Dribs and Drabs

The peak oil balloon, it may appear, is finally going up. Not only have we seen obvious signs like the highest oil price rise in history on June 6 (coincidentally the anniversary of D-Day which began the liberation of Europe in the Second World War), but Gordon Brown, accidental Prime Minister of a former oil exporting (1980-2005) country, may also be one of the unlikely envoys of truth. By Julian Darley (from here).

Two other major causes of the price leap were literally just words, showing how powerful rhetoric really is – rhetoric being the art of persuasion, in some ways perhaps the most important tool in human life. On this newly historic June 6^th, a well known banking house, Morgan Stanley, opined that oil would hit $150 by July 4^th, which few will need reminding is US Independence Day. I suspect that the irony of hitting a new milestone in oil dependence on that day was not lost on the troubled bank. Why should a few words from a bank make any difference? It turns out that several of the larger financial houses have quite a good record in predicting general oil price rises, and it is very likely that the market was responding in part to this forecast.

From theoildrum.com:
CEO of BP, Tony Hayward:

Yet energy supply has struggled to respond. Production by the Organisation of the Petroleum Exporting Countries fell by 350,000 barrels of oil a day last year. The production situation is even more challenging in the market-oriented nations of the Organisation for Economic Co-operation and Development, where many existing basins are maturing fast. In Britain, for instance, North Sea gas production recorded the world's lar-gest decline for the second year in a row, falling by 10 per cent in 2007. UK oil output rose very slightly, but this is a one-off, based on a single big new field. Production remains on a downward trend.

The last time oil prices surged to this kind of level, 30 years ago, new production from the North Sea helped bring prices down. This time, new OECD production will have to come from frontier provinces such as the Canadian oil sands, the Arctic and the deep waters of the Gulf of Mexico.

Another big impact on supply is Russia, where production has begun to decline. It is a little-known fact that, until now, the growing demand for oil from China and India in recent years has been met almost barrel for barrel by rising supply from Russia.

His diagnosis here is spot on, and it is very important that it be made by him (and the IEA) rather than only by pesky bloggers, and that it include a number of points that have yet to make it into the "common wisdom":

• demand growth is still very strong, and it is not just coming from China, it is also increasingly coming from oil-producing countries themselves;
• production is stagnating overall, and declining in a number of regions: OPEC (despite its apparently plentiful reserves, Russia and, more significantly, in regions that "we" control, like the North Sea and the US (no explanation given);
• incremental production can only come from "frontier" areas, ie expensive and low EROEI (although Hayward does not touch that concept, of course). There is no silver bullet or quick fix like Alaska and North Sea were 30 years ago.

But given the tone used, one can guess what the stage is for: the first two bits are in the "not our fault" category (nasty countries closed to us), and the last one is in the "hey look at what we can do" (we're here to help).

US foreclosure filings surge 48 percent in May

By ALAN ZIBEL, AP Business Writer
WASHINGTON - The number of U.S. homeowners swept up in the housing crisis rose further last month, with foreclosure filings up nearly 50 percent compared with a year earlier, a foreclosure listing company said Friday.

Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and up 7 percent from April, RealtyTrac Inc. said.

One in every 483 U.S. households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second-straight monthly record.

Foreclosure filings increased from a year earlier in all but 10 states. Nevada, California, Arizona, Florida and Michigan had the highest statewide foreclosure rates.

Metropolitan areas in California and Florida accounted for nine of the top 10 areas with the highest rate of foreclosure. That list was led by Stockton, Calif. and the Cape Coral-Fort Myers area in Florida.

NVDL: Is the US going into a recession? Yes, no, maybe? Actually, there's no question about it.