The US automaker bailout
It’s hard to drum up sympathy for companies stuck in the 1950s. And just as hard to stay interested.
Help is at hand: the WSJ liveblogged the C-Span feed of the Big Three (Ford, GM and Chrysler) begging for a stay of execution. The comments are pretty entertaining, too.
Meanwhile, the Houston Chronicle has the solution.
Sibir Energy gets into the hotel business
Dealing with the economic downturn, Russian style.
(Meanwhile, Russia’s gas flaring targets are another casualty of the downturn.)
Gazprom vs Ukraine, part 325
Unless they pay up, Ukrainians could be facing another cold winter.
Texas rising
Obama has already offered one carrot to the US oil sector: the windfall tax won’t happen after all.
That’s sensible.
But Texas is still angry about his carbon capping proposals.
The “erection index”
Ben Aris explains what it is — and why erectile dysfunction is a worry for eastern Europe.
The Free Democratic Banana Republic of Canada
Canada’s prime minister Stephen Harper once talked of his country becoming an “energy superpower“.
With its strange perspective on democracy, it is certainly acting like one. Read the rest of this entry »
Oil sands: another one bites the dust
StatoilHydro has binned an application for an upgrader project in Canada’s oil sands, citing “prohibitive construction costs, the state of the global economy, uncertain oil price outlook and lack of legislative clarity”.
Quite a few reasons there.
The real danger of falling oil prices
Even as the collapse in oil prices was just beginning, Tom and I argued that the trend posed real long-term threats to the world economy.
Thesis: as long as the world remains addicted to oil, it needs more of it to come out of the ground, and falling prices deter investment. Read the rest of this entry »
Oil market watch: $42/b and heading lower
January delivery Brent crude in London was this morning struggling to bounce off yesterday’s lows of $42/b. But no-one has much hope of a rally.
And Merrill Lynch — yup, it still exists — said yesterday that $25/b was now in the sights:
A temporary drop below $25 is possible if the global recession extends to China. [...] In the short run, global oil demand growth will likely take a further beating as banks continue to cut credit to consumers and corporations.
A recovery will begin in June 2009, the bank predicts. (Some go even further: Gulf Oil says $20/b is possible)
Other analysts say “ugly” data leave them worried that not even another cut by Opec at its meeting in Algeria this month can thwart the bears.
Other data aren’t much more encouraging. The credit crunch is “looming large“, with smaller market players struggling to finance storage. That means a widening contango.
Recession in the US, Europe and even China is the big worry for Merrill — and anyone else who likes economic growth.
But things are looking bleak elsewhere. The EBRD says Europe’s emerging economies are in trouble too.
Derek Brower
Oil market watch: crude slips below $45 a barrel
The bear trend resumes, with oil prices dropping below $45 a barrel.
On Wednesday, oil prices had got off to a weak start, tumbling to their lowest level in three and a half years – more than $100 a barrel below their mid-year highs – as old worries resurfaced. For one thing, Opec may not be reducing oil output as much as promised. For another, the world economy is so bad that there just isn’t enough demand around.
There was a brief recovery late in the day on Wednesday, after US oil stocks unexpectedly fell.
But it didn’t last long. Analysts such as UBS brushed aside the significance of yesterday’s surprise stock draw-down. The bank says a slim decline of half a million barrels of crude “is no trend-break”. There is plenty of evidence that more oil is being put into storage. And demand for crude from refiners isn’t robust enough to mop up the spare crude.
Meanwhile, companies continue to feel the pain of low oil prices. Schlumberger has said its 2008 profits would fall short of expectations because of the slow-down in spending by its clients.
The next rung down is $40 a barrel. Six months ago, that would have seemed preposterous. But who would bet against it now?
Tom Nicholls
