Blowout week 83

With all the recent focus on Saudi Arabia, OPEC and oil it’s easy to forget that the Middle East is also distinguished by its climate, which is very hot in summer. So in this week’s Blowout we feature the ongoing Middle Eastern heat wave, which is breaking all regional records since ….. since, well, 2003:

Telegraph:  Scorching ‘heat dome’ over Middle East sees temperatures soar to 165F in Iran

Iran is buckling under the pressure of a massive heatwave passing across the Middle East, with temperatures soaring to nearly 70C. Scorching heat levels of 50C have already paralysed nearby Iraq, where officials were forced to call a four day public holiday because it was too hot to work. But the word “hot” has taken on an entirely new meaning in Iran’s city of Bandar Mahshahr, where it was claimed that the city’s heat index, or “feels-like temperature”, was among the highest ever recorded. The heat index was recorded by a group of astonished weather experts who predict the country could be enduring some of the hottest urban temperatures ever endured by mankind. ‘That was one of the most incredible temperature observations I have ever seen and it is one of the most extreme readings ever in the world,’ said AccuWeather meteorologist Anthony Saglia. It is just a few degrees lower than the highest ever recorded heat index, which was 178F (81C) in Dhahran, Saudi Arabia on July 8, 2003.

The usual potpourri of news from around the world below the fold, including layoffs at Shell and Centrica, BP still paying for Deepwater Horizon, an Australian coal mine sells for $1, Fukushima executives charged, possible lawsuits over green subsidies in UK, nuclear expansion in China, Iran to peddle oil projects, politics and climate change in the US, wind power in Europe and five amazing environmental scientists. And immediately following, two conflicting stories that highlight the difficulties of making sense of oil production statistics that are constantly being revised.

Reuters:  OPEC oil output hits new high in July

July 31: OPEC oil output reached the highest monthly level in recent history in July, a Reuters survey found on Friday. OPEC supply has risen in July to 32.01 million barrels per day (bpd) from a revised 31.87 million bpd in June, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants.

Bloomberg:  OPEC oil production falls in July

July 31: Output by the Organization of Petroleum Exporting Countries decreased 362,000 barrels to 32.107 million a day this month, according to a Bloomberg survey of oil companies, producers and analysts. Last month’s total was revised 335,000 barrels higher, to 32.469 million a day, because of changes to the Saudi, Kuwaiti, Angolan and Nigerian estimates.

Reuters:  With no sign of oil price rebound, Shell wields axe again

Royal Dutch Shell is to axe 6,500 jobs this year and step up spending cuts as it seeks to reassure investors it can withstand an extended period of lower oil prices, even through its planned $70 billion (£44.8 billion) acquisition of BG Group. The Anglo-Dutch company also announced plans to raise $50 billion from asset sales between 2014 and 2018 after its second-quarter profit dropped by 37 percent. Shell said it anticipated 6,500 staff and direct contractor reductions globally in 2015 from a total of nearly 100,000 employees, as it grapples with a halving in oil prices to around $55 per barrel in a year. Like rivals BP, Statoil and Total it announced reductions in capital investments for a second time this year, shaving another $3 billion off its 2015 budget to bring it to $30 billion. Around 20 to 30 percent of the $30 billion of asset sales expected between 2016 and 2018 will come from the downstream and midstream businesses , Shell said, leaving the expanded Shell-BG group to focus on fewer but larger and more competitive assets. Shell will only make two major investment decisions this year, with many projects scaled back, delayed or cancelled, van Beurden said. He hinted at further spending cuts if economic conditions worsened, including a steeper drop in oil prices.

OE Digital:  BP sees red over Deepwater Horizon

The 2010 Deepwater Horizon spill came back to haunt BP once again in 2Q 2015, as the company reported a massive loss of US$6.3 billion, largely due to the deadly Gulf of Mexico incident. The UK supermajor’s total costs for Macondo came in at $10.8 billion for 2Q, which included the $9.8 billion associated with government settlements, business economic claims, and ongoing costs. The total cumulative pre-tax charge for the incident is now $54.6 billion. In addition to Macondo, BP attributed its 2Q 2015 losses to low oil and gas prices, reduced contribution from Russia’s Rosneft, and around $600 million of exploration write-offs and other costs related to BP’s activities in Libya stemming from circumstances in the country. BP’s underlying replacement cost profit for 2Q came in at $1.3 billion, a 50% drop from 1Q 2015 at $2.6 billion, and a nearly 64% drop from 2Q 2014 of $3.6 billion.

Oil Price:  $185 Billion In New Oil and Gas Projects in Iran Up For Grabs

Iran’s deputy oil minister for commerce and international affairs, Hossein Zamaninia, told Reuters that the country has already identified 50 oil and gas projects it will offer for bids. With the government pegging the value of these properties at $185 billion. And officials are hoping to get these fields licensed out soon. With Zamaninia saying that the government plans to offer all of the blocks over the next five years. Perhaps most importantly, Iranian officials say they have designed a new petroleum contract structure for international investors. Which they are calling the “integrated petroleum contract” or IPC. Officials said that the IPCs will last for a term of 20 to 25 years. A substantial improvement over the older, shorter-term contracts — which have been a major stumbling point for the world’s oil and gas companies. Deputy Minister Zamaninia said that full details on the new contracts will be announced within the next two to three months. Along with specifics on the fields being offered by the government for bids.

ABC News:  US Oil and Natural Gas Rig Count Down 2 to 874

Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. declined by two this week to 874. Houston-based Baker Hughes said Friday 664 rigs were seeking oil and 209 explored for natural gas. One was listed as miscellaneous. A year ago, 1,889 rigs were active. Among major oil- and gas-producing states, New Mexico gained three rigs, Louisiana gained two and North Dakota, Ohio, Texas and Wyoming each gained one. Kansas lost four rigs, Utah declined by three, Alaska and Pennsylvania each lost two and Colorado and West Virginia each declined by one. Arkansas, California and Oklahoma were unchanged. The U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999.

Technology Review:  China Leapfrogging Traditional Leaders in Nuclear Power

China is rapidly moving up the global nuclear power leaderboard. Since 2012, as the traditional leaders in nuclear energy production have remained stagnant or backed off of their reliance on nuclear in the wake of Fukushima, China has added 11 new reactors and over 11 gigawatts of nuclear generating capacity. By the end of this year, China is expected to pass Russia and South Korea and boast the fourth-largest nuclear generating capacity in the world, behind the United States, France, and Japan. By 2020 it will likely replace Japan in third place. This trend shows no signs of slowing, because China has huge ambitions for adding new reactors, including advanced reactor designs, in the coming decades. The country plans to increase its capacity from 23 gigawatts currently to 58 gigawatts by 2020, at which point it is also aiming to have 30 additional gigawatts under construction, according to the World Nuclear Association. Right now, of the 64 reactors being built around the world, 24 are in China—15 more than in second-place Russia.

Diplomat:  Russia Races to Outflank China in Middle East Nuclear Technology Market

As China enters the market for nuclear power plant construction in post-sanctions Iran, Moscow is racing across the Middle East to develop new export markets for Russian nuclear technology. On July 22, the head of Atomic Energy Organization of Iran (AEOI) announced that Beijing and Tehran have agreed to China’s construction of two nuclear power plants on Iran’s southern coast. However the loss to Beijing of some of its market share in nuclear technology exports to Iran has not caught Moscow flatfooted. While world attention was focused on the negotiations between Iran and the P5+1 nations during the first half of 2015, one of those P5 nations – Russia – was scrambling across the Middle East to sign nuclear plant construction contracts with Iran’s Sunni rivals. In addition to seizing upon a good business opportunity among Iran’s regional rivals, Russia was also attempting to outflank another P5 nation, China, before Beijing emerges as Moscow’s rival in the Middle East market for civil nuclear technology.

New York Times:  Three Former Fukushima Executives to Be Prosecuted

In the first criminal prosecutions of officials connected to the Fukushima nuclear plant disaster of 2011, the Japanese authorities said Friday that they would move forward with cases against three former executives of the Tokyo Electric Power Company, the owner of the plant where reactors melted down after a tsunami. The move was a victory for citizens’ groups that have been pursuing charges against dozens of officials at Tokyo Electric Power, known as Tepco, and the government, with no success until now. Prosecutors had twice rejected requests to indict the three former Tepco executives, but a review board overruled their decision on Friday and ordered that charges be brought. The three executives who face indictment are Tsunehisa Katsumata, 75, the chairman of Tepco at the time of the accident, and two former heads of the utility’s nuclear division, Sakae Muto, 65, and Ichiro Takekuro, 69. The review panel ordered that they be charged with professional negligence resulting in death.

Bloomberg:  $624 Million Coal Mine Sold for $1

The destructive force of a collapse in world coal prices has been underscored by the sale of a mine valued at A$860 million ($631 million) three years ago for just a dollar. Brazilian miner Vale SA and Japan’s Sumitomo Corp. sold the Isaac Plains coking-coal mine in Australia to Stanmore Coal Ltd., the Brisbane-based company said Thursday in a statement. Sumitomo bought a half stake for A$430 million in 2012. Isaac Plains in Queensland “was one of the most exciting coal projects in Australia,” Investec Plc analysts said in a note to investors on Friday. The site has a resource of 30 million metric tons, according to Stanmore.

Politico:  Obama’s big climate rule readies for Monday launch

President Barack Obama is poised to push ahead with the nation’s most ambitious environmental regulation in decades — a crackdown on power plants’ greenhouse gas emissions that the administration hopes will put the U.S. in striking distance of achieving a global agreement to combat climate change. The regulation is expected to ease up on a few of the most controversial provisions that the Environmental Protection Agency included in its draft proposals in the past two years. But it will still set up a years-long legal and political battle with congressional Republicans and other opponents, who call it the major weapon in Obama’s “War on Coal,” and it promises to become a major point of contention for the 2016 presidential race. For people closely following the rule, the major questions concern how much the final rule will differ from what EPA originally proposed in September 2013 and last June. Sources have said EPA will roll back an interim pollution-cutting deadline that states and power companies attacked as unworkable, to 2022 from 2020. The agency is also expected to abandon its proposal to require future coal-burning plants to capture and store their carbon pollution, an expensive mandate that opponents said would be vulnerable in court because it violates a 2005 energy law.

New York Times:  Hillary Clinton Joins the Climate Battle

Hillary Rodham Clinton has promised a series of initiatives to address the challenge of climate change. The first installment, unveiled this week in Iowa, calls for an aggressive expansion of wind, solar and other carbon-free energy sources so that they provide one-third of America’s electricity by 2027 — enough, she says, to power every home in the country. The plan’s centerpiece is a huge, sevenfold bump in solar-generated power, which, despite the sharp drop in the price of solar panels, now provides only a tiny fraction of the nation’s energy. Renewable energy sources overall furnish just 13 percent of America’s electricity (natural gas, coal and nuclear power account for nearly all the rest), with hydropower at 6 percent, wind power at 4.4 percent and the remainder coming from geothermal, biomass and solar (less than 1 percent).

Boston Globe:  GOP hopefuls not embracing climate change

Rick Santorum calls climate change “a beautifully concocted scheme.” Senator Ted Cruz contends that no climate change has been recorded in the last 15 years, bluntly declaring, “It hasn’t happened.” Ben Carson, a renowned neurosurgeon, has said, “We may be warming. We may be cooling.” Former Florida governor Jeb Bush grants that climate change is real, but he is unwilling to say it is caused by humans. Donald Trump, mean-while, sees a conspiracy: “The concept of global warming was created by and for the Chinese in order to make US manufacturing noncompetitive.” Most of the 17 Republicans running for president are skeptical about climate change caused by humans, a stance that appears to line up with conservative voters who hold sway in the GOP primary contest.

Take Part: Germany Breaks a Renewable Energy Record

Germany’s transition from coal- and oil-fired power to carbon-free electricity hit a new milestone on July 25 when solar, wind, and other sources of renewable energy met 78 percent of the day’s energy demand. That beat the old record of 74 percent, made in May 2014, according to Craig Morris, a journalist who has covered Germany’s energy scene for more than a decade. Helping set the record was an unusual weather pattern that brought heavy winds where most of the nation’s wind turbines are located. As the turbines generated more power, utilities ramped down coal- and gas-fired power plants. But Morris found the power mix a few days earlier even more encouraging. During the night of July 22, even with darkness reducing solar output to zero and no big winds in the forecast, renewables—wind, biomass, and hydropower—generated nearly 25 percent of Germany’s electricity. Morris found the energy data for both dates using an online tool sponsored by the Germany-based Fraunhofer Institute for Solar Energy Systems.

The Engineer:  Wind now makes up 8 per cent of EU energy mix

A new report from the European Commission Joint Research Centre (JRC) has highlighted the growth of wind energy across the EU, with 8 per cent of total electricity demand now met with onshore and offshore wind installations. According to the JRC 2014 wind status report, the connected cumulative capacity of the EU grid reached 129GW last year, equivalent to the annual consumption of the Netherlands, Belgium, Greece and Ireland combined. The report claims that the growth of wind energy across Europe means it will meet 12 per cent of the EU’s total demand within the next five years, significantly contributing to the EU target of a 20 per cent renewable energy share by 2020.

Register:  Windfarms produce whopping ONE PER CENT of EU energy

We here on the Reg energy desk only noticed this particularly this week because of a chirpy press release that flitted past us just the other day, claiming that “wind energy provides 8 per cent of Europe’s electricity.”Hey, we thought, that sounds almost like it’s getting somewhere! So we looked into it. The eight per cent figure comes from the latest Wind Status Report (pdf) from the EU Joint Research Centre, and sure enough, it’s claimed therein that all those massive wind farms produced no less than 238 terawatt-hours of the 2,942 TWh of ‘leccy used in the EU nations last year. That’s eight per cent, right enough – Except it isn’t, of course. Like most developed economies, the EU nations use the great bulk of their energy in non-electric forms: we burn fuels to run transport, to provide heating and cooking and hot water, to power most of our industry. And this accounts for most of our energy use and carbon emissions. By the most recent figures available, in fact, the EU is using around 1,666 million-tonnes-of-oil-equivalent of energy from all sources every year: that’s 20,710 TWh. Wind electricity makes up just over one measly percentage point of that. Solar? About half that again, for a total renewable-‘leccy contribution of around 1.5 per cent and a roughly corresponding CO2 reduction.

BBC:  British Gas owner Centrica cuts 6,000 jobs

Energy firm Centrica has said it will cut 6,000 jobs as it reported a doubling of profits at its British Gas business in the first half of the year. The company said half of the job losses would go through redundancies. Most of the cuts are expected to be in the UK. However, Centrica said it would also create jobs in growth areas, so the net loss in jobs will be 4,000 from the firm’s current total of 37,500. First half profits at British Gas’s residential arm rose to £528m. That was up from £265m a year earlier. Centrica group profits fell 3% to £1bn. Centrica said the rise in profits at British Gas was due to higher gas consumption, which was triggered by the cold weather earlier this year compared with milder weather in the first half of 2014. However, the strong performance at British Gas was offset by a collapse in profits at Centrica’s oil and gas production division. Profits in this unit fell 78% to £116m as a result of lower oil prices.

RE News:  Centrica offloads wind portfolio

UK energy giant Centrica is to dispose of its entire wind power portfolio as part of a strategic review. Centrica said it was too early to say how many renewables jobs would go, but group wide, including oil and gas it has announced a total of 6000 job cuts . The company is seeking to raise up to £1bn from asset divestments by 2017. The owner of British Gas has a combined operational wind generation asset base of 245MW, including a 50% share in the 270MW Lincs offshore wind farm and a 50% share in the 194MW Lynn and Inner Dowsing offshore sites. It also owns the 20-turbine, 26MW Glens of Foudland onshore wind farm in Aberdeenshire. In its half-yearly statement the company said it would also exit its existing wind joint ventures. The statement read: “In wind power generation, with total operational capacity of only 245MW and no existing potential developments in the pipeline, we plan to dispose of our interests, continuing to participate to a limited degree through power purchase agreements.”

Courier:  North Sea windfarm success predicted

Seagreen Wind Energy has plans for a huge wind array for a section of the North Sea spanning the Forth and Tay’s outer firths. The partnership between SSE Renewables Developments (UK) and Fluor Limited, is seeking consent from Marine Scotland to raise up to 150 turbines in two sections. The Seagreen Alpha and Seagreen Bravo installations would each have a capacity of 525 MW and accommodate up to 75 wind turbines. The Royal Society for the Protection of Birds served a petition for a judicial review of the off-shore consents granted by the Scottish Government. Seagreen, which is supporting the Government in its response, says in its newly published annual report for the year to March 2015 that the outcome of a court hearing on the issue is expected in September. “It is the belief of the directors that the decision of the Scottish Government can be defended and the consents will be allowed to stand,” the report adds. The windfarm will only be financially viable if the consents are obtained. Perth-based SSE has scaled back its support for offshore renewables. It has pledged to endorse the Seagreen project to the point of securing the necessary consents but said it will not extend the scope of its commitment in the near term.

BBC:  Coal gas firm Cluff “holding Scotland to ransom”

The company which wants to use coal seams beneath the Forth to produce gas has defended writing to ministers about possible threats to its plans. Cluff Natural Resources was concerned a ban on onshore unconventional oil and gas exploration, or fracking, could be extended to its undersea plans. Newly-released letters show Cluff warned ministers that plans to invest more than £250m were at risk. Environmentalists accused Cluff of “holding Scotland to ransom”. WWF Scotland said plans to burn coal under the sea should be a non-starter. The Scottish government announced a block on planned fracking operations in January. They said ministers would carry out new work on the environmental and health implications of the controversial gas drilling technique. The day after the moratorium was announced, Algy Cluff, the company’s founder, said he wanted assurances from ministers that the ban on unconventional oil and gas would not apply to underground coal gasification (UCG). He said the moratorium would have a “potentially devastating” impact on his company’s “ability to operate and invest further in Scotland”.

Guardian:  Green cuts risk sending UK back to the dark ages

The government’s U-turn on renewable energy risks sending this country back to the dark ages of relying only on fossil fuel. Since the election we have seen a slashing of subsidies for biomass, anaerobic digestion and biogas as well as solar and wind. This will make very little difference to household bills but will impact heavily on energy security and in the long-term increase bills with no way back. Renewable energy can actually secure energy prices, giving security for households, whatever fossil fuel prices are. The sudden abolition of these subsidies was, wind power aside, a massive surprise. For a business-friendly government, it is a risky message to send and one that could shake investor confidence. Without financial justification, it will be very hard for business to invest in renewables again – particularly if there is a worry that any other support could be scrapped at a moment’s notice.

Scotsman:  Foreign investors may sue over renewables subsidies

Foreign investors in Scotland’s renewable energy sector could launch multi-million pound compensation claims against the UK government over the ending of subsidies for new onshore wind farms, legal experts believe. Energy Secretary Amber Rudd is proposing that projects which have already secured planning consent, grid connection acceptance and land rights, should be allowed a grace period which would entitle them to support up to the original deadline. But Pinsent Masons’ dispute resolution expert, John Gilbert, believes some investors in projects which fall outside that grace period will be looking at the potential for multi-million pound compensation claims under the Energy Charter Treaty (ECT). “European investors, and German companies in particular, have invested many millions in to Scotland’s renewable sector in the belief that it was a safe investment with limited risk,” said Gilbert. “Under the ECT, investors can’t challenge the government’s decision on subsidies, but they may have a good case for seeking damages on the basis that their investments have been undermined and devalued.”

Guardian:  Portland icebreaker protesters cleared after judge fines Greenpeace $2,500 an hour

Authorities have forced protesters in kayaks from a river in Portland, Oregon, where they were trying to stop a Royal Dutch Shell icebreaker from leaving dry dock and joining an Arctic oil drilling operation. Police also tried to lower protesters who were dangling from a bridge into the water below. A federal judge in Alaska had earlier ordered Greenpeace USA to pay a fine of $2,500 for every hour that protesters continued to block the icebreaker from leaving for the Arctic. US district court judge Sharon Gleason ruled on Thursday in Anchorage that Greenpeace was in civil contempt because of protesters dangling off the bridge and impeding the vessel. Greenpeace USA executive director Annie Leonard said: “Shell is still trying to circumvent the growing global call to preserve the Arctic, and has turned to the courts for help.”

Global Research:  People Living Near Fracking Sites Suffer Severe Health Problems

Researchers from the University of Columbia and the University of Pennsylvania wrote in a study published in PLOS ONE that those who live close to the natural oil and gas drilling sites are more likely to suffer from heart conditions, neurological illnesses, and cancer. The scientists analyzed 198,000 hospitalizations records over a four year period (from 2007 to 2011) in Northern Pennsylvania counties, categorized 25 medical scenarios, and then associated each case with its proximity to a fracking area. A larger number of hospitalizations were found in those areas where drilling takes place. According to the researchers, there are 18 zip code areas with a well density higher than 0.79 wells per square kilometer. That means a person who lives in one of those zip codes has a 27 percent greater risk of suffering from one of the aforementioned conditions. “At this point, we suspect that residents are exposed to many toxicants, noise and social stressors due to hydraulic fracturing near their homes, and this may add to the increased number of hospitalizations,” said Dr. Reynold Panettieri, Jr., deputy director of the Center of Excellence in Environmental Toxicology at the University of Pennsylvania, and senior author of the study.

Business Insider:  Five amazing environmental scientists who are working to remedy climate change

We pulled five of the most impressive environmental scientists from our recent list of groundbreaking scientists who are changing the way we see the world. Eric Rignot is drawing public attention to the irreversible impacts of climate change. Gavin A. Schmidt is pinpointing the roots of climate change. Ian Joughin made a stunning discovery about the future of the West Antarctic Ice Sheet. Ken Caldeira is protecting our planet from quick fixes to the climate-change problem. Michael Mann is helping the public understand the science behind climate change.

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16 Responses to Blowout week 83

  1. Graeme No.3 says:

    “Centrica offloads wind portfolio”
    Sinking ship abandons rats?

    • roberto says:

      … and what about

      “Vattenfall scraps UK wind project after subsidy cuts”?

      Nice… on the same EU JRC web page (the news “The Engineer: Wind now makes up 8 per cent of EU energy mix”) one can find a paper about the 370 GW of EU wind installations, magnifying its incredibly low LCoE costs… and then a link to Vattenfall’s scrapping the wind project… which clearly shows that intermittent sources without subsidies go nowhere, and that LCoE is a very porr way of comparing production costs.

    • Euan Mearns says:

      I think it was last week Alexander posted a link explaining the flight of capital from FF to renewables. This I believe comes down to Green propaganda and hope. Say it often enough and then you begin to believe its true. There has been a major slow down in investment in renewables in Europe. There is also a major slow down in investment in FF underway. This comes down to a complex interaction between supply, demand and subsidies. The subsidy part of renewables and their expansion has led to over supply of power generation and the need for tranches of it to close – that was the whole point of the energy / climate policy.

      • A C Osborn says:

        ” The subsidy part of renewables and their expansion has led to over supply of power generation”
        Except in the UK of course, where margins are the lowest they have been for a long time.

  2. glen Mc Millian says:

    A question for the regulars here.

    How long do you guys think it will take for oil prices to get back into the eighty dollar plus range? My seat of the pants impression,based on reading some business and oil sites, is that oil will have to get back to at least eighty bucks or so to keep production from declining rather sharply within the next year or two..

    • Euan Mearns says:

      Glen, the oil price will recover, but calling the timing is extremely difficult. I thought previously we would see strong recovery in 2016. Now I’m not so sure, the momentum of over supply is far greater than I anticipated. And there is the ever present risk of slow down in global economy. There needs to be a 3 to 4 Mbpd shift between supply and demand, and since supply has increased by about 1 Mbpd since crash began that may easily be 4 to 5 Mbpd now. You frame the issue the wrong way around. Supply must fall if price is to rise. Its not a question of price rising to prevent a fall in supply.

      • A C Osborn says:

        Euan, when talking about “Peak Oil” do they mean Oil Production, or amount of Oil to be found/used?
        As these very low prices due to the Glut in Oil could certainly bring about a Production Peak, until demand again outstrips supply, but even then they would not want to bring about another glut.
        If they are trying to Kill the USA Oil industry they will not succeed, the best they can do is delay the output.
        The world needs the Oil in the long run and will use it.

        • Glen Mc Millian says:

          ”If they are trying to Kill the USA Oil industry they will not succeed, the best they can do is delay the output.”

          I agree. When studying econ back in the dark ages my professor discussed prices in the steel industry this way:

          United States Steel sets the price of steel for all practical purposes. A small producer can’t charge a dime more because USS gets the order. He can charge the same or a penny less and get the order. Even if he is making a substantial profit on his sales he cannot afford to cut his price to sell more- because large buyers will ask for his entire production and leave him with nothing for his real customer base, the smaller buyers who prefer to do business with him. He cannot charge more and he has no reason to charge more than a penny LESS.

          When the price goes back up then the American oil industry will recover. Neither the Saudis nor anybody else can afford to permanently keep the price of oil down.I do not believe for a minute that the Saudis are refusing to cut production for the PRIMARY reason of driving the American tight oil industry into bankruptcy. American tight oil will come back very quickly once the price justifies a comeback and the Saudis have to know this.

          Euan is correct in that I framed the price recovery issue clumsily in my above comment. But price can also go up if demand increases so as to absorb the current excess supply.

          • K Yamaguchi says:

            It seems several of the OPEC members were getting comfortable with Brent above $65, and the June meeting went without complaints. It wasn’t that way back in January when Brent went under $50. Can’t believe even the Saudis will be pleased now that it is under $50 once again.

    • Jeff Edzier says:

      Before 2000, the price of crude was more or less $40 and the industry functioned. Granted there has been inflation and tight oil might be more expensive to produce than conventional but the tangible costs of production such as energy and steel have fallen markedly and contractors and labor are having to accept less remuneration if they want to stay in the game. The longer the prices stay low, the more the industry will have adjusted. If breakeven points keep dropping, it is not clear to me that $80 is still the magic number.

  3. Jeff Edzier says:

    Researchers from the University of Columbia and the University of Pennsylvania wrote in a study published in PLOS ONE that those who live close to the natural oil and gas drilling sites are more likely to suffer from heart conditions, neurological illnesses, and cancer.

    It would be interesting to know who paid for this study.

    It isn’t clear how the researchers propose the toxic effects of fracking are transmitted. I assume that chemicals are transported to the site in closed containers and injected into a sealed well casing. I also assume the waste liquids are injected into deep formations below the local drinking water table. One can never rule out the possibility of contamination of potable water systems but there seems to be little evidence of this to date. So how do the alleged victims come in contact with fracking fluids?

    • JerryC says:

      My first thought was demographics. Do people living out in rural areas where fracking is common tend to older than the regional average?

  4. A C Osborn says:

    The MSM is yet again over hyping the latest Typhoon in the Pacific, this one is called Super Typhoon Soudelor and being hyped as a class 5.
    However if you look at it on Nuschool’s Earth it is showing about 145Kph, not 145-200Mph.
    So yet again we appear to have a problem with Satellite imagary where we see Kph but the authorities quote Mph.
    This has happened with every single Typhoon over the last 2 years where the actual recorded Ground Speeds do not match those at the top of the Typhoon as measured by Satellites.

  5. Owen says:

    You missed this – European Commission wants to cut out peaks in electricity demand across Europe:

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