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It’s Time for the United States to Start Worrying About a Saudi Collapse

As if there weren’t already enough problems to worry about in the Middle East, Saudi Arabia might be headed for trouble.

From plummeting oil prices to foreign-policy missteps to growing tensions with Iran, a confluence of recent events is mounting to pose some serious challenges for the Saudi regime. If not properly managed, these events could eventually coalesce into a perfect storm that significantly increases the risk of instability within the kingdom, with untold consequences for global oil markets and security in the Middle East.

Here are some of the percolating problems that could throw the country off kilter.

Fissures Within the Royal Family. Last week, the Guardian published two letters that an anonymous Saudi prince recently circulated among senior members of the royal family, calling on them to stage a palace coup against King Salman. The letters allege that Salman, who ascended to the throne in January, and his powerful 30-something son Deputy Crown Prince Mohammed bin Salman have pursued dangerous policies that are leading the country to political, economic, and military ruin. In an interview with the Guardian, the prince insisted that his demand for a change in leadership not only had growing support within the royal family but across broader Saudi society as well. “The public [is] also pushing for this very hard,” he claimed. “They say you have to do this or the country will go to disaster.” The article, which includes the letters, written in Arabic, has been shared more than 15,000 times.

The Yemen War. The longer it drags on, the greater the risk that the Saudi intervention against Houthi rebels could become a serious source of internal dissension. In its story on the prince’s letters, the Guardian reported that “many Saudis are sickened by the sight of the Arab world’s richest country pummelling its poorest.” Particular blame is attached to Prince Mohammed bin Salman, who also serves as the kingdom’s defense minister and by all accounts has been the driving force behind the war effort. Tagged with the unofficial nickname “Reckless,” Prince Mohammed bin Salman has been accused of rushing into Yemen without a clear strategy or exit plan, resulting in mounting costs in blood and treasure, an ever-expanding humanitarian crisis, and growing international criticism.

Economic Problems. Thanks largely to Saudi policy, oil prices plummeted by more than 50 percent in the past year. Facing a market glut due to the U.S. oil boom, Saudi strategy has been to maintain high production, fight for market share, allow prices to collapse, and wait for higher cost producers, particularly in America, to be driven out of business. With cheaper oil spurring increased demand and squeezing out excess supply, the theory was that higher prices would return before the kingdom ever felt any real economic pinch.

But it hasn’t quite worked out that way — at least not as quickly as the Saudis anticipated. Indeed, Saudi Arabia’s 2015 budget was based on the assumption that oil would be selling at about $90 per barrel. Today, it’s closer to half that. At the same time, the Saudis have incurred a rash of expenses that weren’t planned for, including those associated with King Salman’s ascendance to the throne (securing loyalty for a new king can be expensive business) and the war in Yemen.

The result is a budget deficit approaching 20 percent, well over $100 billion, requiring the Saudis to deplete their huge foreign exchange reserves at a record rate (about $12 billion per month) while also accelerating bond sales. The Saudis have reportedly liquidated more than $70 billion of their holdings with global asset managers in just the past 6 months.

While there’s no danger that the kingdom will run out of money anytime soon, the longer this trend of large budget deficits, lower oil prices, and declining foreign exchange reserves continues, the more nervous international markets will become — with potential implications for key indicators like credit rating and capital flight. Adding to long-term concerns is the fact that Saudi net oil exports have been in slow decline for years as internal energy consumption rises dramatically. Indeed, analysts now suggest that rapidly expanding domestic demand could render the kingdom a net importer of oil by the 2030s. It goes without saying that such a development poses a mortal threat to the kingdom, where oil sales still account for 80 to 90 percent of state revenues. More

 

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Climate Expert James Hansen: The Planet May Become Ungovernable

The repercussions of climate disruption are still not being acknowledged fully, warned climatologist Dr. James Hansen, addressing an audience of Baby Boomer and Greatest Generation climate activists on September 9.

Dr. Jim Hansen

“We’ve now got an emergency,” he told about 150 “elder activists” at Calvary Baptist Church in Washington, DC, who were participating in Grandparents Climate Action Day.

Hansen — formerly NASA’s head climate scientist, now adjunct professor at Columbia University — is probably best known for bringing definitive evidence of global warming to Congress in testimony in 1988. In July of this year, he released a report with sixteen co-authors studying glacier melt in Greenland and Antarctica. Unlike previous models, the new report takes into account some feedback loops which may be hastening the loss of ice sheet mass far faster than anticipated.

Time is running out to transition to renewable energy, Hansen said, yet the most “relevant” people in power aren’t aware of the situation’s gravity. “Even people who go around saying, ‘We have a planet in peril,’ don’t get it. Until we’re aware of our future, we can’t deal with it.”

Mass species extinction, extreme weather events, dry spells and fires are climate change impacts which are happening now. A warmer atmosphere and warmer oceans can lead to stronger storms, he explained. Superstorm Sandy, for example, remained a hurricane all the way up the Eastern seaboard to New York because Atlantic waters were abnormally warm.

“Amplifying impacts” and feedback loops will accelerate the changes, according to Hansen. “It will happen faster than you think,” he said. If major coastal cities become “dysfunctional” because of sea level rise, as he believes is possible, the global economy could be in peril of collapse.

It is therefore imperative to stop using coal, oil and gas as energy sources now. “We’ve already burned as much as we can afford,” he said. Fossil fuels already burned will continue to have impacts, because the climate system “has inertia.” “We’ve only felt the warming for half of the gases that are up there,” he said.

The use of fossil fuels is still on the rise in spite of the dangers, he said, because governments subsidize them and don’t make companies bear the real costs to society. The only viable way to make the price of fossil fuels “honest,” in his opinion, is to implement a “fee and dividend” system.

While Hansen denounced “unfettered capitalism”and “scary” trade agreements in the works, he believes government regulation can steer captains of industry onto the right path. “We’ve got to make the system work for us,” he said. “If you properly harness the market, it will work for you.”

He gave an example of incentives and tax breaks for solar panels, which he has on his own home, and how he contributes electricity to the grid. Yet one audience member took issue with a corruption-free scenario. “Come to Virginia, I dare you!” he said. (In Virginia, where Dominion Virginia Power has a stranglehold on state politics, “standby” fees and other barriers stifle solar panel installation by individuals.)

Hansen, a grandparent himself, was the keynote speaker at Grandparents Climate Action Day, an event to mobilize elder activists and promote a policy agenda aimed at reducing greenhouse gas emissions.

Hansen believes elders possess resources and wisdom which, combined with the zeal of youth, can help find solutions to climate change. “Older people have a lot of clout, a lot of votes, and time,” he said. With more older people getting involved, there will be more pressure to make needed changes.

Fellow speaker John Sorensen, co-founder of the Conscious Elders Network, echoed this point. The 80 million elders in the U.S. — 25 percent of the population — are living longer and healthier lives with more time and resources to devote to activism.

Hansen is supporting a lawsuit in which 21 young people are suing the U.S. government. (One of the plaintiffs is his granddaughter Sophie.) The lawsuit alleges that the federal government knew decades ago that burning fossil fuels and climate were linked, but continued on the same course anyway.

In his testimony for Youth v. Obama, Hansen said, “In my opinion, this lawsuit is made necessary by the at-best schizophrenic, if not suicidal, nature of U.S. climate and energy policy.”

The judiciary, he believes, is the only viable recourse left for the younger generation, “because the courts will be less under the thumb of the fossil fuel industry.”

“Young people have all these rights that are guaranteed by the constitution, and that’s what we’re asking the courts to look at, and I think this may be our best chance to force the government to do its job,” he said.

Most of the elders participating in Grandparents Climate Action Day probably won’t live to see the worst effects of climate change, yet they were eager to learn about the earth future generations will inherit. One participant explained her reason for being there. After working with children for her whole career, she realized that “all of it mean[s] nothing if we don’t have a livable planet.”

“Young people have all these rights that are guaranteed by the constitution, and that’s what we’re asking the courts to look at, and I think this may be our best chance to force the government to do its job,” he said.

Most of the elders participating in Grandparents Climate Action Day probably won’t live to see the worst effects of climate change, yet they were eager to learn about the earth future generations will inherit. One participant explained her reason for being there. After working with children for her whole career, she realized that “all of it mean[s] nothing if we don’t have a livable planet.” More

 

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Goodbye gasoline… first green LEAF arrives in the Cayman Islands

GEORGE TOWN, Cayman Islands — The NCB group in the Cayman Islands has purchased the very first new all-electric Nissan LEAF in the Caribbean, reinforcing its commitment to environmental sustainability.

“NCB Group is proud to be a part of the innovative movement towards electric cars in the Cayman Islands,” said Matthew Wight, managing director.

Considered the premier residential developer in the Cayman Islands, the NCB group is seeking to further reduce its ecological footprint in an effort to protect the Caribbean and the planet from harmful greenhouse gasses.

Wight said that he drives electric vehicles because he knows that he is helping the environment.

“As a company, we strive to employ sustainable and green technologies when we build our residential and commercial projects and we wanted to carry this mission through to the vehicles we drive,” he explained.

Driving a Nissan LEAF – a 100% electric car — has been extremely rewarding “in the sense that the LEAF does not use a single drop of gas. It has no tailpipe, no fumes and produces zero emissions,” he said.

“As we build with Cayman’s future in mind we are also looking to alternative energy sources in everything we do with the goal to be as eco-conscious as possible,” Wight added.

For nearly a decade John Felder, president and CEO of Cayman Automotive Leasing, has been at the forefront of the burgeoning electric vehicle industry in the Caribbean.

His hope is to see electric vehicles being driven in every country in the Caribbean and eventually the world in years to come.

“I applaud Mr Matthew Wight and NCB for investing in the future for a cleaner and healthier environment. The energy generated to power the Nissan LEAF and the energy to move the car is 97% cleaner in terms of noxious pollutants,” Felder said.

The Nissan LEAF boasts one of the quietest and smoothest rides ever experienced. The vehicle does not have a gas tank and drivers will never have to pay at the pumps again. The motor is powered by an advanced lithium-ion battery, which is half the weight and twice the power of the nickel-metal hydride batteries used in hybrids, and can easily be charged at home, or at any solar panel charging station in Grand Cayman.

Felder is certain that electric cars are the cleanest, most efficient, and most cost effective form of transportation around.

“Electric cars are high performance vehicles that will continue to meet new challenges in the future,” he said. More

 

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Energy Efficiency Simply Makes Sense

What simple tool offers the entire world an extended energy supply, increased energy security, lower carbon emissions, cleaner air and extra time to mitigate climate change? Energy efficiency. What’s more, higher efficiency can avoid infrastructure investment, cut energy bills, improve health, increase competitiveness and enhance consumer welfare — all while more than paying for itself.

Maria van der Hoeven - IEA

The challenge is getting governments, industry and citizens to take the first steps towards making these savings in energy and money.

The International Energy Agency (IEA) has long spearheaded a global move toward improved energy efficiency policy and technology in buildings, appliances, transport and industry, as well as end-use applications such as lighting. That’s because the core of our mandate is energy security — the uninterrupted availability of energy at an affordable price. Greater efficiency is a principal way to strengthen that security: it reduces reliance on energy supply, especially imports, for economic growth; mitigates threats to energy security from climate change; and lessens the global economy’s exposure to disruptions in fossil fuel supply.

In short, energy efficiency makes sense.

In 2006, the IEA presented to the Group of Eight leading industrialized nations its 25 energy efficiency recommendations, which identify best practice and policy approaches to realize the full potential of energy efficiency for our member countries. Every two years, the Agency reports on the gains made by member countries, and today we are working with a growing number of international organizations, including the European Bank for Reconstruction and Development, the Asian Development Bank and the German sustainable development cooperation services provider GIZ.

The opportunities of this “invisible fuel” are many and rich. More than half of the potential savings in industry and a whopping 80 percent of opportunities in the buildings sector worldwide remain untouched. The 25 recommendations, if adopted fully by all 28 IEA members, would save $1 trillion in annual energy costs as well as deliver incalculable security benefits in terms of energy supply and environmental protection.

Achieving even a small fraction of those gains does not require new technological breakthroughs or ruinous capital outlays: the know-how exists, and the investments generate positive returns in fuel savings and increased economic growth. What is required is foresight, patience, changed habits and the removal of the barriers to implementation of measures that are economically viable. For instance, as the World Energy Outlook 2012 demonstrates, investing less than $12 trillion in more energy-efficient technologies would not only quickly pay for itself through reduced energy costs, it would also increase cumulative economic output to 2035 by $18 trillion worldwide.

While current efforts come nowhere close to realizing the full benefits that efficiency offers, some countries are taking big steps forward. Members of the European Union have pledged to cut energy demand by 20 percent by 2020, while Japan plans to trim its electricity consumption 10 percent by 2030. China is committed to reducing the amount of energy needed for each unit of gross domestic product by 16 percent in the next two years. The United States has leaped to the forefront in transportation efficiency standards with new fuel economy rules that could more than double vehicle fuel consumption.

Such transitions entail challenges for policy, and experience shows that government and the private sector must work together to achieve the sustainability goals that societies demand, learning what works and what does not, and following the right path to optimal deployment of technology. Looking forward, energy efficiency will play a vital role in the transition to the secure and sustainable energy future that we all seek. The most secure energy is the barrel or megawatt we never have to use.

Maria van der Hoeven is the Executive Director of the International Energy Agency, an autonomous organization which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond. This commentary appeared first this month in IEA Energy, the Agency’s journal.

 

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Caribbean Energy Experts Recommend Creation Of New Caribbean Centre For Renewable Energy And Energy Efficiency

Caribbean energy experts recommend creation of new Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE) – A Centre of Excellence to Promote Inclusive and Sustainable Energy Industries and SE4ALL

The technical design and institutional set-up of the Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE) was successfully validated by energy experts and specialists of CARICOM Member States in a regional workshop, held from 21 to 22 July 2014 in Roseau, Dominica. The event was co-organized by theSmall Island Developing States (SIDS) Sustainable Energy Initiative – SIDS DOCK, the United Nations Industrial Development Organization (UNIDO) and the Government of Dominica, with financial support of the Austrian Development Cooperation (ADC).

The workshop follows-up on the official request of SIDS DOCK to UNIDO in August 2013, to assist the small island developing states in the Caribbean, Pacific, Indian Ocean and Africa, in the creation of a SIDS network of regional sustainable energy centres. With technical assistance from UNIDO, a consultative preparatory process for the Caribbean centre was launched in close coordination with the Energy Unit of the CARICOM Secretariat. The process included the development of a needs assessment and project document on the technical and institutional design of the centre. With the inputs received at the regional workshop, the needs assessment and the project document on the technical and institutional design of the centre will be finalized.

It was recommended to create CCREEE under the umbrella of the existing institutional framework of CARICOM. It was agreed to submit the final CCREEE project document for consideration by the next Ministerial Council for Trade and Economic Development (COTED) of CARICOM. It was suggested to launch a competitive selection process for the host country of the Secretariat of CCREEE.

Prime Minister of Dominica, Hon. Roosevelt Skerrit, endorsed the establishment of the CCREEE, and announced Dominica’s interest in hosting the centre. “Dominica has the highest percentage of renewable energy (RE) in its energy mix among the Caribbean countries, therefore, Dominica would be the ideal location,” he said. By 2017, Dominica will become the only Small Island Developing State to export electricity. A partnership between the Government of Dominica and a French Consortium will develop a geothermal power plant for export and subsea transmission lines to French neighbours – Guadeloupe to the north, and Martinique to the south.

Ambassador Vince Henderson, Permanent Representative of the Commonwealth of Dominica to the United Nations, and Chair of the SIDS DOCK Steering Committee, who spearheaded the initiative for the establishment of regional RE and EE centres, expressed gratitude on behalf of the small island developing states to the government of Austria for providing the funding for the establishment of the regional centres in the Pacific and the Caribbean and the support to African SIDS through the ECREEE. “The establishment of regional centres for RE and EE is one of the most progressive steps that UNIDO, SIDS DOCK and our governments can take towards the transitioning from fossil fuels to RE, and CCREEE will work with regional institutions, like the OECS, CARICOM, CREDP and CDB, to pool human and financial resources to transform the regional energy sector,” he noted.

Dr. Pradeep Monga, Director of the Energy and Climate Change Branch of UNIDO, said the importance of the regional energy centre is to boost inclusive and sustainable industrial development in Caribbean islands. “The centre will play an important role in empowering the local private sector and industry to take advantage of growing job and business opportunities in the sustainable energy sector,” Mr. Monga stressed.

The over 60 Caribbean experts and specialists, development and private sector partners in attendance recommended that the centre focuses particularly on policy implementation, capacity development, knowledge management, awareness raising and the creation of business opportunities for the local sustainable energy industry. The centre will act as a think-tank and hub for sustainable energy and will play a key role in creating economies of scale and a competitive sustainable energy market and business sector. It will address existing barriers and strengthen drivers through regional methodologies and tools. It will act as central service provider for the development and implementation of SIDS DOCK and Sustainable Energy For All (SE4ALL) activities.

The centre will become part of UNIDO´s Global Network of Regional Sustainable Energy Centres. The SIDS centres will be announced as an innovative south-south partnership at the Third International Conference on Small Island Developing States, scheduled to take place from 1 to 4 September 2014 in Apia, Samoa.

Further information on the workshop is available at: www.ccreee.org

For more information:

Mr. Al Binger, Energy Advisor, CARICOM Climate Change Centre, abinger@sidsdock.org

Mr. Martin Lugmayr, Sustainable Energy Expert, UNIDO, m.lugmayr@unido.org

 

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Here’s Why Al Gore Is Optimistic About the Fight Against Climate Change

Al Gore has something of a reputation as the Cassandra of climate change. But amid the doom and gloom—melting glaciers, ever-rising carbon levels, accelerating species extinction—the former vice president has been positively sunny of late.

Why? Solar energy. “There is surprising—even shocking—good news: Our ability to convert sunshine into usable energy has become much cheaper far more rapidly than anyone had predicted,” Gore wrote recently in Rolling Stone. “By 2020—as the scale of deployments grows and the costs continue to decline—more than 80 percent of the world’s people will live in regions where solar will be competitive with electricity from other sources.”

Now a new report substantiates Gore’s optimism. Research firm Bloomberg New Energy Finance predicts renewable energy will account for 49 percent of the world’s power by 2030, with another 6 percent coming from carbon-free nuclear power plants. Solar, wind, and other emissions-free sources will account for 60 percent of the 5,579 gigawatts of new energy capacity expected to be installed between now and 2030, representing 65 percent of the $7.7 trillion that will be invested.

Gore is right that solar is driving the shift away from fossil fuels, thanks to plummeting prices for photovoltaic panels and the fact that solar fuel—sunshine—is free.

“A small-scale solar revolution will take place over the next 16 years thanks to increasingly attractive economics in both developed and developing countries, attracting the largest single share of cumulative investment over 2013–26,” the report states.

Solar will outpace wind as an energy source, with photovoltaic power accounting for an estimated 18 percent of worldwide energy capacity, compared to 12 percent for wind. That’s not surprising given that a solar panel can be put on just about any home or building where the sun shines. Erecting a 100-foot-tall wind turbine in your backyard usually isn’t an option.

In the United States, solar is projected to supply 10 percent of energy capacity, up from 1 percent today. In Germany, though, solar and wind will account for a whopping 52 percent of all power generated by 2030, according to the BNEF estimate.

These are all projections, of course, based on the existing pipeline of projects and national policies and involving a certain amount of guesswork.

The big wild card is what happens in developing nations like China and India, where energy demand is expected to skyrocket with a burgeoning middle class. Energy consumption will grow to an estimated 115 percent in China and 200 percent in India over the next 16 years. (Falling birth rates in the West mean that energy use will drop 2 percent in Japan, for instance, and 0.2 percent in Germany.)

Whether the world kicks its reliance on coal-fired electricity will depend in large part on what kind of energy choices China and India make. China installed a record amount of solar capacity last year and has set ambitious goals for ramping up renewable energy production.

But old ways die hard. While the Obama administration has proposed regulations to slash carbon emissions from coal-fired power plants, the U.S. Export-Import Bank, on the other hand, is considering financing a 4,000-megawatt coal-fired power station in India.

The good news, though, is that individuals around the world can make a difference with their personal power choices. According to BNEF, much of the solar energy to be generated over the next 16 years will come from solar panels installed on residential roofs. More

 

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Lebanon, Hezbollah Cut off from Iran

Juan Cole writes ‘With the alleged fall to the Islamic State of Iraq, and [in] Syria of Qa’im on Saturday, and of Talafar a few days ago, the border between Iraq and Syria has now been effectively erased.

A new country exists, stretching from the outskirts of Baghdad all the way to Aleppo.

The first thing that occurred to me on the fall of Qa’im is that Iran no longer has its land bridge to Lebanon. I suppose it could get much of the way there through Kurdish territory, but ISIS could ambush the convoys when they came into Arab Syria. Since Iran has expended a good deal of treasure and blood to keep Bashar al-Assad in power so as to maintain that land bridge, it surely will not easily accept being blocked by ISIS. Without Iranian shipments of rockets and other munitions, Lebanon’s Hizbullah would rapidly decline in importance, and south Lebanon would be open again to potential Israeli occupation. I’d say, we can expect a Shiite counter-strike to maintain the truck routes to Damascus.

He goes on to say ‘Syrian jets bombed eastern positions of ISIS near the Iraqi border, perhaps signalling a likely alliance of Damascus and Baghdad to put the Sunni radical genie back in the bottle’.

From a petro-political perspective I find myself asking the following questions;

  • What will be the reaction of Saudi Arabia with the Sunni forces in Iraq having both Damascus and Baghdad allied against them?
  • What will Iran now do to support Bashar al-Assad?
  • What will Iran do to keep their supply route to Hezbollah open?

The answer to these three questions will inform the price of oil going forward. According to Reuters Libya’s oil output has sunk back to a current 1.16 million barrels per day of oil due to disruption at fields and terminals, a senior industry source told stated on Tuesday. Iran put OPEC on notice of its plans to raise output swiftly with the help of foreign investors immediately after any lifting of sanctions imposed over its nuclear programme. Oil Minister Bijan Zanganeh said Iran could increase oil exports by 500,000 barrels per day immediately after any lifting of sanctions. “Very quickly we can increase by half a million and after a couple of months we can increase it to 700,000 barrels per day,” he told reporters ahead of OPEC’s Wednesday meeting. He said Iran could pump 4 million bpd in less than three months after any lifting of restrictions. When sanctions may be lifted is the unknown factor.

For those of us living on Small Island Dveloping States (SIDS) and other states dependant on fossil fuel, the path towards alternative energy, i.e. solar, wind, OTEC and ocean current technologies looks more attractive with every passing day. Editor

 

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