This week we feature the impacts of the collapse in crude oil prices, which are already being felt around the world:
Why is Saudi Arabia using oil as a weapon?
Falling oil prices are making it harder for OPEC member states to fund their governments. Oil prices hovering around $70 per barrel is too low for most OPEC countries to cover their budgets, according to Reuters data. While OPEC countries generally have lower costs of actually getting oil out of the ground than the western countries, they use that oil revenue to fund their government budgets and provide benefits to their citizens. These costs add up, meaning that OPEC members need high oil prices — usually above $90 per barrel — to keep their budgets in the black. “The weighted average of oil prices collected by members of the Organization of the Petroleum Exporting Countries was $106 a barrel last year — just enough to cover the average budget requirements,” according to Reuters analysts.
Algemeiner: Oil Prices Punish Iranian Economy
Iranians awoke on Monday morning to a 30 percent increase in the price of bread – the most tangible consequence of an economy suspended between the twin pressures of falling oil prices and continuing international sanctions stemming from the Tehran regime’s failure to properly account for its nuclear program. A growing chorus inside Iran is blaming rival Saudi Arabia and its allies for the price fall. In October, government spokesman Mohammad Baqer Nobakht accused “some so-called Islamic countries in the region” of “serving the interests of America and (other) arrogant powers in trying to squeeze the Islamic Republic. They (the West) have forced our oil production from 4 million bpd to 1 million bpd, and this recent fall of oil prices is their latest gimmick.”
More related stories below the fold, plus Russia scraps South Stream, Germany to cut coal use, the risk of a “carbon bubble”, EU regulations threaten cross-channel ferries, a nuclear plant catches fire and nobody notices, how to save the planet by not eating meat and the BBC brings unbiased news coverage to Australia.
Wolf Street: Oil War Pushes Venezuela Over Brink, Probability of Default Soars to 84%
Venezuela was already in trouble before the price of oil plunged. The fracking boom in the US and the tar-sands boom in Canada have been replacing Venezuelan imports of crude to the US for years. The Keystone pipeline, if Congress approves it, will replace costly oil trains to move Canadian tar-sands crude to US refineries, making it even more competitive with Venezuelan crude. Shipments of crude from Venezuela to the US will continue to dwindle. Venezuela’s budget deficit is 16% of GDP, the worst in the world. Inflation is running at a white-hot 63%, also the worst in the world. The economy is heavily subsidized, but now the money for the subsidies is running out.
This Day Live: Nigeria loses $11.5 billion to tumbling oil prices
The federal government and the oil and gas producing companies may have lost an estimated $11.5billion to the drop in the price of Brent crude oil from $115 per barrel in June to $68.62 yesterday, THISDAY has learnt. With Nigeria producing about 2.4 million barrels per day and exporting 2.2 million barrels per day, the country may have lost as much as $11.5 billion between June and November this year, forcing the federal government to introduce a raft of measures to shore up its revenue in the face of dwindling earning from crude oil, its main revenue source. The situation may even become more dire should the slide persist.
Radio Free Europe: Iraqi PM Says Low Oil Prices Ruined 2015 Budget
Iraqi Prime Minister Haidar al-Abadi says falling oil prices have forced Iraq to scrap its draft 2015 budget. Abadi told lawmakers on November 30 in Baghdad that the budget had been based on a forecast of $70 per barrel of oil but that prices fell to $64 per barrel on November 28, the lowest price since 2010. He said the low prices, coupled with a disruption in production at oil fields in and around Kirkuk, means the budget has to be reworked.
In April only 4.5 million barrels of Nigerian oil arrived at U.S. ports, down from a record high of 40 million barrels seven years earlier. And by July, the spigot was shut off completely. Over the next six weeks, not a single drop of Nigerian light, sweet crude arrived in the U.S. – all of it replaced at Gulf Coast refineries by fracked oil from fields like the Bakken formation in North Dakota and Eagle Ford in Texas. With it, Nigeria became the first formerly flush oil producer to essentially lose its entire share of the U.S. market, leaving it scrambling for new customers, less able to fund its internal war on terror and less important to the U.S.
Billionaire wildcatter Harold Hamm, a founding father of the U.S. shale boom whose personal fortune has fallen by more than half in the past three months, said U.S. drilling will slow as producers cut back amid falling oil prices. Hamm’s wealth, which is largely tied to the fate of Oklahoma City-based Continental, has fallen by more than $12 billion in three months, according to the Bloomberg Billionaires Index.
Plunging oil prices sparked a drop of almost 40 percent in new well permits issued across the United States in November, in a sudden pause in the growth of the U.S. shale oil and gas boom that started around 2007. Data provided exclusively to Reuters on Tuesday by industry data firm Drilling Info Inc showed 4,520 new well permits were approved last month, down from 7,227 in October.
Next year companies will make final investment decisions on a total of 800 oil and gas projects worth $500 billion and totalling nearly 60 billion barrels of oil equivalent, according to data from Norwegian consultancy Rystad Energy. But with analysts forecasting oil to average $82.50 a barrel next year, around one third of the spending, or a fifth of the volume, is unlikely to be approved, head of analysis at Rystad Energy Per Magnus Nysveen said. “At $70 a barrel, half of the overall volumes are at risk,” he said.
New York Times: Russia to scrap South Stream pipeline
President Vladimir V. Putin said Monday that he would scrap Russia’s South Stream gas pipeline, a grandiose project that was once intended to establish the country’s dominance in southeastern Europe but instead fell victim to Russia’s increasingly toxic relationship with the West. It was a rare diplomatic defeat for Mr. Putin, who said Russia would redirect the pipeline to Turkey. He painted the failure to build the pipeline as a loss for Europe and blamed Brussels for its intransigence.
Russian natural gas producer Gazprom said on Saturday it had received a prepayment of $378.22 million from Ukraine for natural gas supplies, paving the way for the first shipments to Kiev since Moscow cut supplies in June. Ukraine’s state energy firm, Naftogaz, said on Friday it had transferred the sum to Gazprom for December. A Gazprom spokesman confirmed the money had been received.
Telegraph: Is this the end of coal?
In an astonishing reversal – virtually unpublicised in Britain, and little noticed elsewhere – China, which burns more coal than the rest of the world put together, has announced it will cap its use within six years. Even more surprisingly there are signs that it is already declining, way ahead of schedule, as the country undergoes a largely unrecognised green revolution. The United States, the next biggest consumer, is also taking new measures against the fuel. And Germany, Europe’s largest coal consumer – much-criticised for increasing use after resolving to phase out nuclear power – this week began to curb it. This could have enormous implications for controlling climate change.
Australian: Germany plans to cut coal use:
Germany has pledged to cut its greenhouse gas emissions by 40 per cent between 1990 and 2020, but at the current pace, Europe’s top economy looks set to to fall short of that goal by as many as six or seven percentage points. The program adopted by the cabinet on Wednesday aims at cutting carbon emissions by between 62 million and 78 million tonnes from now until 2020. Under the new proposals, the biggest contribution — a reduction of 25-30 million tonnes — would come from measures to boost energy efficiency, including tax incentives for the renovation of buildings’ heating and hot water systems.The electricity sector itself will contribute an additional reduction of 22 million tonnes of carbon gas emissions by capping the use of coal-fired power stations.
About $1 billion in Japanese funding that Japan claimed was part of a UN initiative to help developing countries take action against climate change went, unnoticed, towards Japanese companies for the construction of three coal-fired power plants, the Associated Press reported Monday. The three power plant projects, built in Indonesia by Japanese companies, were listed as “climate finance.” But the U.N. has no formal definition of what constitutes legitimate climate finance, nor does it have a watchdog agency to ensure climate dollars end up in appropriate places.
Business Korea: Fire at nuclear plant goes undetected for over an hour
A fire occurred in the nuclear fuel storage facilities of the Kori Nuclear Power Plant located in Kijang County, Busan City, but none of the workers was aware of it for over an hour. According to the Korea Hydro & Nuclear Power Corporation, the fire occurred at 4:26 p.m., Nov. 11, at Kori Power Plant Unit 4, burning up a waste dryer along with some gloves and towels. An employee, while looking around the site, detected smoke at 5:38 p.m. and extinguished the fire after 14 minutes. “One of the two smoke detectors is designed to be mute, and the other one sounded an alarm but the employees could not hear it,” the corporation explained. The alarm was displayed in the main control center but the employees did not see or hear anything. The slow response to the fire is troubling, since the facility trained to fight them just this summer.
The Bank of England is to conduct an enquiry into the risk of fossil fuel companies causing a major economic crash if future climate change rules render their coal, oil and gas assets worthless. The concept of a “carbon bubble” has gained rapid recognition since 2013, and is being taken increasingly seriously by some major financial companies including Citi bank, HSBC and Moody’s, but the Bank’s enquiry is the most significant endorsement yet from a regulator. The concern is that if the world’s government’s meet their agreed target of limiting global warming to 2C by cutting carbon emissions, then about two-thirds of proven coal, oil and gas reserves cannot be burned. With fossil fuel companies being among the largest in the world, sharp losses in their value could prompt a new economic crisis.
Tickets on cross-Channel ferries will rise in price by £50 because of new EU emissions rules, operator P&O Cruises has announced. P&O, Britain’s biggest operator, said a return ticket for a family of four travelling from Dover to Calais will increase in price from £160 to £210 from January 1. The company blamed new rules set in Brussels, which force operators of ships in the English Channel, North Sea and Baltic Sea to adopt more expensive low-sulphur fuel, called marine gas-oil. They will also have to install filtering equipment, called ‘scrubbers’ costing millions of pounds. The UK Chamber of Shipping said that some routes could close as the new rules made them economically unviable.
The developers blamed a delayed electricity market reform process and incentive arrangements for Northern Ireland, which are running well behind similar measures in the rest of the UK. The partners acknowledged the decision would be “disappointing for all those involved”, particularly since the company has made significant progress in establishing the feasibility of the project. “However as a result of delays to the design of the new market and renewable incentive arrangements for Northern Ireland, First Flight Wind has concluded that the project can no longer be built in the timeframes likely to be required under the new market rules.”
UN climate negotiations opening in Lima on Monday have the best chance in a generation of striking a deal on global warming, diplomats say. After a 20-year standoff, diplomats and longtime observers of the talks say there is rising optimism that negotiators will be able to secure a deal that will commit all countries to take action against climate change. The two weeks of talks in Peru are intended to deliver a draft text to be adopted in Paris next year that will commit countries to reduce their greenhouse gas emissions without compromising the economic development of poor countries. Diplomats and observers of the UN climate negotiations said recent actions by the US and China had injected much-needed momentum. “I have never felt as optimistic as I have now,” said Tony de Brum, the foreign minister of the Marshall Islands, which are sinking as sea levels rise in the Pacific.
Bioscholar: NASA to study climate change from the sky
Starting 2015, NASA will send five new airborne field campaigns to the skies to investigate how long-range air pollution, warming ocean waters and fires in Africa affect our climate. The five selected investigations are: Atmospheric chemistry and air pollution; ecosystem changes in a warming ocean; greenhouse gas sources; African fires and Atlantic clouds; and melting Greenland glaciers.
Daily Mail: CO2 takes only ten years to damage the climate
Many scientists believe it takes several decades for the effects of global warming to be felt on Earth. But in fact, it takes just 10 years for a single emission of carbon dioxide (CO2) to have its maximum warming effects on the planet. This is according to Washington-based researchers who claim to have dispelled a common misconception that the damaging effects from a CO2 emission will only be felt by future generations. The results suggest that warming can persist for more than a century and that the benefits from emission reductions will be felt by those who have worked to curb the emissions. Some of these benefits would be the avoidance of extreme weather events, such as droughts, heatwaves and flooding, according to scientists at the Carnegie Institute for Science.
One Green Planet: Eating meat is destroying the environment
A new report from Chatham House, a UK-based thinktank, has revealed that not only are the greenhouse gas emissions attributed to the meat and dairy industry off the charts (and not in a good way), but most consumers have no idea how much eating these products impacts the planet. Chatham House’s study demonstrates that when it comes to assessing how our actions impact the planet, most people are looking in the wrong place. While cutting your energy use and switching to more efficient modes of transportation are incredible ways to lessen your impact on the planet, according to Chatham House’s findings, if we don’t start to cut our consumption of meat and dairy (globally), we’re cooked. Quite literally.
BBC Global News Ltd, the world’s most trusted international news brand, is extending their local coverage in Australia by launching a dedicated Australian news service on BBC.com from October 21 and producing a series of programs called Australia Direct to air on BBC World News throughout the period of the G20 Summit. Alistair McEwan, Director of Advertising Sales and Brand Partnerships, BBC Worldwide ANZ said: ‘Australia has never been more connected to global issues than now. These site-wide enhancements in local product and Australian content further strengthen the connection with our audience and amplify the unique role of the BBC as Australians seek out unbiased, accurate and globally-connected news and analysis.”