Global Petroleum Club - Opinion

What lower oil prices mean for the world

gpc_admin — Tue, 11 Nov 2008 20:26:58 +0100

Oil prices are a barometer of the world economy. Rising prices between 2003 and 2007 reflected the best global economic growth in a generation.

This high economic growth was brought to an end not only by underpricing of risk, excess liquidity and over-confidence but also by an increasingly unsustainable commodity boom – of which oil was a crucial part. Now, as the world has dropped into recession, oil prices have fallen by more than half.

This fall also reflects the power of price itself. For rising prices set in motion decisions by consumers, governments and businesses that have changed the course of demand. Now the recession is also weighing increasingly heavily on demand....

Note to hedge funds: go short on letters to investors

gpc_admin — Mon, 03 Nov 2008 20:35:46 +0100

What do you do when you lose billions of dollars short-selling Volkswagen? Here is what hedge fund managers did last week: they sat down and cried.

This was the most delicious detail in an utterly delightful story. To read in the FT that these tough guys wept because no one had told them Porsche had built up a stake in the carmaker must have delighted many commuters as they made their chilly way to work last Wednesday.

It filled me with special satisfaction as I had just been doing some detailed textual analysis of the letters that hedge funds have sent out to investors in the last few weeks to explain away their abominable performance in the third quarter....

Irrefutable measurement of bunker fuel oil

gpc_admin — Mon, 20 Oct 2008 15:30:46 +0200

Two years ago BP Marine Fuels embarked on a research project to investigate the feasibility of using metering technology to measure the delivery of bunker fuel oil to ships. The company's goal was to provide irrefutable measurement. The SIBCON conference in Singapore, the world's largest bunkering port, was the venue for the international launch of a new bunker fuel oil metering solution. The innovative solution is sponsored by BP, developed by Invensys Process Systems (IPS), and in the future, administered by the International Bunker industry Association (IBIA). For the first time the accurate measurement of all bunker fuel oil delivered to ships can now be guaranteed, much in the same way as a petrol pump measures the delivery of petrol to a car....

U.N. Report: Ethanol creating corn and oil price link

gpc_admin — Wed, 08 Oct 2008 12:25:00 +0200

The price of corn has become tied more and more to the ups and downs of oil prices and oil companies' increasing appetite for ethanol, according to a report released Tuesday by the United Nations.

“The historic linkages between agriculture and the energy sector are becoming stronger and are changing in character,” according to the report, by the U.N.'s Food and Agriculture Organization. “Biofuel demand will continue to exercise upward pressure on agricultural prices for considerable time to come.”

The relationship between corn and oil has been slowly tightening for the last decade according to Vic Lespinasse, an analyst with Chicago-based GrainAnalyst.com. “It’s only been in the last several years that crude oil prices have exploded, and that really increased the demand for biofuel.” ...

Don't Blame Biofuels for Food Crisis

gpc_admin — Wed, 08 Oct 2008 12:23:25 +0200

Biofuels have contributed far less to rising food prices than previously estimated, a new United Nations report's data suggests.

The State of Food and Agriculture 2008 projects that biofuels production only adds 15 percent to world food prices, and that despite rising ethanol capacity, overall food prices are headed down. The slowing world economy combined with increased agricultural production, are cutting the prices of staples like wheat, sugar and vegetable oil.

"Food prices have dropped significantly and will continue to drop," said Per Pinstrup-Andersen, a food economist at Cornell University, who was not an author of the U.N. report. "The reason for that is that farmers respond to these higher prices and you'll get more food produced than ever before."...

Energy Alternatives

gpc_admin — Mon, 08 Sep 2008 11:18:33 +0200

Can they make a significant difference? DOOMSDAY SCENARIOS OF the world's oil supplies reaching a peak and then declining have helped to fuel financial speculation in crude oil and driven prices to record highs. They have also helped to raise expectations that alternative sources of energy - everything from ethanol and biodiesel to nuclear, solar, wind and coal - can provide substantial new supplies in the coming decades. But new research shows that such scenarios and expectations are misplaced. While the use of alternative fuels will grow significantly, it will fail to keep pace with global rises in demand. As a result, the world will need more, not less, crude oil, especially from Saudi Arabia and other Opec producers, as well as much more natural gas. ...

Energy at the crossroads

gpc_admin — Tue, 02 Sep 2008 14:03:46 +0200

Vaclav Smil is a historian of technical advances -- particularly in the field of energy -- and a Distinguished Professor at the University of Manitoba in Canada. Over the years, Smil has written more than 25 books and many dozens of articles. In recent years he has been examining human uses of energy over past millennia. As Smil says [PDF], "My firm belief is that looking far ahead is done most profitably by looking far back."

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Green Hunter Energy: A Highly Speculative Stock Pick

gpc_admin — Mon, 01 Sep 2008 14:43:56 +0200

(By Tim Plaehn). I have a strong interest in the renewable energy sector and believe this is a strong growth area for the next 20-40 years as renewables increase their percentage of world wide energy consumption. Green Hunter Energy (GRH) flew across my radar a few months ago and I added it to my Watch List. A recent news item caused me to take a closer look at the company and what I found is quite appealing.

First a disclaimer: I usually look for stocks with strong earnings that are under-appreciated by the market. Green Hunter does not meet this criteria. This is a start-up company burning cash and may be some time away from generating profits. Also, I can find very little information about the company besides what is offered on the Green Hunter Energy’s website. I consider this a very, very speculative stock....

Experts try to divine the direction of oil

gpc_admin — Mon, 01 Sep 2008 14:28:15 +0200

As Gustav threatened last week to become the first major storm to disrupt oil and gas production in the Gulf of Mexico since 2005, market analysts, financial advisers and money managers hunkered down with the latest theories on where energy prices might go from here.

Despite the lack of a clear general consensus and forecasts ranging from dark to rosy, the recent downward trend in the price of oil has at least reintroduced the notion that energy prices can go down as well as up.

"I don't think anybody really has a good handle on what has driven this turnaround trend, but it seems to me that it's mainly a demand story right now," said Bill Cheney, an economist at John Hancock Financial Services Inc. in Boston. ...

10 Things to Know About Biden and Energy

gpc_admin — Mon, 25 Aug 2008 12:34:33 +0200

The future of federal energy policy is looking bright — Barack Obama chose Delaware Sen. Joseph Biden as his vice president this weekend. Biden has a three-decade senate record that includes a solid history of establishing climate change and energy policies. As Chairman of the Senate Foreign Relations Committee, he has a perspective on how those policies will jive with the international community (not very well so far), and throughout his career he has sponsored a variety of legislation that tackles renewable energy, cleantech funds, electric car battery investment and biofuel mandates.

As a representative of Delaware, it’s also not too surprising that his policies align with the major industries in his state....