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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: koan who wrote (73651)	5/4/2010 9:23:11 PM
From: Wharf Rat	Read Replies (1) \| Respond to of 149317

The next oil price shock by Dave Cohen A few years ago I made a graph illustrating my view of the timing of future oil price shocks. I've updated that graph to reflect the current price, but I haven't changed my mind about the timing of the next blow-up. Here it is. This is not a "price" graph—nobody can predict future oil prices. It's simply a schematic showing that— demand surges cause oil price shocks (the peaks) oil price shocks cause recessions and force reductions in demand (the troughs) the average price of oil goes up over time (the ascending blue line) Informally, we can say there's been an oil price shock when the real (inflation-adjusted) price goes over $100 per barrel and stays there for at least 2 months. I have the next spike occurring in 2012 ± 1 year. Discussion I'm going to do a lot of hand-waving here. If somebody can predict how the global economy is going to perform over the next 2-3 years, they should step forward now. Perhaps it is easier to state what we don't know than what we do know— How will Europe's sovereign debt crisis (in the PIIGS) affect the Eurozone economy as a whole? And thus its oil demand? The IMF says the European crisis is a boon for emerging markets. How serious is the Chinese housing bubble? If the bubble bursts, what will happen to China's economy? Will there be a double dip recession in the United States? If so, what will happen to its already weak oil demand? Otherwise, I expect little change from current levels. Japan? I expect little change there. Both the International Energy Agency and Barclays, a prominent oil analyst firm, are bullish on oil. In fact, if they weren't so confident that oil demand in the developing countries—the so-called BRICs (Brazil, Russian, India and China) plus the Middle East—is surging, I would have changed the 2012 forecast to 2013. Here's the Financial Times on April 13. On the demand side, the IEA said the world’s oil need in 2010 would rise to higher levels than previously thought, with much of the growth from Asia and the Middle East. World demand will hit 86.6m barrels a day this year, up from 84.9m in 2009, and above the record 86.5m b/d demand of 2007, the report said. Other analysts agreed. “Non-OECD demand is growing at a phenomenal pace,” said Amrita Sen, analyst at Barclays Capital. China imported 4.95m barrels of oil a day in March, a 14 per cent increase from the previous month, according to data released by the Chinese customs bureau. [My note: China's oil demand was 8.12 million barrels-per-day in April, which is well below its all-time record of 8.5 million set last February. China's oil production has been around 3.75 million barrels-per-day (xls file) for some time now.] However, many analysts warned that the higher growth may not be sustainable because it is being driven by government stimulus programs. Even the IEA acknowledged that prices may be higher than market factors justify. “While some see recovering demand having been sufficient to support the $70-80/bbl prices evident in the last eight months, they nonetheless raise questions over the sustainability of prices markedly higher than those levels,” the IEA said. It's quite amazing that the IEA has pegged 2010 world oil demand higher than it was in 2007 when the last oil price shock got going. Frankly, I don't believe it. Still, there's a smallish chance they're right, in which case the next oil shock will likely occur in 2011. You can see the considerable uncertainty in the FT's report. Apparently, the Kuwaiti oil minister predicts that China's oil imports will be 7 million barrels-per-day by 2015! That's an additional 2-3 million barrels daily. Believe me, if that prediction comes to pass, we will never reach 2015 without a tremendous, very destructive oil price spike. We don't know when the next oil shock will arrive but we do know it's just a matter of time before the next one shows up. I continue to be astonished that most American economists and all American policy-makers ignore the dangers posed by future oil prices. But then again, if you can ignore the biggest property bubble in human history, you can ignore anything. Here's a Barclays analyst saying the oil demand picture is improving. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ energybulletin.net ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

To: koan who wrote (73651)	5/4/2010 10:41:16 PM
From: tejek	Read Replies (1) \| Respond to of 149317

>>No one knows for certain but if we were at peak right now, the price of crude would be skyrocketing like it did in 2007. Dude, we are just now coming out of the worst depression since 1930. World car production cannot keep us with Chinese demand. Lots of NG substitution for oil. India just completing a freeway aroudn teir entire country like IKE's highway system in the 50's. But wharfy is right. The steep decline after Peak oil will be startling to people. $150 oil will be average I think. That changes lots of things about how we live. Koan, this is all anecdotal stuff. If you want anecdotal stuff, I can give it to you back but it proves nothing.

To: koan who wrote (73651)	5/5/2010 9:12:25 AM
From: stockman_scott	Read Replies (1) \| Respond to of 149317

Obama Backs ‘Significantly’ Higher Spill Damage Cap (Update1) By Julianna Goldman and Lisa Lerer May 5 (Bloomberg) -- The Obama administration is backing “significantly” higher limits for damages BP Plc might face for the oil spill in the Gulf of Mexico and won’t rule out scaling back plans to expand offshore drilling. “Beyond clean-up and containment, BP must be held responsible for the damages this spill causes,” White House communications director Dan Pfeiffer wrote on the White House website yesterday. The administration “strongly supports” a move in Congress to raise an existing $75 million cap on damages under the Oil Pollution Act. BP Chief Executive Officer Tony Hayward said yesterday he expects that limit will be exceeded. The London-based company, Europe’s second-largest oil producer, will honor all “legitimate” claims from those harmed, such as the region’s fishing and tourist industry, he said after meeting in Washington with Gulf Coast lawmakers. Separately, White House press secretary Robert Gibbs said “I would not rule it out,” when asked if President Barack Obama would change his mind on a plan announced March 31 to open portions of the East Coast to oil and gas exploration. The April 20 explosion and fire on a drilling rig leased by BP resulted in a leak that is spreading an estimated 5,000 barrels of crude a day in the Gulf and reshaping the U.S. energy debate in Congress. Democratic lawmakers from New Jersey and Florida are among those calling on Obama to abandon his plan to expand drilling as Congress considers climate policy and lawmakers look ahead to the November elections. Higher Damages One of those lawmakers, Democratic Senator Robert Menendez of New Jersey is co-sponsoring legislation to raise the limit on damages awards from a spill to $10 billion from $75 million under the current law, which was passed in 1990. The cost to BP of cleaning up the spill isn’t affected by the cap. “The administration -- in the context of a comprehensive energy bill which would help move us to a clean energy future -- strongly supports efforts on Capitol Hill to raise the Oil Pollution Act damages cap significantly above $75 million,” Pfeiffer wrote. The White House also is examining what “fines or damages BP could be liable for under additional applicable federal and state laws.” Menendez’s legislation would apply the higher limit retroactively to the BP spill. “I think it is inevitable that the cap will be exceeded,” Hayward said after meeting with senators from Louisiana, Mississippi and Florida at the U.S. Capitol. BP will “have the resources to deal with this,” he said. Shares in the London-based company, which had lost 16 percent of their value since the explosion, rose for the first time in four days. BP gained as much as 2.7 percent to 564 pence today. Obama Policy Gibbs reiterated Obama’s stance that domestic oil production has to be part of an energy strategy. The president said May 1 that he’s directed Interior Secretary Ken Salazar to conduct a “thorough review” over the next 30 days to determine whether more safety precautions are needed for offshore drilling. “The president wants to use that investigation to inform anything that might happen going forward,” Gibbs said today. Obama’s plan would permit exploration in the Atlantic Ocean from south of Delaware and, if a congressional moratorium is lifted, in the Gulf of Mexico 125 miles (201 kilometers) off the west coast of Florida. Expanded offshore drilling has also been proposed in Senate negotiations over climate-change legislation in a bid to win energy industry support for limits on carbon dioxide and other greenhouse gases. The BP spill has solidified a division in the Senate between Republicans who favor more domestic oil and gas exploration and Democrats who don’t. Drilling Prohibitions “To get my vote, any energy or climate bill must prohibit drilling in places where a spill could reach New Jersey’s waters,” said Senator Frank Lautenberg, a New Jersey Democrat. Even backers of wider exploration said they expected tighter regulation of the oil industry. “Those of us that support offshore drilling have to be open to the possibility that we have to toughen up a bit,” said Republican Representative Joe Barton of Texas, who called himself a “strong supporter” of the oil industry. State officials also have weighed in. California Governor Arnold Schwarzenegger, a Republican, withdrew his support for offshore drilling yesterday, after a similar move by Florida Governor Charlie Crist, who raised doubts about environmental safety. “I think we’re all going to back off from offshore drilling until we get a better handle of how we can make it safe,” Senate Majority Leader Harry Reid said today. At least three committees -- House Energy and Commerce, House Natural Resources, and Senate Energy and Natural Resources -- plan hearings to investigate the spill during the next month. To contact the reporter on this story: Julianna Goldman in Washington at jgoldman6@bloomberg.netLisa Lerer in Washington at llerer@bloomberg.net Last Updated: May 5, 2010 04:46 EDT