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View our online presentation:  The Changing Geopolitics of Oil

Joint Publication of The Brookings Institution and the Institute for the Analysis of Global Security (IAGS): How Much Oil Does Iraq Have?
Over the past several months, news organizations and experts have regularly cited U.S. Department of Energy figures claiming that Iraq holds over 112 billion barrels (bbl) of proven reserves and up to 200 bbl of undiscovered reserves - making Iraq the world's second largest oil reserve. But DOE figures stand in contrast to those of a no less reputable government body, the Department of Interior's U.S. Geological Survey's (USGS). Based on extensive geologic studies, USGS claims that it is Russia, not Iraq, which holds the world's second largest reserve after Saudi Arabia. According to the USGS, Iraq has only 78 bbl and about 45bbl of undiscovered reserves, very far from the 200 bbl figure.
The incompatibilities between the two chief government agencies dealing with energy assessments are so sharp that it seems as if the two operate in different countries.
Who is right?
Billions of dollars of investment are heading toward Iraq; it is time to find out how much oil Iraq really has. For more information read an analysis by Gal Luft, co-director of the Institute for the Analysis of Global Security (IAGS,) published by The Brookings Institution.

Oil prices rise after Riyadh bombing
Oil prices jumped more than four percent after a series of suicide bombings ripped through residential compounds housing foreigners in Saudi Arabia, the world's largest oil exporter and holder of most of the world's swing capacity.
The attacks, which killed dozens of people, raised anxiety over security of supply from Saudi Arabia as al-Qaeda seems to have chosen to direct its efforts against the Saudi regime and the large Western population living in the Kingdom.
About 40,000 Americans live in Saudi Arabia, many of them provide essential services to the Saudi oil and gas industry. A terror campaign against them could drive many out of the country causing major damage to the Saudi oil industry, mostly reliant on foreign services and expertise.
Saudi Arabia is capable of contributing 10.5 million barrel-per-day (bpd) of the 77 million bpd global oil market. This makes the oil Kingdom an indispensable player; any political instability could cause great nervousness in the market sending oil prices up to levels seen before the Iraq war of up to $40 per barrel and even higher.
According to an article by Robert Baer in The Atlantic Monthly "an attack on Saudi Arabia's largest oil-producing facility could create a reduction in the flow of oil roughly equal to what all of OPEC effected in its 1973 embargo. In such case crude oil could rise to as much as $150 a barrel.

Department of Energy: World oil demand to jump 50% by 2025
According to the Department of Energy's newly released International Energy Outlook 2003-2025, world energy consumption is projected to increase by 58 percent over the next 22 years. World oil consumption is projected to increase by 1.8 percent annually over the 22-year projection period, from 77 million barrels per day today to 119 million barrels per day in 2025.
OPEC producers are expected to be the major beneficiaries of increased production requirements. The cartel's output will more than double from the current 25 million barrels per day to almost 56 million barrels per day by 2025. Non-OPEC supply is expected to remain competitive though most will come from offshore resources requiring expensive recovery.
Despite expectations that countries in many parts of the world will be switching from oil to natural gas and other fuels for their electricity generation, robust growth in transportation energy use--overwhelmingly fueled by petroleum products-- is expected to retain oil's predominance in the global energy mix.
While industrialized countries continue to consume more of the world's petroleum products than developing nations, the gap is projected to narrow during the forecast period. Developing countries use about 64 percent as much oil as the industrialized nations, and by 2025 their consumption will increase so that it will be 86 percent.
Click here to read the report.
To read more about the future of oil, click here.

Oil imports help widen trade deficit for the U.S.
The Commerce Department announced that the U.S. trade deficit widened by 7.6 percent in March to $43.5 billion, the second-highest deficit on record, as imports of crude oil rose to a monthly high. The deficit with oil-producing countries such as Saudi Arabia and Venezuela, grew to a monthly high of $5 billion. The Department of Energy estimates that each $1 billion of trade deficit costs America 27,000 jobs. Oil imports account for almost one-third of the total U.S. deficit and, hence, are a major contributor to unemployment.

The Environmental Protection Agency: U.S. vehicle fuel economy the lowest in 22 years
The Environmental Protection Agency reported that fuel economy of U.S. cars and light trucks in the 2002 model year averaged 20.4 miles a gallon, the lowest since the fleet averaged 19.2 miles a gallon in 1980. Fuel economy peaked at 22.1 miles a gallon in 1988 but has mostly fallen since.
The agency predicts fuel economy will rise to 20.8 miles a gallon in the 2003 model year. Cars are expected to average 24.8 miles a gallon, compared with 19.6 for minivans, 17.8 for SUVs and 16.8 for pickups.
The Bush administration last month ordered automakers to raise the fuel economy of light trucks and SUVs by 1.5 mpg by the 2007 model year but the automobile industry claims that a higher fuel standard would result in cars made of lighter-weight materials, which could be more dangerous on the highway and not popular with consumers.
Conservation groups, on the other hand, are pushing Congress to impose much stronger mileage requirements, especially on SUVs, to reduce U.S. gasoline consumption and cut back on American oil imports.
A proposal introduced by Senators Dianne Feinstein (D-Calif.) and Olympia Snowe (R-Maine) to boost the fuel requirements of trucks and SUVs by 30 percent by 2011 was rejected by the Senate last week.
Full report: Light-Duty Automotive Technology and Fuel Economy Trends: 1975 Through 2003 (EPA)

Highlights from the Senate Committee on Energy and Natural Resources' Energy Policy Act of 2003, a bipartisan comprehensive energy bill designed to diversify America's energy portfolio:
--Requires federal agencies to increase fuel economy of new federal fleet passenger cars and light trucks by at least three miles per gallon by 2005.
--Grants expanded authority to the National Highway Transportation Safety Administration to set fuel economy standards for passenger cars and light trucks, taking into account vehicle and passenger safety as well as the impact on U.S. jobs.
--Authorizes $1.8 billion for the President's Hydrogen Fuel Cell Initiative to develop clean, renewable hydrogen cars.
--Reauthorizes and increases funding for existing research programs into stationary and transportation hydrogen applications.
--Creates an array of demonstration programs to develop hydrogen applications on Indian land, in national parks and international programs.
--Creates a pilot program to craft the full range of technologies required to put hydrogen vehicles on the road in the foreseeable future, building on the President's Hydrogen Fuel Cell Initiative.
--Establishes public education and university education programs in hydrogen research and applications.
--Amends the Energy Policy Act of 1992 to require agencies to purchase 5 percent of new vehicles as hydrogen-powered vehicles in 2006 and 2007, increasing to 20 percent in subsequent years.
--Requires the federal government to offset its total electric energy consumption through the use of fuel cells.
For the full version of the bill click here.

Tension mounting in Indonesia's oil rich province
Indonesia's president Megawati Sukarnoputri put the oil rich Aceh province in the northwestern region of Indonesia under martial law giving green light for a major military assault against separatist rebels after peace talks in Tokyo collapsed. The government said the martial law decree would be effective for six months, but could be extended if required. Jakarta had ordered the rebels to drop their demand for independence and agree to give up 60 percent of their weapons or face one of the country's biggest military assaults.
The four million residents of the province led by 5,000 fighters of the Free Aceh Movement (GAM) refuse to accept Indonesian sovereignty over Aceh. During the past 10 years, more than 6,000 people have been killed in fighting in Aceh between the rebels and government forces.
Aceh's population is staunchly Muslim. The rebels have declared that once they gain independence they would declare an Islamic republic far more conservative than Indonesia's current regime. Instability in Aceh increases the threat to oil transportation in the region. Aceh lies along the Strait of Malacca where 40% of the world's shipping passes. More than 50% of Japan's oil is delivered through the straits. Collusion between the rebels and terrorist groups could disrupt Indonesia's oil production and seriously threaten international trade and global economy.

News from the technology front

Fuel cell powered buses delivered to Europe
Canadian fuel-cell maker Ballard Power Systems Inc. and DaimlerChrysler introduced the first Ballard-powered Mercedes-Benz bus to public transit authorities in Madrid. Thirty similar buses, propelled by 205-kilowatt Ballard fuel cells, are to be delivered over the next year to Amsterdam, Barcelona, Hamburg, London, Luxembourg, Madrid, Porto, Reykjavik, Stockholm and Stuttgart.
The objective of the two-year field trial in European cities is to give people across Europe the opportunity to experience first-hand the clean, quiet and comfortable ride of hydrogen fuel cell buses. In addition, hydrogen fueling stations will be installed in the 10 cities. "This is the start of the fuel cell and hydrogen revolution in Europe," said Dennis Campbell, Ballard's president and chief executive officer.

Fuel Cell Vehicles Reach 400-Mile Finish Line in Los Angeles
On May 19, 2003, The California Fuel Cell Partnership concluded its 2003 “Rally Thru The Valley,” a Three-Day drive from Sacramento to Southern California with fuel cell vehicles. Fuel Cell vehicles from six of the partnership’s eight automakers – DaimlerChrysler, Ford, Honda, Hyundai, Nissan and Toyota – demonstrated the road-worthiness of fuel cell technology. “This year’s Road Rally was an extraordinary success,” said California Fuel Cell Partnership Chairman Alan Lloyd. “The Road Rally was an opportunity to showcase innovative fuel cell technology that if commercialized, can create an environment of energy diversity and efficiency. Californians in 10 counties became more familiar with the potential of fuel cell technology by seeing these vehicles up close."
In Los Angeles, Mayor James Hahn shared his support for the Road Rally and fuel cell vehicles and Deputy Mayor Brian Williams greeted the Road Rally at the Los Angeles Zoo in Griffith Park. “Los Angeles has entered a new era of transportation by signing a two-year lease to put hydrogen-powered fuel cells into practical use,” said Hahn.

GM, Dow tout largest fuel cell deal
GM will provide a Dow manufacturing plant in Texas with trucks containing fuel cell conversion equipment. Dow will provide the hydrogen fuel, a byproduct of one of Dow’s principal products, chlorine. The hydrogen will be pumped into the fuel cells where, mixed with oxygen, it becomes electricity that can help power the plant. GM called the deal a way to test fuel cells and to start driving down their costs by bringing them to new markets. Dow expects to get at least 35 megawatts of power, enough to power 25,000 homes for one year, over the lifetime of the agreement.

UPS to use Mercedez-Benz fuel cell vehicles in fleet
DaimlerChrysler AG is collaborating with United Parcel Service of America Inc. and the U.S. Environmental Protection Agency to introduce fuel cell vehicles into the UPS commercial delivery fleet. The DaimlerChrysler vehicles will be used in normal UPS delivery operations. DaimlerChrysler "F-Cell," a Mercedes-Benz A-class vehicle powered by a Ballard Power Systems Inc. fuel cell, will begin letter delivery by late 2003. A fuel cell Dodge Sprinter van will be added to the fleet in 2004.

Delphi aims to power solid oxide fuel cell with coal
In June 2003, Delphi Corp. will demonstrate a unique innovation by powering its Solid State Energy Conversion Alliance (SECA) Generation-2 solid oxide fuel cell (SOFC) using gaseous fuel extracted from coal.
The demonstration will take place at the Power Systems Development Facility (PSDF) coal-gasification plant in Wilsonville, Alabama. This demonstration will be conducted under Delphi's existing cooperative agreement with the DOE's office of Fossil Energy/National Energy Technology Laboratory.
"Most SOFCs need fuel that is low in contaminants. Fuel purity is an issue, and this is especially true for fuel from coal. Gas cleanup processes will also be tested at the PSDF," says Dr. Jean Botti, chief technologist, Delphi's Dynamics and Propulsion Innovation Center. "Since coal is an abundant resource in the U.S., showing that a fuel cell can produce electricity from gasified coal at a competitive cost would mean that the U.S. would become less dependent on energy imports. After the demonstration, which explores what's possible with this process, further R&D could prove-out the reliability and effectiveness of high-power output from the fuel cell using gasified coal."

Clean Coal-to-Methanol project a success
Air Products Liquid Phase Conversion Company, L.P., a partnership between Air Products and Chemicals, Inc., and Eastman Chemical Company, has successfully completed a nearly 11-year project to demonstrate an advanced method for making methanol from coal. The 69-month government co-funded operating period ended as trouble-free as it began. Since April 1997, when the Liquid Phase Methanol (LPMEOH) process began its first test runs at Eastman Kingsport, Tenn. chemicals-from-coal complex, the demonstration facility has operated with a remarkable on-stream availability of 97.5 percent, the best of any of the original Clean Coal Technology projects co-funded by the Energy Department in the late 1980s and early 1990s.
During its demonstration period, the facility produced nearly 104 million gallons of methanol from coal gas with a demonstrated plant capacity in excess of 300 tons of methanol per day, more than 15 percent greater than the plant's design rate. Successful demonstration of the LPMEOH technology, and the application of methanol to transportation and power generation systems, adds significant flexibility and dispatch benefits to integrated gasification combined cycle electric power plants. These facilities have traditionally been viewed as strictly baseload power generation technology. Now, central clean coal technology processing plants, making coproducts of electricity and methanol, could simultaneously meet the needs of local communities for dispersed power, transportation fuels and manufactured chemical products. Methanol, a liquid with physical characteristics very similar to gasoline, is rich in hydrogen and can be used to power fuel cell vehicles. A vehicle using methanol as a hydrogen carrier fuel, can be built with either a hydrogen fuel cell coupled with a reformer (either at the fueling station or on-board the vehicle,) which converts methanol to hydrogen during usage, or with a direct methanol fuel cell (DMFC.)