The Bullroarer - Wednesday 27 August 2008

NZ Herald - Fuel woes big issue for Air NZ full year

When Air New Zealand announced its half-year result at the end of February chief executive Rob Fyfe said the future profits were all about the oil price. Oil had then just nudged $US102 a barrel. Since then, it's got much worse for big fuel users, especially for an airline that burns 50,000 litres every 20 minutes.

WA Today - Solar generation could make householders money: Labor

WA householders will be able to make money from installing solar panels if Labor is re-elected, Premier Alan Carpenter says. Announcing what he called "the most generous and comprehensive" household solar scheme in Australia, Mr Carpenter today promised a feed-in tarriff for electricity generated from rooftop solar panels.


Fox Business - Trans-Orient Petroleum and New Zealand's Fractured Oil Shale on Dow Jones MarketWatch

Mr. Cadenhead discussed the Company's plan for using technology proven in the Bakken, Barnett and other North American oil and gas shale formations to drill and fracture shale in New Zealand, producing high-grade crude oil for sale at a premium to rapidly growing Asian economies, including India and China.

The first area Trans-Orient plans to drill within its 2.16 million acres of land in New Zealand's East Coast Basin is pocked with oil and gas seeps naturally rising to surface. An independent analysis of Trans-Orient's conventional undiscovered resource potential prepared by Sproule Associates indicates a discovery potential of 1.7 billion barrels of oil equivalent in place. A series of field videos showing these seeps - including a historical wellbore full of live oil generated from the Whangai shale - is featured in the MarketWatch interview.

Business Spectator - Why oil prices will hold up

But there are three good reasons to think that it is not yet time for an oil price collapse. First, demand is still strong. Despite high prices and slowing world growth, the International Energy Agency still expects a 1.1 per cent increase in consumption in 2008. Second, supply seems to be under the suppliers’ control. The Saudis, who remain swing producers, have implied they will defend a triple-digit oil price. So far, it looks like they can.

Finally, money is available to pay the current high price. Real interest rates are still negative in most of the world. For most governments in developing countries, growth remains a higher priority than inflation-fighting. True, oil subsidies are slowly being cut. But the credit crunch hasn’t squeezed sufficiently tightly to close oil-buyers’ wallets.

Eventually, the oil price will fall back to, or below, the marginal cost of production, perhaps $50-$70 a barrel. But probably not until money is a lot tighter and the global economy is in a lot more trouble.

NZ Herald - Drought drags Contact Energy profit down

Contact Energy has posted a 1 per cent fall in full year net profit to $237.1 million, after having to supply its South Island demand by purchasing electricity from the spot market at a "significant" loss during some periods.

The Australian - Royal Dutch Shell takes aim at Arrow's LNG

OIL major Royal Dutch Shell is in talks with Gladstone coal seam methane export hopeful LNG Ltd to buy liquefied natural gas, according to the global giant's local partner.

Arrow Energy chief executive Nick Davies said yesterday that his company's recent pairing with Shell had not changed Arrow's aims to supply LNG Ltd with enough CSM for two or more small LNG trains. He said this was still seen as the best way to develop its Australian gas. "They (Shell) are in discussions with LNG Ltd," Mr Davies said yesterday, after Arrow logged a full-year profit increase of 109 per cent to $37 million.Shell would obviously like to take the offtake of the LNG plant and ultimately will be involved in various parts of the chain as well as negotiating to be the end buyer," he said.

The Australian - Arrow's strong production lifts profit 109pc

The Australian - East Timor talks on Woodside's Greater Sunrise options

EAST Timor said it was still working with Woodside Petroleum on options for processing gas from the Greater Sunrise field. Asked if East Timor would block development of the field if Woodside (ASX: WPL) and its partners ruled out processing gas from Greater Sunrise in East Timor, Prime Minister Xanana Gusmao told reporters in Canberra that "more exchange of communication" was needed.

ABC - Two sites earmarked for geothermal plans

The company searching for potential geothermal energy locations in South Australia's far north has reported its first findings under the industry's new code of practice. Torrens Energy says early estimates of stored heat show significant potential for Australia's first commercial geothermal energy source.

GreenBiz.com - Google and Aussies to Sink Millions Into Geothermal Energy

The hunt for renewable energy took a turn beneath the earth’s surface over the past week as Google and the Australian government announced multi-million dollar plans to explore geothermal technology.

ABC - Opposition to block condensate tax measure

The Federal Government is already feeling the heat in the new Senate after the Coalition decided to oppose another tax measure. The Coaltion joint party room has agreed to vote against a move to scrap a tax exemption for companies that produce condensate - an oil by-product of gas production

John Quiggin - Blogging About Water

The best water policy in the world is useless when there is no water. We are now finding this out, as we struggle with yet another year of near-record low inflows to the Murray-Darling river system.

The most immediate crisis is that affecting Lakes Albert and Alexandrina at the mouth of the Murray River. Flows in the lower section of the Murray River have been low, or non-existent,most of the time since 2002. However, water in the lakes has been maintained, until now through a system of barrages constructed in the 1930s. As water levels have continued to fall, however, the lakes have become unsustainable in their present form. Lake levels are now below sea level. If current conditions continue, it is likely that drying will result in the formation and exposure of acid sulfate soils, causing severe and permanent environmental damage.

Larvatus Prodeo - Water tanks, round 247

The water tank wars are going another round, this time in the Victorian state cabinet, according to yesterday’s Age.

ABC - Inquiry finds demand strong despite solar panel means test

A Senate inquiry into the solar panel rebate scheme has recommended the Government keep its means test. The budget measure stopped people earning more than $100,000 from getting the rebate. The Opposition tried to have the means test scrapped but the Senate Environment Committee has found there was evidence of continued strong demand.

The Age - Ford pressures Canberra for more assistance

PRESSURE on the Federal Government to boost taxpayer support for the car industry has intensified, with Ford yesterday declaring it would need additional aid to remain competitive beyond 2010. Days after The Age revealed that Ford would cut hundreds of jobs in Victoria due to falling sales of locally built cars, the company's international chief executive and president, Alan Mulally, has met Prime Minister Kevin Rudd and Industry Minister Kim Carr to press his case for more government support.

frogblog - Yes to the Emissions Trading Scheme

Crikey - BCA climate report: falling for junk economics

So, for all those journalists inclined to believe whatever comes out under the cover of a consultant’s report, here’s a sort of methodological note. Back when I was a public servant, a favoured technique for reinforcing the case for something was to hire a consultant who would provide an "independent" report. You never directed the consultant on what you wanted, you didn’t have to -- good consultants knew.

And it wasn’t just bureaucrats that did that -- ministers would as well. External reports, with lots of graphs, tables, boxes, a glossy cover and a consultant’s logo, look much better than a boring minute from a public servant.

The private sector understands this. Businesses and peak bodies are forever commissioning "independent" reports that, strangely, demonstrate exactly what those who commissioned them want demonstrated. And the media falls for it every time. The AFR, in particular, is shocking at running reports on new studies blatantly serving the interests of the bodies that commissioned them. Even the ABC has a particular weakness for medical studies that demonstrate the need for new pills and products.

We’ve seen a procession of businesses and sectors coming forward to whinge about the Government’s lamentably weak emissions trading scheme. The LNG producers. The miners. The power generators. And now the BCA has come forward -- only it has its own "independent" research, produced by consultants Port Jackson Partners.

It’s no different to any other commissioned research. It is junk economics, produced for the purposes of arguing for more and bigger handouts for businesses.

Public Opinion - industry whingeing

Larvatus Prodeo - Coming to terms with climate change

Whatever the merits of shale oil it seems that the Queensland Government has come to its senses by banning shale oil developments in the Whitsundays, and everywhere else for that matter, and specifically a plan to dig up 400,000 tonnes of the muck to see whether anything useful could be done with it.

The locals should be immensely relieved, in spite of foregoing 3000 jobs. Imagine that! A Queensland premier foregoing a resource development with 3000 jobs attached!

ABC - Hit the gas: Hydrogen cars cross USA

Hydrogen fuel cell cars from nine automakers completed a 13-day United States cross-country trip over the weekend, in the first such mass US crossing for vehicles powered by a zero-emission technology still in its infancy.

As firsts go, the event, which ran from Portland, Maine, to to the Los Angeles Coliseum, probably would not qualify for the record books. There were stretches without hydrogen fueling stations when the vehicles were carried on flat-bed trucks, the longest from Rolla, Missouri, to Albuquerque, New Mexico.

frogblog - The fish market

Europe, like New Zealand, has plenty of waters in which it can grow and catch fish. Both need either to change the amount and way we consume fish, and to invest in rebuilding fish stocks so that they can be sustainably caught. Despite our massive territorial waters New Zealand still buys a lot of ‘foreign’ fish. It’s absolutely wrong that countries that misuse their own food baskets should be able to use their comparative wealth to shelter themselves from their unsustainable mistakes at the expense of other, poorer peoples.

Peak Energy - Enhanced Oil Recovery In Oman

Peak Energy - Buffett, Gates, mutant fish frame oil sands debate

One more from frogblog, on the increasing popularity of public transport in Auckland - Aucklanders give up on waiting

The Age - Ford pressures Canberra for more assistance

Why should the Government spend taxpayers money to bail out car manufacturers when it is through their lack of foresight, in building large cars with low fuel efficiency, that they find themselves 'uncompetitive.'

Peak oil is going to create winners and losers. I would suggest that car manufacturers will be one of the losers and there is no point in wasting money to try and save them. Far more important that we invest in public transport rather than cars.

In WA election promises, the big push for the green vote has resulted in a 60c/kWh feed in tariff, vs the current feed in rate of 20c/kWh under the Smartpower peak period tariff.
Currently the buy back price is equivalent to 10/11th's of the current power tariff rate.
With this, the whole economics of domestic photovoltaic solar production will change, making it almost profitable for anyone earning under $100k to install rooftop solar cells, given suitable roof space and enough capital to fund it.
It's almost enough to make you want to vote again.

Yours,

Lachlan the accountant.

I'd certainly vote for it.

It would be nice to imagine WA actually ending up with a huge CSP plant in the north west, wind farms along the west and south coasts, wave power projects off both shores as well and solar panels on most roofs in Perth.

Of course, what would they do with the new (and old) coal fired plants - keep them as backup for when the next gas disaster occurs ?

Gav,
Its great to see solar PV but if we need to offer 60cents/kWh this seems a little pricey, what is the fee rate for wind power in WA? Are we saying that even with an $8,000 rebate solar PV is not competitive at 20 cents/kWh? This is going to give solar PV a reputation for being way too expensive, especially in Eastern Australia where retail rates are 6cnets/kWh.

60cents/kWh can't be the domestic rate. That would mean average bills of $1000 per 3 months!

Lachlan, Gav,
According to synenergy 's web site the domestic rate in WA is 13.9 cents/kWh and they are charging 20cents/kWh for peak under the smartpower tariff , so I don't know where the 60cents/kWh comes from!! Could be a newspaper typo!

The 60c/kWhr rate comes from the ALP policy press release.

Could be a typo - but the few articles I could find all seem to mention high numbers - for example this onefrom a few days ago - a "greenies wishlist" asking for at least 50 cents per kwh.

http://www.watoday.com.au/wa-news/greenies-wishlist-revealed-20080819-3x...

I also see Carpenter is also looking to legislate against uranium mining - he's doing a good job :-)

http://www.abc.net.au/rural/news/content/200808/s2347666.htm

SBS's Insight had a decent show the other night talking about climate change, the emissions trading scheme and so on. You can watch it there if you have broadband.

As usual they did their best to avoid the subject of reducing consumption, there was quite a bit of the usual government-opposition and state-federal blame game going on, and industry guys were pretty openly asking for handouts. There was a bloke basically rubbishing the whole ETS on the basis that "well it's been tried and was just an excuse for handouts", they didn't like that much.

I was amused by their discussion of the means-testing of the solar panel rebate, one woman there said that if there'd been a rebate for her, she and her husband definitely would have got the solar panels. "But to be clear," Brockie asked, "could you actually afford it without the rebate?" The woman got a bit uncomfortable and basically said that she couldn't afford this expensive thing because she'd bought other expensive things instead.

Which gave me a good laugh, but is pretty depressing. Basically nothing useful will happen unless there's public support for it. And if the public would rather spend $45,000 on a 4WD than $25,000 on solar panels, we can't expect much from our pollies but the usual blame game.

Most people have good intentions but they only (generalising) tend to act on them if there is sufficient economic incentives.

Which means we need one or more of - more expensive power, cheaper solar panes, government policies to encourage them (subsidies and/or feed in tarrifs). Thankfully the trend is towards all of these, which should eventually start a big shift.

As for consuming less, its just not in the average person's psychological toolset - look at the obesity epidemic. Dick Cheney (curse him) was probably right when he remarked about conservation being a virtue but not the basis for sound energy policy - not because it isn't sensible, but because its too hard to get people to do it (except when the economics are clearly in its favour).

we need one or more of - more expensive power, cheaper solar panes, government policies to encourage them (subsidies and/or feed in tarrifs)

Well, there are heaps of ways to do it. I mean, solar panels for example are a classic instance of something which may save you money in the long-term, but which you'll not do because of the high start-up cost. $20 a week for 20 years may be $20,000, and $15,000 straight-up may be cheaper, but if I don't have $15,000 in cash to blow then... it's $20 a week for me. The whole hire-purchase industry is based on this fact.

So you can do things like mandate the energy company putting panels everywhere which they'd own, and passing the costs spread over all the customers, or else let people pay the panels off through their regular account over ten years, and so on.

There are a zillion ways to do it, you just have to want to do it.

Dick Cheney (curse him) was probably right when he remarked about conservation being a virtue but not the basis for sound energy policy - not because it isn't sensible, but because its too hard to get people to do it

I disagree. By that reasoning, Vic and Qld would have had desalination plants twenty years ago. Instead we had conservation. There are three basic things you can do,

- information - advertising the reasons to conserve
- carrot - progressive pricing, so that very high users pay a lot more per unit than very low users, the carrot being money savings
- stick - also the progressive pricing, but also regulations about use

We've done that with domestic water use. And basically it seems that information alone gives 5-10% reduction, carrot gives 20%, stick gives 20%, and all three together give 50% or more.

People used to think there was no way we'd ever reduce our domestic water use, but we've done it. If we can do it with water, I really don't see why we can't do it with electricity, transport and so on.

Its hard for governments to apply sticks continuously to the people who vote them in and out though.

Water is different - the only option for adding to the water supply is to build more dams (limited options available, expensive and unpopular) or to build desalination plants (expensive and unpopular). Its still relatively cheap and easy to build new power generation facilities.

I personally hope Labour don't give Ford any money. It is amazing to me that a company can get its business model so comprehensively wrong. Big US style gas guzzlers are history. The government should let it die if it is not prepared to make cars that people actually want.

Eventually, the oil price will fall back to, or below, the marginal cost of production, perhaps $50-$70 a barrel
I wonder when the realisation oil is now priced for its scarcity, not its production cost plus margin will sink in.
I suspect there will be a couple more large oscillations in price as demand pushes supply into scarcity, then demand destruction kicks in to bring it back, but there is only one way it will end.