We might get through this summer without a crisis.  However, with
gasoline inventories still at a very low point as we enter both the
summer driving season as well as the hurricane season, it's worth
paying attention to these stories.

It's also interesting to
notice that our growing awareness of the problems related to greenhouse
gases ("a planetary emergency!" - Al Gore)
has not yet affected our driving behavior. Our demand for petroleum
products continues to increase.  I noticed with sad irony the other day
when NPR's Morning Edition had a story on "Interest in Climate Change Heats Up in 2008 Race," which was followed soon after by the stories "Gas Prices Don't Slow Summer Driving Season," and "Drivers Aren't Charged Up By Electric
Cars."

The peak oil crisis: Twin problems
by Tom Whipple, June 6, 2007
As
we move into June, we are still confronted with a pair of energy crises
that have the potential to upset our way of life. At the global level,
worldwide oil production has been stagnant for the last two years. This
is true for all the various kinds of liquid fuels we now consume:
ethanol, conventional crude, liquids separated from natural gas,
synthetic crude from tar sands, as well as other flavors of
hydrocarbons that can be converted to liquid fuels. Demand for oil from
China, India, Russia,
and the oil producing Gulf States is still increasing dramatically;
demand from the developed countries is flat or increasing slowly; and
as usual, the poor countries, who cannot afford $70 a barrel oil, are
going without...

Someday soon, however, the poor countries of
the world will be importing so little oil that increasing demand will
leave only the rich bidding against the richer, prices will move up
again and still fewer will be sharing in the last years of the oil age.

This situation could change for the worse, even before the end of the year, as knowledgeable observers are starting to issue stronger warnings...

...The current East Coast
stockpile situation makes it more likely that disruptions from a
hurricane hitting the Gulf will promptly lead to gasoline shortages,
unlike two years ago when local stockpiles were sufficient to get us
through. As the pipelines pumping gasoline from Gulf Coast refineries
to East Coast tank farms are reported to be at capacity, it is unlikely we will see an improvement in the situation anytime soon.

http://www.energybulletin.net/30690.html

This Week in Petroleum
by Robert Rapier, June 8, 2007
"New England
and the Southeast, both regions that could suffer a direct hit in this
year's hurricane season, have some of the lowest inventories in the
U.S. Just how thin is the supply cushion? About 11 gallons per person
is all that is available, according to an analysis of inventory data by
Oil Price Information Service." - from OPIS report, June 4th

"For
me, Robert, it just boggles the mind that "This Week in Petroleum"
(gasoline section) shows prices were almost 27 cents higher than a year
ago (6/4/07) and here's the demand graph (graph shows demand still
increasing). As I've said before — and I've been criticized for saying
it — this is not the way they teach it in Econ 101. Prices
go up, and Americans put the pedal to the metal... So if we really do
have shortfalls, these so-called "consumers" are going to go looking
for someone to blame. It won't be themselves."

http://www.theoildrum.com/node/2625

Another
Near Miss?
Julian Darley, Post Carbon Institute, June 8, 2007
A
huge forest fire looks as if it will now miss the tar sands central
city of Fort McMurray. [Forest fire edges toward Fort McMurray (CBC
News)] A few days ago, Cyclone Gonu narrowly avoided causing petroleum
havoc in the Persian Gulf. Either of these events could trigger severe
spikes in the price of petroleum. In either case the damage could have
been long lived if petroleum processing installations had been hit.
Neither of these events was in most analysts' top ten list of trigger
events.

For now these events may soon be forgotten, though not by those who have lost family and friends as in Oman.
It is often suggested that if an event does prove the trigger for some
kind of serious oil supply disruption (including a huge price run-up)
then it will be caused by some completely unforeseen events. This is
hardly very reassuring for those charged with keeping public services
running and keeping the supply chains filled. It is however yet more
reason to begin planning for an orderly transition away from oil
dependence.
http://postcarbon.org/another_near_miss

Doubts World Can Supply Gas Needs
by David MacLeod (Bellingham Herald, Letter to the Editor, June 6)
I
find it hard to limit myself to the Herald's requirement of no more
than 200 words. This letter is in response to a front page article not
available on the Herald's website, but can be found here: http://www.realcities.com/mld/krwashington/news/columnists/kevin_g_hall/17301056.htm

My letter here:

After
reading “Gas shortage solution likely lies abroad” (May 31, 2007), I
can’t help but wonder what kind of solution this is. “The numbers” in
the article’s accompanying sidebar tell us that current global refining
capacity is 83.5 million barrels per day, with estimated future “needs”
at 93 million barrels per day by 2010 and 118 by 2030. These figures
should raise many questions. More numbers: 70
percent of oil currently consumed comes from fields discovered 25 years
ago. Discovery of new oil fields peaked in the 1960s. Existing oil
fields are depleting at the rate of 5 percent per year. Seven percent
more oil must be found and brought to market each year to make up for
depletion of existing fields and to meet a 2 percent demand growth. How
in the world will we get to 93 million barrels per day, let alone 118?
We must remind ourselves that fossil fuels are a finite resource.
Experts are telling us that we are at or very near the world’s all-time
peak of oil production, which will plateau and then decline. What will
we do when the demands of growth can no longer be met? When the decline
rates inevitably increase?

Increasing our energy literacy is a must at this time. Start with www.energybulletin.net.

http://www.bellinghamherald.com/letterstotheeditor/story/97054.html

Gasoline Prices – Part I: Immediate Causes
by Robert Rapier, late May 2007.
Gasoline
prices have risen for a number of factors. The cost of crude has gone
up sharply in the past few years, adding about $1/gallon to the base
cost of gasoline. In the fall of 2006, gasoline prices fell to their
lowest levels in a year. This spurred record demand in the fall and
winter of 2006, and discouraged gasoline imports (which were also
discouraged by a weaker dollar). Those factors combined to draw down
gasoline inventories in the spring of 2007 at the fastest rate in EIA
history. When an inventory draw is that steep and persistent, gasoline
prices must rise sharply to reign in demand and balance it with
available supply.

...it looks to be the rule, rather than the exception, that higher gasoline prices are here to stay. A return to sub-$2/gal
gasoline appears highly unlikely (again, some seasonal exceptions are possible).
http://www.theoildrum.com/node/2611

Saudi Arabia and Gas Prices
by Stuart Staniford on May 24, 2007
[A
bit technical here, but Stuart Staniford estimates that more than half
of the 60% increase of gas prices since 2004 are due to a decline of
crude oil supply from Saudi Arabia.  He argues elsewhere that production cuts from Saudi Arabia
are most probably not voluntary, but are the result of SA having passed
the peak in the amount of oil they can produce, and are now on a
downward path - see http://www.theoildrum.com/node/2325 - Saudi Arabian oil declines 8% in 2006. - David]

"The
core issue under discussion is that production is off by about 1
million barrels per day since Quarter 3 of 2004, despite the addition
of new projects with a rated capacity of about 1 million barrels per
day...

...on the graph above, we can attribute about $0.45 of the
rise since late 2004 to downstream margins (most of which is very
recent and probably fairly transient till BP finishes repairs), but
about $0.70 is due just to crude costs.

So then the question is whether 2 million barrels per day in missing Saudi oil production is
enough to account for the $0.70 increase that can reasonably be
attributed to crude, rather than refinery tightness. Well, that's a
$0.70/$1.90 ~ 35% increase. Given a gasoline price elasticity of -0.05
during the period of interest, it would only take a 35/20 = 1.75%
reduction in global gasoline supplies to do the job. Since the missing
Saudi production is 2/84 = 2.4% of global oil supply, it would appear
that, had this not happened, we would have had little or none of the
35% crude-based increase in gasoline prices since 2004.

(Note
that I'm not arguing this is the only thing going on in world oil
markets. However, I'm suggesting the thought experiment of keeping
everything else exactly as it it occurred, and just adding back in the
missing 2mbd of Saudi production. It appears in that hypothetical
world, we wouldn't have had the crude oil [price] increases that led to
most of the recent gas price increases)...

Finally,
for the record, I don't want to suggest that gasoline price increases
are all bad. I personally am in favor of high gas prices to promote
conservation of precious remaining oil, moves to make the vehicle fleet
more efficient and reduced carbon emissions. But if you feel
differently about high gas prices, you might want to pay close
attention to what Saudi Arabia is doing."
http://www.theoildrum.com/node/2353

The Iraqi War against Labor
Dale Allen Pfeiffer, Mountain Sentinel, June 6, 2007
Back
in March of this year, I pointed to Iraqi union resistance to the
privatization of their nation's oil and suggested that if Iraqi unions
become a target in this war then Operation Iraqi Freedom will lose all
pretence that it is anything other than a war of imperial conquest. (See Are Labor Unions Terrorists?)

Now
the oil workers have gone on strike in an effort to stop the
privatization and giveaway of Iraqi oil. The Iraqi government has
responded by ordering the arrest of the union leaders, and the Iraqi
military has surrounded the striking workers. The veil over imperial
conquest is not just falling, it is being ripped off.

The Iraqi
government and military would never take such bold actions without, at
the very least, the sanction of US officials. Most likely, the US gave
the order for the strike to be stopped. No doubt, the US is having the
Iraqi military handle the matter so that they can ostensibly wash their
hands of it. Yet, if the Iraqis cannot put down the strikers, the US
will have to take direct action.

Furthermore, if union leaders and strikers
are arrested, where will they be detained and interrogated? In US run
facilities such as Abu Ghraib?
Such a scenario would strike at the heart of why this invasion and
occupation is illegal and why all who are involved in it are guilty of
war crimes.

The very silence of the US media concerning the
Iraqi oil strike is itself indicative of who is directing the
repression of the strikers. Those of us who are aware will have to
listen very closely to learn what is really happening in the cradle of
civilization. I suggest you visit the links mentioned in the news
articles. Visit these websites regularly while this strike is in
effect. It is probably the only way that people in the US will know
what is happening over there, and what is being perpetrated in our
names.

Iraqi Government Orders Arrest of Union Leaders http://www.mountainsentinel.com/#oilarrest
IFOU Strike Statement and ICEM
Release http://www.mountainsentinel.com/#strike
ICEM Protests Iraqi Military’s Involvement in Basra Oil Strike http://www.mountainsentinel.com/#ICEMprotest
Contributor Dale Allen Pfeiffer writes:
If
the unions stick to their guns, this could be one of the most important
events of the war. The consequences could be very far reaching indeed.
As these unions play their gambit, they need all the attention they can
get.
http://www.mountainsentinel.com/#laborwar