April 4,
2003
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War jitters send oil prices up Concerns that Iraqi oil may remain off the
market longer than anticipated and a sharp cut in Nigerian
supplies brought oil prices to the highest level since the
start of the war in Iraq. Oil prices initially fell sharply after the
US and Britain invaded Iraq on preliminary trader expectations
of a swift resolution to the war, but prices rose 17% over the last
week as the military warned of an extended
conflict. Oil prices rose above $30 a barrel. Statements
by both President George Bush and British Prime Minister Tony Blair
that the campaign against Saddam Hussein would be tough and
difficult have reaffirmed concerns that Iraq's resumed oil
production is not in sight. Oil analysts predict that with
inventories low and spare production capacity largely used up, oil
prices are expected to remain volatile until the military situation
clarifies in Iraq and the political turmoil in Nigeria and Venezuela
settles. Salomon Smith Barney analyst Kyle Cooper remarked, "You
have a couple things here that could dramatically change the
fundamentals of oil in a short time, and this makes everyone
skittish."
A surge in ethnic
conflict in the Nigerian delta has forced oil companies to shut down
their operations The Niger delta, accounting for most of
Nigeria's crude
output of two million barrels per day, has been in recent days the
center of ethnic violence for oil benefits claiming the lives of
more than 100 people with oil companies getting caught in the deadly
struggle. The fighting, which has
also drawn in the army, erupted between the Ijaw and Itsekiri
tribes. Ijaw warriors are leading a campaign for a greater share of
Nigeria's oil wealth. They had taken control of between nine and 11
crude oil flow stations threatening to destroy them if the army
continued to raze their villages. The recent tribal warfare has shut
down about 40% of Nigeria's total oil output amounting to an
unprecedented 800,000 barrels in daily oil production. Nationwide,
well over 10,000 people have died in ethnic, religious and political
violence since President Olusegun Obasanjo's election in 1999 ended
15 years of military dictatorship. The Nigerian unit of the oil
company ChevronTexaco said it had shut all operations in the western
Niger delta because of the fighting. Chevron announced one of its
contract workers had been killed by a stray bullet from the
fighting. It said it had taken the decision to shut down the
facilities and relocate its workers because it felt it was no longer
safe for staff to stay in the area. Royal Dutch/Shell and the French
TotalFinaElf have already halted operations. Ijaw militants accused
ChevronTexaco of collaborating with the army, which has established
a base at its Escravos export terminal. They have warned Chevron
that if they do not remove the military from the installation it
will be destroyed. Nigeria is the fifth-largest supplier of
petroleum products to the United States. "Nigerian crude is not the
kind of stuff you want to be short of," said Paul Horsnell, oil
analyst at J.P. Morgan. "It's very serious. It's not a little local
disturbance."
Saudi Arabia: a war profiteer?
Elevated oil prices and expanded production as a result
of the Iraqi conflict are already pouring as much as a billion extra
dollars a week into Saudi Arabia's coffers and could double the
government's oil revenues this year. Saudi Arabia, normally
limited by OPEC quotas to producing just over 7 million barrels a
day, is now pumping 9 million barrels a day. That output could surge
as high as 10.5 million barrels a day - Saudi Arabia's full capacity
- if the country makes up for lost Iraqi production during the
entire war. All other OPEC countries are
already producing at or near capacity and Saudi Arabia is the only
country with remaining spare capacity. However, the unexpected
revenue - as much as $28 billion - is not likely to bring much
prosperity to the kingdom. It will mainly help offsetting the
country's growing budget deficit. Saudi Arabia has accumulated a
huge domestic debt of more than $170 billions about the size of its
total annual economic output.
Talisman
Sudan suit to proceed Canada's largest independent oil producer can be held liable
for genocide if it is proven it cooperated with the Sudanese
government to wage war on civilian populations near oil fields, a
judge ruled Wednesday. The lawsuit accuses Talisman of
collaborating with Sudan to commit gross human rights violations,
including murders, forced displacement, war crimes, confiscation and
destruction of property, kidnapping, rape and enslavement. It
describes the current Sudanese government as a "Taliban-style
Islamic fundamentalist movement" engaging in a "war of genocide"
that has already claimed two million lives and displaced four
million people, with the violence aimed at wiping out Christians and
those practicing religions other than a strict form of Islam.
Click here for the text of the suit.
Bomb explodes in Kashmir oil
depot A bomb exploded Wednesday in an empty oil
tanker outside a fuel storage area in Jammu-Kashmir. Police suspect
Islamic separatists planted the bomb. The vehicle's driver was
killed and six people wounded, but police said had the blast taken
place inside the depot, it would have led to widespread devastation
even in the surrounding residential areas. Two days prior to the
attack suspected Islamic militants killed 24 Hindus in a village in
the Indian-controlled portion of Kashmir. Islamist militants in
Kashmir, India's only Muslim majority state, are fighting to
establish an Islamic state in Kashmir or else merge with Pakistan.
Over 61,000 people have died in the 13 year
insurgency.
Drilling in ANWR fails in the
Senate The Senate voted 52 to 48 against drilling for
oil in the Alaskan wildlife refuge. Eight Republicans joined 43
Democrats and one independent to remove the drilling clause from a
budget vote. The vote came after the hardest-fought lobbying
campaign yet in the Congressional session, setting environmental
groups, who said oil production would cause ecological damage to the
area, against Alaskan business interests, who said the oil was
necessary for jobs and energy independence. Administration
officials had hoped that Republican control of Congress would
shatter the power of the environmental lobby and had used the rising
price of gasoline, the strike in Venezuela and the war with Iraq as
arguments for increased domestic oil production. Supporters of
the drilling plans were yesterday warning that this battle was far
from over, and they would be returning with new plans.
Representative Tom DeLay, the House Republican leader, said his
chamber would probably approve drilling next month as part of an
energy bill, which could force another vote in the Senate. The
Bush plan would have allowed for drilling over 1.5m acres of the
20m-acre refuge. The U.S. uses around 7bn barrels of oil a year, and
the government had estimated that as many as 16bn barrels could have
been found in Alaska. Opponents suggested that only around 3bn could
have been recovered without causing major damage. Click
here for ANWR Backgrounder. Environmental implications aside, "the real
show-stopper" for ANWR, as James
Woolsey and Amory Lovins wrote, "is national security."
Delivering the oil from Alaska could only be done via an
800-mile-long Trans-Alaska Pipeline System (TAPS). "This would make
TAPS the fattest energy-terrorist target in the country - Uncle
Sam's "Kick Me" sign." TAPS is extremely vulnerable to terrorist
attacks. It has already been sabotaged, incompetently bombed
twice, and shot at more than 50 times. Last Oct. 4, a drunk shut it
down with one rifle shot. "If key pumping stations or facilities at
either end were disabled, at least the above-ground half of 9
million barrels of hot oil could congeal in one winter week into the
world's biggest Chapstik."
Fueling coalition forces in the desert
The nightmare of military logistics planners in Iraq is
for advancing military units to outrun their fuel supply.
Logistically, fuel is a huge burden for an army on the move. If
Napoleon's army "moved on its stomach," today's ground forces move
on diesel fuel. For heavy divisions, fuel accounts for 70 percent of
the weight of supplies that have to be delivered to the front lines.
For lighter divisions, fuel still makes up 30
percent. A 1999 study on fuel economy in the military by the Rocky Mountains
Institute showed that many of the vehicles, tanks, aircraft and
vessels currently used by the military suffer from poor fuel economy
partly due to anachronistic design but mainly due to flawed
calculation of the real cost of fuel. "The venerable B-52 bombers
now being flown by the children of their original pilots have
inefficient, low-bypass engines from the 1960s. Those could be
refitted to modern ones using a third less fuel to achieve up to
half again as much range. But they haven't been, because the fuel is
thought to be cheap," says the report. Another primary platform, the
Army's half-mile-a-gallon M1A2 tanks are powered by inefficient
1960s-design gas turbines enabling to cruise at 3 miles per hour.
But 60-to 80 percent of the time, that huge turbine is idling at one
percent efficiency to run low power systems like air conditioning
and electronics. "Most civilian vehicles would use a small auxiliary
power unit to serve such tiny, steady loads efficiently. Tanks
don't, because their fuel was assumed to cost about a buck a
gallon," said Amory Lovins the report's author. When the tanks
advance hundreds of miles into the desert, away from their logistics
base, the cost of refueling increases drastically. The cost of
delivering fuel to the tank either by tankers or cargo helicopters
can rise to $400-600 a gallon. Similarly, refueling bombers and
jetfighters in midair makes refueling costs prohibitive. But fuel
waste doesn't just cost money; it inhibits war fighting. Each tank
is trailed by lumbering fuel tankers. "An armored division may use
as much as 20, perhaps even 40, times as many daily tons of fuel as
it does of munitions." For the future, the military is committed
to creating a lighter, faster force that uses a lot less fuel. The
U.S. military is currently developing hybrid systems, efficient
diesel engines, and gasoline engines enhanced by auxiliary power
units. The military is also interested in fuel cells to replace
generators in the field. For the most part the fuel cells will
likely be auxiliary power units, with hydrogen produced from water
using diesel at least in the foreseeable future.
New legislation offers tax incentives for
alternative fuels Congress is proposing $16 billion in
tax credits for alternative and traditional energy sources over the
next decade. The Energy Tax Incentives Act of 2003, introduced this
month, proposes numerous tax credits for advanced technology
vehicles. The wide-ranging bill offers incentives for the
purchase of fuel cell, hybrid electric and alternative fuel
vehicles. It establishes credits for small ethanol producers, as
well as for selling alternative fuels and building residential or
retail alternative fuel refueling sites. The bill provides an
income tax credit for biodiesel fuel mixtures made from vegetable
oil and animal fats and also for ethanol producers. There are
numerous tax incentives for traditional motor fuels from
non-conventional sources such as coal bed methane and heavy
oil.
DaimlerChrysler:
Over 500,000 Fuel Cell Cars Worldwide by 2010 A top DaimlerChrysler
executive, Thomas Weber, predicted that more than half a million
cars in the world will be powered by fuel cells by the year 2010. He
said DaimlerChrysler is to invest one billion dollars in the fuel
cell technology. Weber, head of DaimlerChrysler's research and
development, said that greater cooperation among carmakers is
needed. Half a million exhaust-free fuel cell powered cars would
mean about one per cent of the number of new cars registered each
year.
New
fuel cell buses to reduce air pollution in
China China
Thursday launched a project of $32 million to help reduce the
cost of fuel-cell bus technology. "We hope many FCBs are on
the roads during the 2008 Olympic Games for the sake of better air
quality," said Fan Boyuan, vice major of Beijing.
Greek navy modernizes submarines with Siemens fuel
cell technology Siemens Industrial Solutions and Services Group (I&S)
together with Howaldtswerke Deutsche Werft AG (HDW) of Kiel are to
equip three Greek class 209 submarines with a propulsion system that
is independent of an external air supply. Delivery is scheduled to
be between mid-2004 and 2010. A PEM (polymer
electrolyte membrane) fuel cell system provides the power for the
submarines when running submerged.
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