HYDROCARBONS DAILY RECORD: SEASONAL EDITION By J. Brock (FINN) CRUDE PRICES: Light Sweet Crude prices fell over the holiday season with a barrel costing $62.41on 22 December and ending up at $60.34 on 01 January. The same pattern dominated for Brent Crude with 22 December prices at $62.85 and 01 January 2007 prices at $60.49. Several analysts say that crude prices were approximately the same last year at this time. TRENDS: (Alternative Energy) What happened in July, with record crude prices - $78.40 on 14 July 2006 - was in the mind of the consumer, inexcusable. A move to seek alternative methods of energy generation, such as hydrogen or LPG vehicles, solar heating and wind power for electricity gained momentum. There is even a drive to build new nuclear power stations across the globe. While alternatives are not yet viable, they are gaining ground and once there is a cost-effective replacement available the switch will be dramatic. (Infrastructure Maintenance, Protection and Upgrades) Also thought to be inexcusable is the trend of large hydrocarbons companies not maintaining their infrastructure. Consumers feel that some of the profits taken over the northern summer months should have been used to upgrade and maintain infrastructure in areas like Prudhoe Bay. One can understand Iraq and its constant terrorism attacks against ageing infrastructure but in Nigeria it needs to be more secure to prevent thievery and all too frequent explosions caused when stealing fuel goes wrong. (Focus) Iran, though it contains the third largest reserves of hydrocarbons, has focused on nuclear power for energy generation and, according to analysts, has lost focus on its oil industry. Analysts accuse Iran of mismanaging its oil and refineries and importing gasoline and subsidising it so consumers pay .30 Cents a gallon at the pump. I would say that if this is true there needs to be prioritising of Irans oil industry, hydrocarbons imports and marketing. Weaning energy generation away from hydrocarbons and substituting nuclear energy is a good way forward and has a long-term positive affect on the emission of greenhouse gasses. (Using Hydrocarbons as a Bargaining Tool) Thanks to a last minute countries from Belarus to Germany now can have natural gas supplies. There would have been a knock-on affect for Europe if Russia cut supplies. However, Belarus is paying twice as much for the gas than they did last year at this time. OPECs cutting production in order to increase the price of crude per barrel had mixed results, with the fear of a production cut being more potent than the actual cut itself. (Some Uncomfortable Words) Irans president denies the Holocaust, Hugo Chávez tells Western leaders to go to hell, and Vladimir Putin is cracking the whip. Why? They know that the price of oil and the pace of freedom always move in opposite directions. Its the First Law of Petropolitics, and it may be the axiom to explain our age
Thomas L. Friedman in his editorial, The First Law of Petropolitics.
Dr. Friedman has a point and one can only wonder if oil was at $40.00 per barrel, would governments be as keen to take over their hydrocarbons industries and exert power as they are when crude hovers around $60.00 per barrel.
(Concluding Thoughts)
At present the jury is out as far as the benefits newly nationalized hydrocarbons industries in South America will bring down to the people. If well maintained industry infrastructure, new hospitals, schools, roads and other public amenities appear in Bolivia, then the newly found profits - $2.3Billion in respect of that country will have been well spent.
On the other side of the coin the inexcusable lack of maintenance that private sector companies have towards their infrastructure and questions about where last summers profits went need to be addressed.
