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Thursday, September 25, 2014

The Daily Bulletin - September 23, 2014


The Daily Bulletin - September 23, 2014

 


 

THE ROCKEFELLERS SAY GOOD BYE TO FOSSIL FUELS

In a move that marks the end of a century of history, the Rockefeller family, which once owned nearly all the oil in the world, has divested itself of its fossil fuel holdings.  “John D. Rockefeller made his fortune in oil and at one point controlled the refining of almost all the oil produced in the U.S. through his company, Standard Oil,” reports Stav Ziv in Newsweek. “But now his heirs are taking Rockefeller family money out of fossil fuels. The Rockefeller Brothers Fund (RBF), a private charitable foundation with $860 million worth of assets as of July 31, 2014, announced Monday that the fund would divest from fossil fuels. The news conference announcing the divestment took place in New York City and included South African Archbishop Desmond Tutu, actor Mark Ruffalo, co-founder of Generation Investment David Blood and Agnes Abuom, principal at the World Council of Churches, in addition to Stephen Heintz, RBF president.   Several other organizations were part of the announcement to join the divestment movement at Monday’s conference, says Kristen King, a spokeswoman for Global Divest-Invest, including the World Council of Churches, the Goldman Environmental Foundation, the Blumenthal Foundation and TrustAfrica.”  Somebody’s going to get a huge bargain in picking up the stock.  

GREENING GERMANY IS AN EXPENSIVE SUCCESS

Germany continues to pursue its national policy of relying on green energy while planning to shut down its nuclear reactors by 2020.  Like any such contorted effort, something comes out of it, even though it may not be what was anticipated.  Leonid Bershidsky on Bloomberg gives an up-to-date progress report:  “It's easy to declare Germany's ambitious policy of moving to clean energy from fossil fuels, while at the same time abandoning nuclear power, a failure. After all, the country burns more coal than five years ago, has some of the highest household electricity bills in the developed world and will miss its 2020 greenhouse gas emission targets. To me, though, the policy's results show how a determined government can eventually shake up complacent oligopolies and point their thinking in a different direction. The German government's subsidies to wind, solar and other renewable energy producers have grown to 20 billion euros per year (almost $26 billion at the current exchange rate) since 1991, when Germany first started the financial support. With that massive amount of aid, Germany overshot by three percentage points the European Union's 1997 goal of producing 12 percent of electricity from renewable sources by 2010. In the first quarter of 2014, Germany's electricity mix had a 27 percent renewable share. This rapid growth skewed the market. Because of renewable energy's subsidized production cost, wholesale electricity prices have dropped 60 percent since 2008. That has made it unprofitable for traditional utilities to operate natural gas-burning power plants. Russian gas imports are not just a geopolitical risk for Germany: They contribute to energy companies' losses.”  It looks like a big opportunity for the Russians.  

CAN IRAQ CRACK DOWN ON ISIS’ OIL RICHES?

One thing that differentiates ISIS from Al Qaeda and all the other free-lance jihadi groups is their access to an extraordinary about of stolen oil.  They may not be a country but they are certainly an economy pulling in a million dollars a day.  As President Obama plans a strategy where the Kurds and the Iraqis are to lead the fight against ISIS, the question arises, “Just how rich and strong is ISIS and can the Kurds and Iraqis stand up to them?"   “How much oil does ISIS control?” asks Luay al-Khatteeb on CNN.   “ISIS, in control of a large swathe of eastern Syria, is now handling 60% of the country's oil assets and producing 50,000 barrels a day. This is not full capacity -- pre-conflict, the assets would have produced around 220,000 barrels a day out of the country's 385,000, according to Iraq Energy Institute figures. However, ISIS does control key oil fields including Al Omar, Tanak and Shadadi. ISIS also handle at least 25,000 barrels of oil a day in north and mid-west Iraq, but that is only a small slice of the country's total production. This oil has found its way to the global economy through Turkey's southern corridor. This black-economy zone is known for its oil trades, smuggling antiquities from Iraq and Syria's ancient sites, and funneling thousands of jihadists to both countries. Many observers see Turkey turning a blind eye on a zone that is actively contributing to the instability of the Middle East. Southern Turkey has become ISIS' safe haven for treating wounded fighters, a gateway for foreign jihadists, and a financial hub that brings ISIS over $3 million a day in oil money.”  This non-state that controls so much of the Middle East is not going to be a pushover. 

LIBYA IS AN OIL GIANT AND A COLLAPSING STATE

Just to prove that you don’t need a government to make a lot of money from oil, Libya is proving that you can export huge amounts of oil without any clear understanding of who gets the proceeds.  “Despite forecasts that Libya could soon produce one million barrels of oil per day, the nation is falling apart. How is this possible?  On August 25, Libya’s defunct General National Congress (GNC), a body formerly dominated by Islamist-leaning politicians, reconvened, declaring itself the sole authority of the land in opposition to the currently governing House of Representatives. This move seemingly pushed Libya ever closer to descending into a full-on civil war. On the other hand, Libya’s oil production is steadily on the rise, hitting 800,000 barrels per day (bpd) on September 10: about four times what the country was producing in June. In fact, Libya’s National Oil Corporation forecasts production to hit one million bpd by October. While this spike in production remains notable, given growing reports of militia violence and chaos across the country, such gains remain vulnerable to the crises currently gripping Libya, and we may soon witness another tumble. Previous such predictions of a rise in oil production, by Libya’s Ministry of Economy in late 2013, were predicated on a more stable political and security situation in Libya than currently exists. Conversely, there are currently two parallel governments competing for control, with respective militias battling in the country’s two biggest cities, Tripoli and Benghazi. These hostilities have rendered two of the country's primary international airports unusable, restricted Libya’s over-ground border crossings with its neighbors, and have raised the specter of international military intervention.  This significant rise in production came about as a result of policies enacted prior to the deepening hostilities being witnessed today. Back in April and July, the GNC, when it was still legitimate, came to two agreements with eastern federalist rebels allowing for four important oil facilities to reactivate. These facilities—in Hariga, Ras Lanuf, Sidra and Zueitina—have only in the past two months begun to approach their full capacity. This is due to being in a state of disrepair after going months without use or maintenance. A similar deal in July allowed for the reopening of the Sharara oil field, Libya’s largest at 340,000 bpd.”  Let’s hope Libya doesn’t decide to set up its own Caliphate as well.  

MARK MILLS HAS FOUR-STEP ENERGY PLAN FOR OUR TIME 

Mark Mills is a no-nonsense engineer who is not taken in by dreams of renewable energy for one minute.  Instead he has a hard-nosed strategy on how to make American even more energy independent:  Here’s the way he outlines his strategy on RealClearEnergy:  “Step 1: Encourage yet more production on private and state lands. This could be done with expeditious regulatory approvals, as opposed to today's heel-dragging, especially relating to collateral infrastructure from pipelines to refineries and ports (think Keystone pipeline). And to really accelerate things, we could offer the classes of tax credits, subsidies, and special favors now given to non-hydrocarbon energy. Step 2: Completely repeal antiquated laws that constrain or ban exports of natural gas and petroleum. These anti-free-trade rules were put in place eons ago when people thought we were running out of energy. This no-cost move would, by itself, stimulate more production. American companies shouldn't have to ask for permission to sell to overseas buyers; the federal government should help them do it. Step 3: Reduce corporate taxes, not just to stimulate more production and jobs, but also to accelerate the trend of foreign investment in the U.S. energy sector; nearly $200 billion has already flowed here in the past half-dozen years. We could even offer a tax holiday for the repatriation of foreign profits of American firms, provided the money supports the strategy. Step 4: Open up federal lands for more oil and gas production to reverse the six-year decline in output under current policies. The feds control half America's land and nearly all off-shore domains, but lease under 2 and 6 percent, respectively, of the controlled territories. Let's have a policy to foster growth in production on federal lands to match what's happening on private and state lands.”   Sounds like the anti-Obama strategy.  

EVERYONE HATES RUNNING OUT OF BATTERIES

And that’s the big problem with electric cars, rooftop solar collectors and anything else that isn’t connected to a dispatchable energy source.  John Aziz on The Week makes the following evaluation:  “Everyone hates running out of batteries. The onset of that red, depleted battery icon on your phone or laptop is a continual annoyance. But it's not just electronic gadgets that suffer from battery constraints. Solar energy — one of our most promising energy technologies — may have a battery problem of its own. There is plenty of reason to be bullish about solar. Solar energy's potential for cheap energy is unmatched. The amount of solar energy that falls on the Earth in a single year vastly outstrips the total amount of non-renewable energy in the Earth's crust. Furthermore, the world is draining those supplies of fossil fuels, which have to be dug up or drilled out at ever-higher costs. The confluence of rising global energy demand and dwindling resources has caused energy prices to steadily rise for the last two decades. In addition to posing a civilization-saving alternative to catastrophic climate change, solar would help us keep our energy costs low. But existing battery technology constitutes a major challenge for advances in renewable energy and the widespread adoption of electric vehicles. The average American home uses 903 kWh of energy per month, or 32.25 kWh per day. That demand for energy could be met by running a 5kW solar system for between six and seven hours per day. And thanks to years of declining solar costs, a 5kW system with a 20-year life expectancy can cost less than $8,000 after subsidies, plus another $3,000 in installation costs if you can't install it yourself. Not bad for 20 years of household power. Consider that at current electricity costs of $0.12 per kWh (which may rise further in future), 20 years of electricity for the average U.S. household using 903 kWh per month would cost $26,000." Still sounds cheaper to be connected to something dispatchable.  

 

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