World Energy Monthly
Review: July 2006 |
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Editor's Note
The high price of oil, its effect on our economy and the geopolitics of energy
make headlines daily. The top leaders of the industry are heralding the price
of oil as being too high. Yet with every headline, the traders achieve new
heights and the price keeps climbing.
Predicting the price of oil is the privilege of the pundits, and these individuals
are predicting everything from the dreaded $100 barrel of oil to a return of
the $50 price of a year ago. Personally, I am no closer to predicting the price
of oil than each of these well-heeled individuals. One thing I have recently
noticed, though, is that every time the price of oil drops under $70, some
scary, large-print headline appears in the newspaper, and almost instantly
the price jumps back up over the mark.
In fact, with the exception of Nigeria (where people get kidnapped), the price
of oil seems contingent on comments from the agitators around the globe. In
this month's cover story, "Fear Factor," we look at some of the comments
that have caused these oil jitters. It seems the comments of a few can cause
the price of oil to remain very high for all of us.
Cyril Widdershoven offers an assessment of the "split message" of Iran's
nuclear ambitions. The tensions are increasing America's military sales
to the Middle East; at the same time, the emerging powerhouse of China is being
urged to join the efforts to maintain Gulf security. Then, Widdershoven's
field report takes us to the World Gas Conference in Amsterdam, where this
year's theme was "Sustainable Development: It's Up to Gas."
Moving to Africa, Gordon Feller finds an interesting project going on in western
Rwanda, where methane may be the answer to that nation's chronic power
shortages.
Ethanol is everywhere you look, and the current trend in the media is to point
to Brazil as the leader the United States should emulate. Robert Rapier points
to the significant differences between Brazil and the United States that make
this dream next to impossible. Most of these points - from lower per-capita
demand to the real numbers behind the country's ethanol use - are glossed
over by the general media. But smart analysts cannot ignore these facts when
setting energy policy.
Speaking of ethanol, Brian K. Tully reminds us that powerful farm-belt
political support has raised the profile of this corn-based fuel, but at
the expense of what he considers a much more efficient and available alternative:
biodiesel.
Craig Pirrong talks about Gazprom's muscle throughout Russia and concludes
the company's meteoric rise is less than advantageous for Russia as a whole.
Hugh Ebbutt reports from the United Kingdom, where he finds that the current
energy prices and taxes are not high enough yet to stimulate any real change
in consumer behavior. What will it take to curb actions like unnecessary circling
of planes at Heathrow Airport in the name of energy conservation?
Our Spotlights include the Americas, where the Mexico presidential election
has deep implications for everyone in the energy industry. And in Russia, we
ponder the possibility of a "gas OPEC": Could such an arrangement increase
Russia's intimidating stance in the export market?
Finally, the search for El Dorado continues as Neville Henry explores Malaysia
and finds such promising plays as the Sarawak Basin, discoveries in deepwater
Sabah Basin and especially the discovery of the Kikeh Field offshore Sabah - a
high-quality play that may net more than 1 billion barrels.
It looks to be a long, hot summer in the energy sector. The right information
can help you keep your cool.
Richard R. Loomis
Editor-in-Chief
World Energy Monthly Review
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