Peak Oil Review – Apr 20 | Energy Bulletin

Peak Oil Review – Apr 20  by Tom Whipple

1. Production and Prices

Oil prices started last Monday at $52 a barrel, quickly fell to circa $50, and remained there for the rest of the week. Bad economic news and forecasts of lower demand for oil dominated the energy story, punctuated with occasional bursts of optimism from Wall Street which continues to maintain there are early signs of an economic rebound.

As the world’s economy continues to slip, more investors are seeing oil and other commodities as a safe haven to store wealth. China is making a major effort to convert some of its $2 trillion in reserves into oil and other minerals as a hedge against what might happen to the value of dollar-based securities. This safety-in-oil may prove to be a major factor in supporting oil prices if consumer demand continues to drop.

Recent reports about OPEC efforts to cut production appear to show that the enterprise has stalled after achieving about 3.8 million b/d of the 4.2 million that was mandated. So long as prices remain around $50 a barrel, OPEC seems content to let matters stand. The next OPEC meeting is about 5 weeks away.

2. Off-Shore Drilling

US Interior Secretary Salazar has been traveling around the country conducting hearings on whether to permit off-shore drilling in areas that were off-limits until October 1, 2008. The Secretary visited Atlantic City, New Orleans, Alaska, and San Francisco. Public testimony was mixed as environmentalists and pro-drillers continue their decades-old argument. In Anchorage, Governor Sarah Palin warned that the trans-Alaska pipeline was in danger of shutting down unless new sources of oil were opened up. Fishermen raised the specter of another Exxon-Valdez.

At the San Francisco hearing, California officials unanimously opposed opening the coast to offshore drilling saying the country should concentrate on renewable energy sources and higher energy efficiency standards.

On Friday a federal appeals court ruled that the Bush Administration did not properly study the environment impact of drilling off the Alaska coast and ordered the Interior Department to assess the areas before moving forward. The decision stops work on drilling projects already underway in Alaska and applies to other coastal projects under consideration. The Interior Department has already announced that it will delay further leasing by five years to complete the necessary studies. The offshore drilling issue appears to be out of the energy debates for a while.

via Peak Oil Review – Apr 20 | Energy Bulletin.