Elaine Meinel Supkis
The hedge fund hell hounds are now bidding up oil futures. By now, everyone should realize, they are vicious beasts who, far from making life better, are ravening beasts spreading death and destruction. So we are going to have super-high energy prices foisted on us by speculators flooding the oil futures markets and then, when THAT crashes, and it will, thanks to them driving up prices, they will go even more into bankruptcy and cause more economic mayhem! Also, Germany decides to cut down on coal production, seeking to end it in 2019. Though I doubt this will happen.
Crude oil rose above $78 a barrel in New York, nearing a record, on speculation demand will outpace supply as refiners increase fuel production in preparation for the winter.
Bets on rising prices by hedge funds and other speculators rose to a record earlier this month, according to U.S. Commodity Futures Trading Commission data.
``There's a lot of speculative money in the market and it's all weighed toward higher prices,'' said Brad Samples, commodity analyst for Summit Energy Services Inc. in Louisville, Kentucky. ``They are latching on to anything that's bullish, which at the moment is the prospect that crude stocks fell last week.''
These stupid hedge funds are like a bunch of hysterical brides-to-be at a Macy's Day May Bridal Sale. They rush into the basement, screaming while tearing at all the dresses on the racks and trampling them on the floor as they shove each other trying to get to the dressing rooms. Restlessly, they go from scheme to screwy scheme. They need schemes. The slippery the scheme, the more they rush towards it. They are like Charlie Chaplin in 'Gold Rush', eating shoes while dreaming of striking it rich. This is the final rasping breath of the concept of capitalism as seen by the United States.
Unlike say, my distant ancestors who got on ships and sailed to England thinking, 'Hey, look at all those defenseless peasants! We can enslave them and make them work for us!' Then, sailing to the Holy Land, they thought, 'Jesus will forgive all my many sins due to the horrible things I do to those peasants so if I kill Muslims, I'll go to heaven and hey, look at all the loot here!' Well, they then came to America saying, 'F--k the King, hey, maybe there is gold in them thar hills!' Well, they killed the natives and killed the beavers (yes, some were trappers) and killed lots of turkeys and chopped down forests and when word got out there was gold in California, they ran off to California to get rich quick.
Restless and dangerous, they always wanted a short cut. And this culture of short cutting things is part of the American way of life. The hedge funders want short cuts to El Dorado. The Spanish, when Columbus discovered the unfortunate people of the New World, had exactly one question: 'Where is all the gold?' And they took it, too. And 90% of the natives died. Back to today yet again, this impulse to loot is very strong. The hedge funds, like the 1980's super-investors, buy up companies and then fire as many people as possible. This is how they make a profit. When there is no more companies to ravage, they move to something else. During this last year, it has been oil futures. When that goes south, they will, like their predecessors did in the 1980's, rush over to the precious metals markets to bid up the price of gold to $1000 an ounce.
Saudi Arabia's crude oil production capacity has reached 10.8 million barrels per day (bpd), the country's state oil company Saudi Aramco announced Monday.
The company is sparing no efforts to raise its oil production to meet the market demand, said Armaco's Mid-Year Accountability Report.
The Khursaniyah field is expected to start operations in December 2007, with a capacity of 500,000 bpd of Arabian light crude, said the report, noting the company will boost its exploration of non-associated gas fields.
The Saudis are pumping like crazy and the price of oil is going up. The only thing that can stop this is a recession in the major oil consuming nations which happens to be a certain U.S. of A. So far, people still believe that oil prices will be super low someday so they are clinging to their SUVs to the bitter end. So maybe the hell hounds are on a rich trail leading to a motherlode. Maybe Americans will be terminally stupid about their cars.
Currently, the estimated proven reserves of Ghawar are about 70 billion barrels Arabian Light crude oil (33 °API). Commercial production from Ghawar began in 1951 and reached a peak of 5.7 million barrels per day in 1981. This was the highest sustained oil production rate achieved by any single oilfield in world history. Cumulative production from the field is about 55 billion barrels. Today, Ghawar remains the world’s most important oilfield with a daily production rate of 4.5 to 5 million barrels per day. This represents nearly 6 percent of global oil production, a remarkable number given Ghawar is one of thousands identified oil fields worldwide.
Ghawar’s amazing oil production has been aided by water injection that was initiated in 1965. Estimated injection rates are in the range of seven million barrels of seawater per day. This has produced an effect known as “water cut,” which is the joint production of oil and water from a well. Ghawar’s water cut currently is about 30-35 percent.
This is all the information we can get since the Saudis hold their Ghawar cards close to their chests. And even if they increase production, consumption in-country is always rising rapidly as the population explodes. When my mother used to work out of Saudi Arabia, the women she met would beg her to smuggle in contraceptives (because in a diplomatic pouch, no one can touch them). There was a death penalty for smuggling contraceptives thirty years ago. Indeed, a princess was stoned to death for trying to run off with a man she loved. Since 1970, the population had doubled several times over.
There are four oil fields in the world which produce over one million barrels per day. Ghawar, which produces 4.5 million barrels per day, Cantarell in Mexico, which produces nearly 2 million barrels per day, Burgan in Kuwait which produces 1.7 million barrels per day and Da Qing in China which produces 1 million barrels per day. Ghawar is, therefore, extremely important to the world's economy and well being. Today the world produces 82.5 million barrels per day which means that Ghawar produces 5.5 percent of the world's daily production. Should it decline, there would be major problems. As Ghawar goes, so goes Saudi Arabia.
The field was brought on line in 1951. By 1981 it was producing 5.7 million barrels per day. Its production was restricted during the 1980s but by 1996 with the addition of two other areas in the southern area of Ghawar brought on production, Hawiyah and Haradh, the production went back up above 5 million per day. In 2001 it was producing around 4.5 million barrels per day. There have been 3400 wells drilled into this reservoir
So the wonderful new oil fields the Saudis are boasting about are less than 1/10th the Ghawar field. This is right along the Hubbert Oil Peak predictions. Each decade after a peak in discoveries, the fields are half as big as the previous decade until, after 100 years, the new discoveries are less than 1/10th the old discoveries and this is right about when the old discoveries cease oil production and that is why it is called the 'Hubbert Oil PEAK.' Namely, even as the lesser wells start producing, the largest ones from the beginning are endind but both run briefly alongside each other and this gives people the illusion that the oil will gush forever. But it does not. Like all geological forces, it is limited. There is no way around this limitation. Earth is finite.
I said back in 1974 when everyone was hysterical about preparing for the future, 'We must prepare today for tomorrow. In 2000, the real global Hubbert Oil Peak will begin and it will be a lot more expensive to retrofit our society so it runs in a sustainable fashion.' Of course, because Oil Crisis #1 and #2 and #3 were all due to wars and this present one is due to wars, people think we are calling 'wolf' and there is no ravening wolf at the door.
Well, the howls of the hungry hedge fund hell hounds shows us there are wolves at the gates! I bet they will overbid the price of oil and get ruined for it because there is a lot of flexibility in oil use still. People who heat with oil will heat with other forms of energy, for example. People can size down to gas misers instead of bloated gas guzzlers. The flexibility factor is at least 30% which is a huge number. During the first two oil disasters, I rode the subway or used my bikes, for example. We seldom see cyclists these days but in the last year, I have noticed more and more bikes out there! So the belief that we reach the peak and oil will be expensive instantly and all the time is a grave miscalculation.
Chancellor Angela Merkel's government has decided to close Germany's eight remaining coal mines by 2018, sounding the death knell for a sector that still employs 35,000 people.
However, the phase-out will be reviewed by parliament again in 2012 to see if its still makes economic sense. And the agreement pledges to avoid forced redundancies. "The miners are definitely secure," said Social Democrat leader Kurt Beck, who took part in the talks.
The future of the German hard-coal industry was given new life early in February. Shaped by a combination of hard bargaining by German Union IGBCE in a top-level national summit and a timely demonstration in Düsseldorf by 10,000 miners, a workable plan was achieved to preserve the industry until at least 2018, and possibly beyond.
Rule of thumb: don't irritate the military too much or if you do, make certain you send most of them far, far away where they can't bother you. Also, don't irritate guys who do heavy physical labor that is very dangerous. They tend to fight back. The roots of union organizing lie in the dark caverns where the riches of the earth are mined. Indeed, the intersection of the military and miners is quite close, actually. They make good soldiers and of course, there is lots of digging involved in classic warfare. Ask any WWI or WWII vet.
China has been madly digging coal in various levels of danger. Just this week, many miners were trapped in a mine that flooded for there are massive floods in Western China this month.
Flash floods have trapped 69 workers in a coal mine in central China's Henan province, Chinese media has reported.
More than 100 miners were working at Zhijian mine, 200 km (120 miles) west of provincial capital Zhengzhou, when the incident occurred early on Sunday.
The first steam engines were for pumping water out of mines. The Chinese mining methods recall American and European methods of just 60 years ago. Of course, we are horrified at the numbers of deaths.
May 22, 2006
ZUOYUN, China - Crews searching for 57 coal miners trapped for five days by an underground flood began pumping water from their mine Tuesday, as residents began to lose hope for a successful rescue.
Of all the professions, this is the most dangerous except in wartime when sailors and soldiers die by the many thousands. In some ways, it would be smart for Germany to cease producing coal and this precious resource can lay in the bosom of Mother Earth for a while. We are madly eating up all these ancient energy resources. The US, for example, has the world's biggest coal reserves. This is a geological accident due to the fact that most of the continent was submerged by warm waters and was also very swampy when life began to conquer the lands. From the Silurian to the Permian, before the greatest of all extinctions, life flourished in dazzling volumes.
But this is a one-time affair. Since the advent of large munching beasts, the amount of rotting vegetation has dropped off and there is less and less opportunity for dead things to make thick blankets of goo to be compressed by geological forces into anthracite.
Then there is nuclear power...
From the New York Times:
A one-sentence provision buried in the Senate’s recently passed energy bill, inserted without debate at the urging of the nuclear power industry, could make builders of new nuclear plants eligible for tens of billions of dollars in government loan guarantees.
Lobbyists have told lawmakers and administration officials in recent weeks that the nuclear industry needs as much as $50 billion in loan guarantees over the next two years to finance a major expansion.
The biggest champion of the loan guarantees is Senator Pete V. Domenici of New Mexico, the ranking Republican on the Senate Energy Committee and one of the nuclear industry’s strongest supporters in Congress.
Just to put $50 billion into perspective: Fannie Mae has bought up $47 billion in bad loans in order to bail out the hedge hounds. No one is yelling about that. Also, $50 billion is about 3 months in Iraq. Very, very expensive oil there, I would suggest. So howling about $50 billion is plain silly. Discussing the methodology of nuclear energy is the real issue. I am of two minds. All systems have their downsides. All of them impact the earth in one way or another. As far as that old lady, Mother Nature, is concerned, if something causes mutations, she doesn't mind!
We know from Chernobyl that the landscape is now covered with increasingly lush growth. We being long-lived creatures, we would not do well there but other creatures have no worries. Cockroaches relish such environments and WWIII would probably please them greatly. But we humans have to be most careful with the genie in the nuclear energy bottle! Especially since we love bombing each other every couple of dozen years. Recent history is all about irresponsible people irritatedly trying to destroy each other as much as possible. Therefore, I would nix the nuclear anything.
Nine member states have written to the European Commission "to express their opposition to a split between gas and electricity production, commercialization and transport networks," a ministry statement said.
But EU heavyweights France and Germany are concerned that their major energy groups such as EDF and E.ON would be seriously weakened by such a move.
And the EU struggles constantly with the energy issue. The move to close the Ruhr mines will never happen. The worry about global warming will abate the minute one of any dozen potential volcanoes erupts and we have a caldera event. The US and China are both utterly determined to keep using great amounts of coal so even if all of Europe cuts off that energy source because of CO2, this will barely affect anything. And they still have the problem of Russia: this is their major energy supplier. And the tricks they are using to try to cut things up so there is 'competition' is plain silly since all the world's major energy giants are forming alliances like Exxon/Mobile just for example. The hope of competition is only if one creates new energy systems.