Tuesday, June 28, 2005



Since most homes and many power plants use natural gas for heating, cooking and making electricity, one would imagine the news that we have hit the Hubbert Oil Peak in natural gas would be huge headlines. But this is America the Wasteful and so this is greeted with the usual dead silence.

From Reuters via From the Wilderness.com:
After weak prices in the 1990s due to oversupply, natural gas production in North America will probably continue to decline unless there is another big discovery, Exxon Mobil Corp.'s (XOM.N: Quote, Profile, Research) chief executive said on Tuesday.

"Gas production has peaked in North America," Chief Executive Lee Raymond told reporters at the Reuters Energy Summit.

Asked whether production would continue to decline even if two huge arctic gas pipeline projects were built, Raymond said, "I think that's a fair statement, unless there's some huge find that nobody has any idea where it would be."
About those "weak prices": when the basis of all energy systems, oil, is cheap, all other forms become cheaper, too, due to old fashioned competition. Understanding why oil was suddenly "cheaper" in the roaring nineties is vital to understanding our great peril in the future.

Energy prices didn't fall because of the Gulf War. Americans would love to preen themselves on this so that we can assume our present, disasterous and expensive war will make things revert to the status quo of the nineties, but this is a false hope.

Why do most news stories and commentators talking about energy avoid mentioning Russia? This truly puzzles me. For 75 years, Russia, the world's second largest oil reserve, kept out of the capitalist system and only traded with fellow communist states in the Warsaw Pact countries it conquered or kept all the energy domestic. In the 1980's, Russia inked trade agreements with Germany for piping natural gas. The world's biggest natural gas line was built. This displeased the Reaganites running America at the time but they had no alternative plan for Germany's energy needs so the Germans ignored the Americans.

Immeadiately, the price of oil began to fall. The Texans were displeased with Reagan's disinterest in their affairs and staring disaster in the face, they hoped Bush could fix this. He did.

When Saddam, our client who we supported in the Iran/Iraq war to raise world oil prices so Texans could get rich, signalled he wanted a new invasion and April Gillepsie gave him the nudge-nudge-wink-wink to greenlight it without leaving any fingerprints. Saddam invaded and Bush Sr. pounced.

World oil prices shot up! But this was a feeble solution. Even after removing Saddam's country from the world oil markets, the prices collapsed thanks to Russia's sudden and unintended revolution felling the communist dictatorship. The newly opened spigots to Europe flooded the oil market with black ooze and world prices collapsed as Europe no longer needeed Middle Eastern oil nearly so much!

Now, this year, Russia is beginning to enter its own phase of the Hubbert Oil Peak and that along with the rising use of oil in China, translates into higher future oil prices. Back to our own NG woes:
While the number of U.S. rigs drilling for natural gas has climbed about 20 percent over the last year and prices are at record highs, producers have been struggling to raise output.

Experts said easy onshore and shallow water basins have been mostly tapped or are off limits for environmental reasons, and new technologies like horizontal drilling have been draining wells in two or three years, a much faster rate than the five years or more during the 1990s.

The U.S. Energy Information Administration estimates that natural gas production will be flat this year and increase only one-half percent next year.

At the same time, demand for the cleaner burning fossil fuel is expected to grow by two percent this year and almost 2.5 percent in 2006, according to EIA, the statistical arm of the Department of Energy.
So, demand will grow and supplies shrink? This is going to really hurt many people. From the LA Times:
The Senate voted on Wednesday to give federal regulators authority over the location of liquefied natural gas terminals, despite objections from governors that states should be have an equal say in deciding where such projects are built.

Republican and Democratic officials from city halls to Capitol Hill have expressed concern that the terminals could become targets of terrorist attacks or pose other safety risks, and they have sought a role in siting them.

But President Bush has pushed to put Washington in charge of deciding where terminals are built, saying that a lengthy approval process could delay the building of facilities critical to providing the natural gas needed to fuel the nation's economy.

On Wednesday, a majority of the Senate agreed with him. The lawmakers voted 52-45 against adding a provision to the energy legislation that would have given governors the authority to veto or impose conditions on the terminals.
Who will be the lucky duckies that have to sacrifice their lives by living near these terminal terminals? The massive oil refineries are terrifying enough. This is a thousand times more volatile! Unlike oil fires which give oneself time to flee, these babies, when they blow, do so instantly. A recent fire at an oxygen/gas facility was very explosive and it was the equivelent of a camp fire vs a forest fire.

Gas guzzling continues at home. These trucks are what Detroit is churning out. Foreign companies are no better.

Finally, from From the Wilderness, this rather amusing news:
Opec is hoping to set up regular dialogue soon with China, which is now one of its biggest oil consumers, the cartel's president Sheikh Ahmad Fahd Al Sabah said yesterday. Opec was also aiming for a similar arrangement with Russia by the end of the year, Sheikh Ahmad said after a ministerial meeting of the 11-nation oil-producing cartel.

"We are happy if we can start our dialogue with China. We have already received an official request to start this dialogue," Opec's president, who is also Kuwait's oil minister, told journalists. "I hope in September as president I will visit Beijing. This has not been decided 100 percent, this is one of the proposals," he added.

China's booming industrial growth and energy needs are believed to be fuelling the current lack of spare petroleum capacity on the market.

"I think China is helping. China is the main reason the price is high because they are coming in with big demand," Opec's president said.
Bush and Cheney and their Texan oil buddies all thought that taking over Iraq and thus having a direct seat in OPEC while still pretending they are not part of that cartel despite pictures of Bush literally kissing OPEC sheiks on the cheeks is being busted by the reality that Russia is a lynchpin to OPEC and Putin wants a seat at the table. And you can bet, Putin despises Bush and wishes him ill.

The fact that Russia is pulling China along is very amusing. When Putin took over Russia in his little midnight 2000 New Year's coup, he desperately wanted to be legitamisized by the USA. And so it appeared. But over the years, thanks to Bush's loud mouth ways and nearly continuous back stabbing, relations have soured so badly, China is now Russia's best friend and Putin consults with the dynamic duo in Beijing, Hu and Wen, on a nearly daily basis. Their united actions show up in the news periodically and this is one of the more powerful expressions of their united wills.

They plan to put a noose around our necks.

To return to main page click here