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Venezuela oil ‘may double Saudi Arabia’

Venezuela oil ‘may double Saudis’

A new US assessment of Venezuela’s oil reserves could give the country double the supplies of Saudi Arabia.

Scientists working for the US Geological Survey say Venezuela’s Orinoco belt region holds twice as much petroleum as previously thought.

The geologists estimate the area could yield more than 500bn barrels of crude oil.

This assessment is far more optimistic than even the best case scenario put forward by President Hugo Chavez.

The USGS team gave a mean estimate of 513bn barrels of “technically recoverable” oil in the Orinoco belt.

Chris Schenk of the USGS said the estimate was based on oil recovery rates of 40% to 45%.

Petroleos de Venezuela SA (PDVSA), Venezuela’s state oil company, has not commented on the news.

However, Venezuelan oil geologist and former PDVSA board member Gustavo Coronel was sceptical.

“I doubt the recovery factor could go much higher than 25% and much of that oil would not be economic to produce”, he told Associated Press news agency.

Venezuela holds the largest oil reserves of any Opec country outside the Middle East. Saudi Arabia has proven reserves of 260bn barrels.

Is U.S. Now On Slippery Slope To Tyranny? – Thomas Sowell

Jerry’s comments: For as long as I can remember I have looked forward to reading Thomas Sowell’s columns for his acute insights. He is a former economics professor and has written some great books, including one called: Basic Economics. In my opinion, it is a must-read for anyone who wants to understand the way the U.S. economy works – and doesn’t work.

Is U.S. Now On Slippery Slope To Tyranny?
By THOMAS SOWELL
Posted 06/21/2010 06:13 PM ET

When Adolf Hitler was building up the Nazi movement in the 1920s, leading up to his taking power in the 1930s, he deliberately sought to activate people who did not normally pay much attention to politics.

Such people were a valuable addition to his political base, since they were particularly susceptible to Hitler’s rhetoric and had far less basis for questioning his assumptions or his conclusions.

“Useful idiots” was the term supposedly coined by V.I. Lenin to describe similarly unthinking supporters of his dictatorship in the Soviet Union.

Put differently, a democracy needs informed citizens if it is to thrive, or ultimately even survive.

In our times, American democracy is being dismantled, piece by piece, before our very eyes by the current administration in Washington, and few people seem to be concerned about it.

The president’s poll numbers are going down because increasing numbers of people disagree with particular policies of his, but the damage being done to the fundamental structure of this nation goes far beyond particular counterproductive policies.

Just where in the Constitution of the United States does it say that a president has the authority to extract vast sums of money from a private enterprise and distribute it as he sees fit to whomever he deems worthy of compensation? Nowhere.

And yet that is precisely what is happening with a $20 billion fund to be provided by BP to compensate people harmed by their oil spill in the Gulf of Mexico.

Many among the public and in the media may think that the issue is simply whether BP’s oil spill has damaged many people, who ought to be compensated.

But our government is supposed to be “a government of laws and not of men.”

If our laws and our institutions determine that BP ought to pay $20 billion — or $50 billion or $100 billion — then so be it.

But the Constitution says that private property is not to be confiscated by the government without “due process of law.”

Technically, it has not been confiscated by Barack Obama, but that is a distinction without a difference.

With vastly expanded powers of government available at the discretion of politicians and bureaucrats, private individuals and organizations can be forced into accepting the imposition of powers that were never granted to the government by the Constitution.

If you believe that the end justifies the means, then you don’t believe in constitutional government.

Price increases fuel fears of food ‘crises’

By Javier Blas in London | Financial Times

Published: June 15 2010 18:51 | Last updated: June 15 2010 18:51

Food commodity prices will increase more than previously expected in the next decade because of rising energy prices and developing countries’ rapid growth, two leading organisations said on Tuesday, worsening the outlook for global food security.

“A return to higher global economic growth . . .  together with continuing population gains, are expected to increase demand and trade and underpin prices,” the United Nations’ Food and Agriculture Organisation and the Organisation for Economic Co-operation and Development said in their annual agricultural outlook.

Higher crude oil prices would add force to rising agricultural commodities prices, particularly in those regions – including Europe and the US – where energy inputs such as fertilisers were used intensively, said the report.

For the next 10 years the FAO and OECD forecast that significant food prices, with the exception of pork, would remain above the 1996-2007 average, in both nominal and real terms – adjusted for inflation. Although prices were unlikely to surge back to the record levels of early 2008, they warned that “if history is any guide, further episodes of strong price fluctuations . . . cannot be ruled out, nor can future short-lived crises”.

Angel Gurría, secretary-general of the OECD, said all indications pointed to a “period of high prices”, although these would be below the peaks of the 2007-08 food crisis when prices spiked to record levels, triggering riots in countries from Bangladesh to Haiti.

The forecast of high prices is likely to exacerbate concerns about global food security. Since the food crisis, and the number of chronically hungry people surging above the 1bn mark last year, agriculture has drawn more attention from policymakers – particularly in the US. The OECD earlier this year organised its first ministerial meeting on agriculture for 12 years.

The prospect of higher prices could prompt those nations dependent on food imports – such as Saudi Arabia and South Korea – to try to secure long-term food supplies by accelerating their investment in overseas agriculture in so-called “farmland grabs”. Mr Gurría said some food-importing nations felt “strategically vulnerable” about their agricultural commodities supplies, but added it was critical to avoid “a race for [food] self-sufficiency”.

Developing countries would provide the main source of growth for world agricultural production, consumption and trade, said the report.

“As incomes rise, diets are expected to slowly diversify away from staple foods towards increased meats and processed foods,” it said. In turn, with increasing affluence and an expanding middle class, food consumption in developing countries would become less responsive to price and income changes.

In real terms, the report projected cereal prices to rise around 15-40 per cent relative to the 1997-2006 average, up from last year’s forecast of 10-20 per cent. Vegetable oils are expected to be more than 40 per cent higher, against last year’s forecast of a 30 per cent increase. Meat and dairy products will also be more expensive in the next decade, reversing last year’s forecast that pointed to lower prices.

OPEC: 2010 demand picture uncertain

Tarek El-Tablawy, AP Business Writer, On Wednesday June 9, 2010, 10:12 am

CAIRO (AP) — OPEC on Wednesday slightly revised up its forecast for world economic growth but left 2010 oil demand largely unchanged as Europe’s debt crisis, an oversupply of crude in the market and a potential cooling in China’s growth pointed to “economic signs that are not rosy.”

The Organization of the Petroleum Exporting Countries said world economic growth this year was revised up to 3.8 percent in June from the previous month’s 3.5 percent forecast. The gain was driven mainly by improved performance in the Japanese economy which it forecast to grow by 2.7 percent this year compared to last month’s 1.5 percent projection.

“While the global economy seems to be enjoying solid momentum in the first half (of 2010), concerns about growth in the second half remain due to euro-zone sovereign debt problem, the ability of China to avoid overheating and the still high unemployment” in industrialized nations, OPEC said in its June Oil Market Report.

The 12-nation group that supplies about 35 percent of the world’s oil has seen the price of its member states’ chief export drop from nearly $87 earlier in May to around $70 per barrel this month. The slide came as concerns mounted about a spillover from Greece’s debt crunch that would undercut the fragile economic recovery taking place in the world and, by extension, oil demand.

“With half of the year already passed, economic signs are not that rosy,” the report said, adding however that increasing world economic growth rates offered hope that oil demand would be supported.

For more than a year, the group has refrained from changing its output quotas to boost prices. OPEC kingpin Saudi Arabia and others have said oil at between $70-80 per barrel is fair for both producers and consumers.
The producer bloc is slated to meet in October to discuss whether to revise its output ceiling, but several ministers have indicated that a cut was unlikely given that members were already producing far more than their quotas.

It said given the current oversupply in the market, demand for OPEC crude was revised down to 28.8 million barrels per day — a drop of 70,000 barrels per day from May forecasts.

“This would leave no room for additional crude supplies in the market,” OPEC said, even as it predicted non-OPEC production would climb this year by 640,000 barrels per day.

OPEC lowered its world oil demand growth forecast by 10,000 barrels per day, at 940,000 barrels per day. That put 2010 world demand at 85.37 million barrels per day or 1.12 percent more than the previous year.
“Although demand has seen some improvement recently, this has been more than overwhelmed by the higher growth in supply,” OPEC said. “Additionally, in light of the ongoing risks, there is considerable uncertainty on the outlook for the second half of the year.”

The producer group said the United States — particularly with the approaching summer driving season — would “play a major role in total oil consumption” this year, even as China’s oil demand had been “a back up and offsetting the loss in OECD oil demand.”

Output compliance among the 11 OPEC nations bound by quotas is said to be around 53 percent, according to analysts. Iraq is not bound by the quotas, and OPEC said in the report that the country was responsible for most of the growth in OPEC nation supply in May.

Feds halt new oil drilling in Gulf

By MATTHEW DALY, Associated Press Writer

WASHINGTON – The Obama administration is blocking all new offshore drilling in the Gulf of Mexico, a day after regulators approved a new permit for drilling in shallow water.

An e-mail Thursday from the Gulf Coast office of the Minerals Management Service says that “until further notice” no new drilling is being allowed in the Gulf, no matter the water depth. A copy of the e-mail was obtained by The Associated Press.

The announcement comes a day after the minerals agency, which oversees offshore drilling, granted a new drilling permit for a site about 50 miles off the Louisiana coast, 115 feet below the ocean surface. Environmental groups accused the administration of misleading the public by allowing work to resume in waters up to 500 feet deep while maintaining a moratorium on deepwater drilling.

Kendra Barkoff, a spokeswoman for Interior Secretary Ken Salazar, denied that the administration was placing a hold on shallow-water drilling.

“There is a six-month moratorium on deepwater drilling,” Barkoff said in an e-mail Thursday. “Shallow-water drilling may continue as long as oil and gas operations satisfy the environmental and safety requirements Secretary Salazar outlined in his report to the president and have exploration plans that meet those requirements. There is no moratorium on shallow water drilling.”

Bob Abbey, the acting director of the Minerals Management Service, announced further restrictions for offshore drilling on Wednesday night.

Abbey, who took over the minerals agency last week after the forced resignation of its previous director Elizabeth Birnbaum, said operators will be required to submit additional information about potential risks and safety considerations before being allowed to drill. The rule applies even to those plans that have already been approved or received a waiver exempting them from detailed environmental scrutiny, Abbey said.

The new information must be submitted before any drilling of new wells begins, Abbey said, adding that the rule should ensure that tighter safety standards and better consideration of risks are incorporated into drilling plans.

The administration will establish separate requirements for deep water and shallow water exploration, Abbey said.

In a recent letter, Gulf Coast senators urged President Barack Obama to allow shallow-water drilling to continue, arguing that it is far safer than deepwater exploration. The senators said shutting down the roughly 60 shallow-water rigs in the Gulf could cost some $135 million in revenues and affect at least 5,000 jobs.

Goldman Sachs sold $250 million of BP stock before spill

By John Byrne

Wednesday, June 2nd, 2010 — 10:12 am

Firm’s stock sale nearly twice as large as any other institution; Represented 44 percent of total BP investment

The brokerage firm that’s faced the most scrutiny from regulators in the past year over the shorting of mortgage related securities seems to have had good timing when it came to something else: the stock of British oil giant BP.

According to regulatory filings, RawStory.com has found that Goldman Sachs sold 4,680,822 shares of BP in the first quarter of 2010. Goldman’s sales were the largest of any firm during that time. Goldman would have pocketed slightly more than $266 million if their holdings were sold at the average price of BP’s stock during the quarter.

If Goldman had sold these shares today, their investment would have lost 36 percent its value, or $96 million. The share sales represented 44 percent of Goldman’s holdings — meaning that Goldman’s remaining holdings have still lost tens of millions in value.

The sale and its size itself isn’t unusual for a large asset management firm. Wall Street brokerages routinely buy and sell huge blocks of shares for themselves and their clients. In light of a recent SEC lawsuit arguing that Goldman kept information about a product they sold from their clients, however, the stock sale may raise fresh concern among Goldman’s critics. Goldman is also a frequent target of liberals and journalists, including Rolling Stone‘s Matt Taibbi, who famously dubbed the firm a “vampire squid.”

Two calls placed to Goldman Sachs’ media office in New York Wednesday morning after US markets opened were not immediately returned, though Raw Story decided to publish the story quickly after the calls since the stock sale had been already noted online.

Others also sold stock

Other asset management firms also sold huge blocks of BP stock in the first quarter — but their sales were a fraction of Goldman’s. Wachovia, which is owned by Wells Fargo, sold 2,667,419 shares; UBS, the Swiss bank, sold 2,125,566 shares.

Wachovia and UBS also sold much larger percentages of their BP stock, at 98 percently and 97 percent respectively.

Wachova parent Wells Fargo, however, bought 2.3 million shares in the quarter, largely discounting Wachovia’s sales.

Those reported buying BP’s stock included Wellington Management, a large asset firm, and the Bill and Melinda Gates Foundation.

BP is struggling to cap a massive oil leak at one of its drill sites in the Gulf of Mexico. The firm’s myriad safety violations over the years have come to light in lieu of the Gulf disaster.

BP traded on average at $56.86 in the first quarter, according to GuruFocus, a site that monitors the major trading moves of prominent investors. A list of major institutions’ sales of BP stock are available at the market research website Morningstar.

It’s certainly unknown as to why the firms sold their holdings. In its analysis of the company in mid-March, Morningstar, the market research site, gave the company an average rating of three out of a possible five stars.

“BP’s valuation carries more uncertainty than ExxonMobil’s or Shell’s because the firm is less integrated, with more of its earnings coming from the [exploration and production] business than from potentially offsetting refining operations,” the site’s analyst wrote. “Like its peers, a sustained drop in oil and gas prices can hurt upstream earnings. Lower crude-oil feedstock costs could help refining margins, but refined product pricing lags could quickly swing refining profits to losses. BP’s global business faces potential disruptions caused by political risks, particularly with its heavy exposure to Russia. Disruptions caused by environmental and operational constraints could further limit earnings potential.”

The transnational oil company, like other energy giants, was hit with lower oil and gas prices in the past year after the price of oil surged in 2008.

“BP’s fourth quarter marked another quarter of year-over-year production gains, with a 3% increase thanks to new field startups,” Morningstar’s analyst wrote in another note, after BP turned in better than expected fourth quarter results in February. “BP reported fourth-quarter replacement cost profit of $3.4 billion, up 33% from year-ago earnings of $2.6 billion, as upstream earnings growth was more than enough to offset downstream weakness. For the full year, BP’s earnings of $14 billion were 45% below year-ago earnings of $26 billion, in part because of lower oil prices earlier in the year. We’re encouraged by BP’s sequential earnings gains as new projects and cost-cutting efforts drive upstream results.”

The SEC filed a civil lawsuit against Goldman Sachs and one of its vice presidents in April, asserting that the firm had committed fraud by misrepresenting a mortgage-investment product inherently designed to fail. The company helped a hedge fund trader create a mortgage investment that gained value as mortgage borrowers defaulted en masse.

In response, Goldman said the SEC’s charges were “completely unfounded in law and fact” and averred that it would “vigorously contest them and defend the firm and its reputation.”

The firm has also faced criticism over giant bonuses paid to staff amidst the US financial crisis. Goldman reduced the sizes of its staff bonuses this year to $16.9 billion, and said it would pay its chief executive $9 million, far less than the previous year.

Goldman also announced it would create a $500 million program to help small businesses. Critics noted that the figure represented just 3% of the bonus pool.