Better Fill up today

[frawin]

All the more reason we should get busy and start drilling the OCS, ANWR and other BLM controlled lands. We are dependent  on the rest of the world for almost 70% of our energy needs and Nancy Pelosi refuses to let the Vote be heard to release drilling in a huge portion of our reserves. It seems inconcievable to me that she won't even allow some exploratory search and at least let the oil and gas industry try to define the fields to some degree, it is a big unknown what reserves are really in place and where. Our enemies are going to use oil more and more to destroy or control us.

Russia may cut off oil flow to the West

By Ambrose Evans-Pritchard

Last Updated: 10:39am BST 29/08/2008



Fears are mounting that Russia may restrict oil deliveries to Western Europe over coming days, in response to the threat of EU sanctions and Nato naval actions in the Black Sea.

Any such move would be a dramatic escalation of the Georgia crisis and play havoc with the oil markets.

Reports have begun to circulate in Moscow that Russian oil companies are under orders from the Kremlin to prepare for a supply cut to Germany and Poland through the Druzhba (Friendship) pipeline. It is believed that executives from lead-producer LUKoil have been put on weekend alert.

"They have been told to be ready to cut off supplies as soon as Monday," claimed a high-level business source, speaking to The Daily Telegraph. Any move would be timed to coincide with an emergency EU summit in Brussels, where possible sanctions against Russia are on the agenda.

Any evidence that the Kremlin is planning to use the oil weapon to intimidate the West could inflame global energy markets. US crude prices jumped to $119 a barrel yesterday on reports of hurricane warnings in the Gulf of Mexico, before falling back slightly.

Global supplies remain tight despite the economic downturn engulfing North America, Europe and Japan. A supply cut at this delicate juncture could drive crude prices much higher, possibly to record levels of $150 or even $200 a barrel.

With US and European credit spreads already trading at levels of extreme stress, a fresh oil spike would rock financial markets. The Kremlin is undoubtedly aware that it exercises extraordinary leverage, if it strikes right now.

Such action would be seen as economic warfare but Russia has been infuriated by Nato meddling in its "backyard" and threats of punitive measures by the EU. Foreign minister Sergei Lavrov yesterday accused EU diplomats of a "sick imagination".

Armed with $580bn of foreign reserves (the world's third largest), Russia appears willing to risk its reputation as a reliable actor on the international stage in order to pursue geo-strategic ambitions.

"We are not afraid of anything, including the prospect of a Cold War," said President Dmitry Medvedev.

The Polish government said yesterday that Russian deliveries were still arriving smoothly. It was not aware of any move to limit supplies. The European Commission's energy directorate said it had received no warnings of retaliatory cuts.

Russia has repeatedly restricted oil and gas deliveries over recent years as a means of diplomatic pressure, though Moscow usually explains away the reduction by referring to technical upsets or pipeline maintenance.

Last month, deliveries to the Czech Republic through the Druzhba pipeline were cut after Prague signed an agreement with the US to install an anti-missile shield. Czech officials say supplies fell 40pc for July. The pipeline managers Transneft said the shortfall was due to "technical and commercial reasons".

Supplies were cut to Estonia in May 2007 following a dispute with Russia over the removal of Red Army memorials. It was blamed on a "repair operation". Latvia was cut off in 2005 and 2006 in a battle for control over the Ventspils terminals. "There are ways to camouflage it," said Vincent Sabathier, a senior fellow at the Centre for Strategic and International Studies in Washington.

"They never say, 'we're going to cut off your oil because we don't like your foreign policy'."

A senior LUKoil official in Moscow said he was unaware of any plans to curtail deliveries. The Kremlin declined to comment.

London-listed LUKoil is run by Russian billionaire Vagit Alekperov, who holds 20pc of the shares. LUKoil produces 2m barrels per day (b/d), or 2.5pc of world supply. It exports one fifth of its output to Germany and Poland.

Although Russia would lose much-needed revenue if it cut deliveries, the Kremlin might hope to recoup some of the money from higher prices. Indeed, it could enhance income for a while if the weapon was calibrated skilfully. Russia exports roughly 6.5m b/d, supplying the EU with 26pc of its total oil needs and 29pc of its gas.

A cut of just 1m b/d in global supply – and a veiled threat of more to come – would cause a major price spike.

It is unclear whether Saudi Arabia, Kuwait or other Opec producers have enough spare capacity to plug the shortfall. "Russia is behaving in a very erratic way," said James Woolsey, the former director of the CIA. "There is a risk that they might do something like cutting oil to hurt the world's democracies, if they get angry enough."

Mr Woolsey said the rapid move towards electric cars and other sources of power in the US and Europe means Russia's ability to use the oil weapon will soon be a diminishing asset. "Within a decade it will be very hard for Russia to push us around," he told The Daily Telegraph.

It is widely assumed that Russia would cut gas supplies rather than oil as a means of pressuring Europe. It is very hard to find alternative sources of gas. But gas cuts would not hurt the United States. Oil is a better weapon for striking at the broader Western world.

The price is global. The US economy could suffer serious damage from the immediate knock-on effects.

While the Russian state is rich, the corporate sector is heavily reliant on foreign investors. The internal bond market is tiny, with just $60bn worth of ruble issues.

Russian companies raise their funds on the world capital markets. Foreigners own half of the $1 trillion debt. Michael Ganske, Russia expert at Commerzbank, said the country was now facing a liquidity crunch. "Local investors are scared. They can see the foreigners leaving, so now they won't touch anything either. The impact on the capital markets is severe," he said.

[frawin]

Oct-08 Crude Oil is trading at $117.15, up $1.56 and Oct-08 Natural Gas is trading $8.195, up $0.145. If Hurricane Gustav increases in intensity and moves in to the Gulf both Crude and Natural Gas will move up considerably. If that does happen some will blame the Energy Industry for the Hurricane, fortunately only The Good Lord can control the weather.

[srkruzich]

All the more reason we should get busy and start drilling the OCS, ANWR and other BLM controlled lands. We are dependent  on the rest of the world for almost 70% of our energy needs and Nancy Pelosi refuses to let the Vote be heard to release drilling in a huge portion of our reserves. It seems inconcievable to me that she won't even allow some exploratory search and at least let the oil and gas industry try to define the fields to some degree, it is a big unknown what reserves are really in place and where. Our enemies are going to use oil more and more to destroy or control us.

I would call that a act of treason to jeapordize our national security like that.

[frawin]

Steve, she is holding back anything that will help our energy situation so it won't look like the Republicans helped it. She wants it to look like Hussein Obama  and the Democrats did it.

[Catwoman]

If what you suspect about Pelosi is true, then it is horrific to contemplate the fact that any one political party would play hell with our economy in such a way.  I have been truly appalled by that woman from the start...and this profile would only fit my estimation (or lack thereof) regarding her.

[pam]

where have you people been Antarctica? That's the way our government operates democrat and republican alike. Come on.......

[frawin]

In overnite trading, Oct-08 Crude Oil is trading at $107.95, down $7.51, and Oct-08 Natural Gas is trading at $7.26, down $0.683.

[frawin]

More evidence of our dependence on Foreign Oil, the only way we can break some of OPEC and the rest of the Worlds control over our destiny is drill our own reserves, again Nancy Pelosi and the Democrat controlled Congress refuses to do anything. Some of you keep blaming the US Oil Industry, THE US OIL INDUSTRY HAS NO CONTROL OVER THE PRICE OF OIL, BUT IF WE ARE GOING TO REDUCE OUR INDEPENDENCE ON FOREIGN OIL IT WILL HAVE TO BE THE US OIL INDUSTRY THAT DOES IT.
Opec could agree on output cut this month

Reuters

Published: September 01, 2008, 21:15

Tehran: Iran's Opec governor said on Monday the group could agree to cut output when it meets this month because of a fall in oil prices, Mehr News Agency said.

Oil has fallen from a record level of just above $147 a barrel in July to around $116 a barrel on Monday.

"In view of the drop in oil prices, there is this possibility that Opec would approve an output cut in its upcoming meeting in Vienna," Mohammad Ali Khatibi told Mehr.

Iranian Oil Minister Gholamhossein Nozari said on Sunday that $100 a barrel was the lowest appropriate price for oil, echoing a figure cited by another price hawk in the Organisation of Petroleum Exporting Countries, Venezuela.

Even as prices surged to all-time highs this year, Iran said the market was oversupplied with crude and blamed the price surge on other factors, such as speculation and geopolitics.

"The supply of oil is more than demand in the market. If Opec is interested in removing the excess oil from the market, it must approve the output cut plan," Khatibi told Mehr.

Irrational trend

Most commentators predict Opec will leave output targets unchanged when its meets in Vienna on Sep-tember 9.

Venezuela, like Iran, has spurned calls from consumers like the United States to hike output, even when prices surged.

But Venezuelan President Hugo Chavez, in a departure from previous rhetoric, said in early Aug-ust it was a good thing oil prices had fallen. He said the price should settle near $100 a barrel, calling prices near $150 "irrational."

Khatibi said big consumers were hurting their interests by imposing sanctions on producers. He did not mention names but it was clearly directed at the countries like the United States which have targeted Iran over its disputed nuclear programme.

"The enforcement of these sanctions will disrupt the production of oil and cause consuming countries to pay more for the oil they buy," Khatibi said.

Washington and its Western allies accuse Tehran of seeking to build nuclear warheads, a charge Iran denies.

The world's fourth big-gest oil producer and No 2 Opec producer says it is mastering nuclear technology to generate electricity.

[Diane Amberg]

If Iran has so much oil, why do they need nuclear energy for electricity?

[frawin]

Diane, what else can they say in this scenario? I don't think anyone believes them.
Frank