The New York Times reports: The boom in oil from shale formations in recent years has generated a lot of discussion that the United States could eventually return to energy self-sufficiency, but according to a report released Tuesday by the International Energy Agency, production of such oil in the United States and worldwide will provide only a temporary respite from reliance on the Middle East.
The agency’s annual World Energy Outlook, released in London, said the world oil picture was being remade by oil from shale, known as light tight oil, along with new sources like Canadian oil sands, deepwater production off Brazil and the liquids that are produced with new supplies of natural gas.
“But, by the mid-2020s, non-OPEC production starts to fall back and countries from the Middle East provide most of the increase in global supply,” the report said. A high market price for oil will help stimulate drilling for light tight oil, the report said, but the resource is finite, and the low-cost suppliers are in the Middle East.
“There is a huge growth in light tight oil, that it will peak around 2020, and then it will plateau,” said Maria van der Hoeven, executive director of the International Energy Agency. The agency was founded in response to the Arab oil embargo of 1973-74, by oil-importing nations.
The agency’s assessment of world supplies is consistent with an estimate by the United States Energy Department’s Energy Information Administration, which forecasts higher levels of American oil production from shale to continue until the late teens, and then slow rapidly.
“We expect the Middle East will come back and be a very important producer and exporter of oil, just because there are huge resources of low-cost light oil,” Ms. van der Hoeven said. “Light tight oil is not low-cost oil.” [Continue reading...]
Der Spiegel reports: America’s NSA and Britain’s GCHQ are both spying on the OPEC oil cartel, documents from whistleblower Edward Snowden reveal. The security of the global energy supply is one of the most important issues for the intelligence agencies.
Documents disclosed by whistleblower Edward Snowden reveal that both America’s National Security Agency (NSA) and Britain’s Government Communications Headquarters (GCHQ) have infiltrated the computer network of the the Organization of the Petroleum Exporting Countries (OPEC).
In January 2008, the NSA department in charge of energy issues reported it had accomplished its mission. Intelligence information about individual petroleum-exporting countries had existed before then, but now the NSA had managed, for the first time, to infiltrate OPEC in its entirety.
OPEC, founded in 1960, has its headquarters in a box-like building in Vienna. Its main objective is to control the global oil market, and to keep prices high. The 12 member states include Saudi Arabia, Venezuela, Iran and Iraq.
When the NSA used the Internet to infiltrate OPEC’s computers, its analysts discovered an internal study in the OPEC Research Division. It stated that OPEC officials were trying to cast the blame for high oil prices on speculators. A look at files in the OPEC legal department revealed how the organization was preparing itself for an antitrust suit in the United States. And a review of the section reserved for the OPEC secretary general documented that the Saudis were using underhanded tactics, even within the organization. According to the NSA analysts, Riyadh had tried to keep an increase in oil production a secret for as long as possible. [Continue reading...]
The New York Times reports: Iran issued a blunt warning on Tuesday that it would block the Strait of Hormuz, the world’s most important oil transit point, if Western powers attempt to impose an embargo on Iranian petroleum exports in their campaign to isolate the country over its suspect nuclear energy program.
The warning, issued by Vice President Mohammad Reza Rahimi, came as Iran’s naval forces were in the midst of a 10-day war games exercise in a vast area of the Arabian Sea and Gulf of Oman. The Strait of Hormuz, a narrow passage that connects the Gulf of Oman to the Persian Gulf, is the route for one third of the world’s oil-tanker traffic.
“If Iran oil is banned not a single drop of oil will pass through Hormuz Strait,” Mr. Rahimi was quoted as saying by the official Islamic Republic News Agency at a conference in Tehran.
“We are not interested in any hostility,” he was quoted as saying. “Our motto is friendship and brotherhood, but Westerners are not willing to abandon their plots.”
Saudi Arabia will spend $43 billion on its poorer citizens and religious institutions. Kuwaitis are getting free food for a year. Civil servants in Algeria received a 34 percent pay rise. Desert cities in the United Arab Emirates may soon enjoy uninterrupted electricity.
Organization of Petroleum Exporting Countries members are poised to earn an unprecedented $1 trillion this year, according to the U.S. Energy Department, as the group’s benchmark oil measure exceeded $100 a barrel for the longest period ever. They are promising to plow record amounts into public and social programs after pro-democracy movements overthrew rulers in Tunisia, Egypt and Libya and spread to Yemen and Syria.
Unlike past booms, when Abu Dhabi bought English soccer club Manchester City and Qatar acquired a stake in luxury carmaker Porsche SE, Gulf nations pledged $150 billion in additional spending this year on their citizens. They will need to keep U.S. benchmark West Texas Intermediate crude oil at more than $80 a barrel to afford their promises, according to Bank of America Corp.
“A sharp increase in spending to accommodate social pressures has averted potential disquiet over governance in most countries, though in the longer-term economic reforms will be needed to buoy private-sector growth and job creation,” Jean- Michel Saliba, a London-based economist at Bank of America, said in an e-mail Sept. 8. “Without the social spending, Gulf protests would possibly move the nations toward constitutional monarchy.”
The decline of the dollar, symbol of US global hegemony for the best part of a century, may have become so entrenched that some experts now fear it is irreversible.
After months of huge and sustained turmoil on the money markets, lack of confidence in the world’s totemic currency has become so widespread that an increasing number of international traders are transferring their wealth to stronger currencies such as the euro, which recently hit its highest level against the dollar.
“An American businessman over here who is given the choice would take anything but the dollar,” David Buik of Cantor Index said yesterday. “I would want to be paid in yen, and if not yen then the euro or sterling.” [complete article]
A rare meeting of the heads of state of the OPEC countries ended here today on a political note, with two leaders — President Hugo Chávez of Venezuela and President Mahmoud Ahmadinejad of Iran — blaming the weakness of the United States dollar for high oil prices.
Despite the best efforts of the host country, Saudi Arabia, to steer the meeting away from politics and promote OPEC’s environmental concerns, the leaders of Venezuela and Iran let loose some show-stealing statements.
“The dollar is in free fall, everyone should be worried about it,” Mr. Chávez told reporters here. “The fall of the dollar is not the fall of the dollar — it’s the fall of the American empire.”
During a news conference after the meeting, Mr. Ahmadinejad added: “The U.S. dollar has no economic value.”
Mr. Ahmadinejad said that oil, which was hovering last week at close to $100 a barrel, was being sold currently for a “paltry sum.” And Mr. Chávez predicted that prices would rise to $200 a barrel if the United States were “crazy enough” to strike at Iran, or even at his own country. [complete article]
See also, Dollar continues near record lows (BBC).