Saturday, September 20, 2008

Findlaw's Environmental Law Case Summaries




• Fund For Animals v. Kempthorne
• US v. Capital Tax Corp.
• Missouri Coalition for the Env't Found. v. US Army Corps of Eng'rs
• NRDC v. Winter
• National Resources Defense Council v. US Envtl. Prot. Agency
• Northwest Coalition for Alternatives to Pesticides v. US Envtl. Prot. Agency
• Ctr. for Biological Diversity v. FPL Group, Inc.

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U.S. 2nd Circuit Court of Appeals, September 18, 2008
Fund For Animals v. Kempthorne, No. 052603
In a claim challenging defendants' Public Resource Depredation Order on the ground that it violated treaty obligations of the United States and federal statutes by allowing employees to kill unlimited number of federally protected double-crested cormorants in New York and other states, summary judgment for defendant-government is affirmed where: 1) the Depredation Order is a reasonable method of effectuating the goals of the Migratory Bird Treaty Act (MBTA); 2) the Depredation Order does not conflict with treaties to which the United States is a party; 3) the Depredation Order represents one rational response to the problem of cormorant depredation based on evidence to the Fish and Wildlife Service (FWS); 4) FWS complied with the Administrative Procedure Act (APA) in adopting the Depredation Order; and 5) the FWS did not violate National Environmental Policy Act (NEPA) in adopting the Depredation Order. Read more...

U.S. 7th Circuit Court of Appeals, September 19, 2008
US v. Capital Tax Corp., No. 07-3744
In a suit by the government under CERCLA to recover costs incurred in cleaning up hazardous waste, summary judgment for plaintiff is vacated and remanded where: 1) there was insufficient evidence in the record to determine whether the defendant had entered into a valid contract with a third party for the sale of the land, and thus whether the doctrine of equitable conversion would remove the burden of ownership under CERCLA from the defendant; and 2) the harm was not divisible among parcels since the parcels were contiguous and hazardous materials moved between them. Read more...

U.S. 8th Circuit Court of Appeals, September 16, 2008
Missouri Coalition for the Env't Found. v. US Army Corps of Eng'rs, No. 07-2218
In an action brought by an environmental group seeking disclosure of a number of documents from the U.S. Army Corps of Engineers pursuant to the Freedom of Information Act (FOIA), summary judgment for defendant-Corps is remanded for further proceedings where: 1) a Vaughn index was not inadequate on its face; 2) the Vaughn index was sufficient to establish that some of the information requested was, in fact, exempted by the deliberative process privilege; but 3) because the district court failed to analyze the segregability of the documents, it was not possible to conclude that the privilege applied to all 83 responsive documents in their entirety. Read more...

U.S. 9th Circuit Court of Appeals, September 16, 2008
NRDC v. Winter, No. 07-55294
The award of enhanced attorney's fees from an environmental case against the Navy is vacated and remanded for recalculation where: 1) co-counsel senior law firm partners and junior NRDC counsel did possess specialized experience needed in the litigation; but 2) co-counsel junior law firm associates did not qualify for enhanced fees due to lack of specialized experience; and 3) plaintiff had not shown that appropriate counsel could not be found at the statutory rate. Read more...

U.S. 9th Circuit Court of Appeals, September 18, 2008
National Resources Defense Council v. US Envtl. Prot. Agency, No. 07-55183, 07-55261
In a Clean Water Act (CWA) case seeking to force the EPA to promulgate guidelines relating to storm water pollution discharges caused by construction and development, summary judgment for plaintiffs is affirmed where: 1) plaintiffs challenged the EPA's failure to promulgate industry wide rules under section 505(a)(2) of the Clean Water Act, not the substance of existing regulation; 2) plaintiff has standing because organization members' use of particular waterways is diminished due to concern from construction sites, the injury is traceable and is redressable by the effluent limitation guidelines (ELGs) and new source performance standards (NSPSs) sought by plaintiff; and 3) the EPA listed construction sites as a point source category under CWA section 304(m), for which it must promulgate ELGs and NSPSs. Read more...

U.S. 9th Circuit Court of Appeals, September 19, 2008
Northwest Coalition for Alternatives to Pesticides v. US Envtl. Prot. Agency, No. 05-75255, 05-76807
In a case challenging pesticide tolerance levels set by the EPA, petition for review is granted in part and reversed in part and the case remanded to the EPA, where: 1) the Food Quality Protection Act requires the EPA to set pesticide tolerance levels at a ten times reduction (10x reduction) absent reliable data that a higher tolerance will be safe for infants and children; 2) the EPA data presented, including computer modeling, was reliable data for avoiding the 10x reduction on four of seven challenged pesticide tolerances; but 3) the EPA did not explained its data rationale for avoiding the 10x reduction for tolerances of three pesticides. Read more...

California Appellate Districts, September 18, 2008
Ctr. for Biological Diversity v. FPL Group, Inc., No. A116362
In action alleging that defendant owners and operators of wind turbine electric generators were, by the operation of their wind turbines, responsible for killing and injuring raptors and other birds in violation of the public trust doctrine, dismissal of the action is affirmed where: 1) the proper method of challenging the issuance of conditional use permits was by writ of administrative mandate, the time for filing which long passed; 2) it was too late for an action against the county to set aside the conditional use permits that had already been issued; and 3) dismissal was also justified by the absence of a necessary and indispensable party. Read more...


September 20, 2008 in Cases | Permalink | TrackBack (0)

McCain's Freeze on Discretionary Spending Includes all Energy and other R&D

Jeffrey Mervis of ScienceNOW Daily News [link] reported yesterday that next year's federal budget will not contain even one penny more for scientific research, technology development, and science education if McCain is elected, assuming Congress cannot muster enough votes to override a veto.  McCain intends to freeze all discretionary spending for a year to evaluate all programs.  Democratic Senator Barack Obama (IL), on the other hand, proposes doubling the budgets of many U.S. science agencies over the course of the next decade.

McCain had promised support for R & D in August, but his science aide Brannon said yesterday that there's been no talk within the campaign of allowing any flexibility in the proposed freeze. It would be part of McCain's 2010 budget submission next spring to Congress for the fiscal year that begins in October 2009, should he defeat Obama in November. "Senator McCain realizes that it's difficult to evaluate the effectiveness of basic research," Brannon told Science. "But the freeze applies to the entire budget, most of which doesn't relate to science."

September 20, 2008 in Air Quality, Biodiversity, Climate Change, Energy, Forests/Timber, Governance/Management, Legislation, Physical Science, Social Science, US, Water Quality, Water Resources | Permalink | TrackBack (0)

Awesome Chart of Financial Crisis

The NY Times  has a great chart illustrating what has happened to the stock of financial companies in the last year.  You can click on the image to get a sharper copy.

The Bush Administration wants another $ 700 billion to bail out companies that have made megabucks by sucking the American public in with worthless bundles of bad loans, luring them to overutilize easy credit, raising interest rates and foreclosing mortgages that force people out of their homes.  I realize that drastic action is necessary to deal with this debacle.  I just hope that ordinary people will receive as much of a financial bailout as the financial companies.

Here's a modest suggestion.  Let's condition the bailout on companies recouping all salaries and stock option values in excess of $ 250,000 from every officer, director, manager or salaried employee of these companies during the last three years -- reducing maximum credit card interest rates to 18% or less -- and matching mortgage payments of families who are struggling to make their payments (assuming their homes are no more than 75% of average value and their incomes are no more than 150% of average income or some similar limit).

I know that this is a fantasy.  The rich get bailed out and the poor get evicted.  But one can dream of the federal government using our taxpayer dollars to benefit the people generally rather than the banking tycoons.


September 20, 2008 in Economics | Permalink | TrackBack (0)

Friday, September 19, 2008

Iraq and Oil

It Was Oil, All Along
By Bill Moyers & Michael Winship

PBS transcript link

Oh, no, they told us, Iraq isn't a war about oil. That's cynical and simplistic, they said. It's about terror and al Qaeda and toppling a dictator and spreading democracy and protecting ourselves from weapons of mass destruction. But one by one, these concocted rationales went up in smoke, fire, and ashes. And now the bottom turns out to be....the bottom line. It is about oil.


Alan Greenspan said so last fall. The former chairman of the Federal Reserve, safely out of office, confessed in his memoir, “…Everyone knows: the Iraq war is largely about oil.” He elaborated in an interview with the Washington Post's Bob Woodward, "If Saddam Hussein had been head of Iraq and there was no oil under those sands, our response to him would not have been as strong as it was in the first gulf war."

Remember, also, that soon after the invasion, Donald Rumsfeld’s deputy, Paul Wolfowitz, told the press that war was our only strategic choice. “…We had virtually no economic options with Iraq,” he explained, “because the country floats on a sea of oil.”

Shades of Daniel Plainview, the monstrous petroleum tycoon in the movie THERE WILL BE BLOOD. Half-mad, he exclaims, "There's a whole ocean of oil under our feet!" then adds, "No one can get at it except for me!"
No wonder American troops only guarded the Ministries of Oil and the Interior in Baghdad, even as looters pillaged museums of their priceless antiquities. They were making sure no one could get at the oil except... guess who?

Here’s a recent headline in the NEW YORK TIMES: "Deals with Iraq Are Set to Bring Oil Giants Back." Read on: "Four western companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power."

There you have it. After a long exile, Exxon Mobil, Shell, Total and BP are back in Iraq. And on the wings of no-bid contracts – that's right, sweetheart deals like those given Halliburton, KBR, Blackwater. The kind of deals you get only if you have friends in high places. And these war profiteers have friends in very high places.

Let’s go back a few years to the 1990’s, when private citizen Dick Cheney was running Halliburton, the big energy supplier. That’s when he told the oil industry that, “By 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? While many regions of the world offer great oil opportunities, the Middle East, with two-thirds of the world's oil and the lowest cost, is still where the prize ultimately lies.”

Fast forward to Cheney’s first heady days in the White House. The oil industry and other energy conglomerates have been headed backdoor keys to the White House, and their CEO’s and lobbyists were trooping in and out for meetings with their old opal, now Vice President Cheney. The meetings are secret, conducted under tight security, but as we reported five years ago, among the documents that turned up from some of those meetings were maps of oil fields in Iraq – and a list of companies who wanted access to them. The conservative group Judicial Watch and the Sierra Club filed suit to try to find out who attended the meetings and what was discussed, but the White House fought all the way to the Supreme Court to keep the press and public from learning the whole truth.

Think about it. These secret meetings took place six months before 9/11, two years before Bush and Cheney invaded Iraq. We still don’t know what they were about. What we know is that this is the oil industry that’s enjoying swollen profits these days. It would be laughable if it weren’t so painful to remember that their erstwhile cheerleader for invading Iraq – the press mogul Rupert Murdoch – once said that a successful war there would bring us $20 a barrel of oil. The last time we looked, it was more than $140 a barrel. Where are you, Rupert, when the facts need checking and the predictions are revisited?

At a congressional hearing this week, James Hansen, the NASA climate scientist who exactly twenty years ago alerted Congress and the world to the dangers of global warming, compared the chief executives of Big Oil to the tobacco moguls who denied that nicotine is addictive or that there's a link between smoking and cancer. Hansen,
who the administration has tried again and again to silence, said these barons of black gold should be tried for committing crimes against humanity and nature in opposing efforts to deal with global warming.

Perhaps those sweetheart deals in Iraq should be added to his proposed indictments. They have been purchased at a very high price. Four thousand American soldiers dead, tens of thousands permanently wounded for life, hundreds of thousands of dead and crippled Iraqis plus five million displaced, and a cost that will mount into trillions of dollars. The political analyst Kevin Phillips says America has become little more than an "energy protection force," doing anything to gain access to expensive fuel without regard to the lives of others or the earth itself. One thinks again of Daniel Plainview in THERE WILL BE BLOOD. His lust for oil came at the price of his son and his soul.

September 19, 2008 in Energy | Permalink | TrackBack (0)

McCain's Green Economy: Drill, Baby, Drill

Here's one perspective on McCain's energy policy:
"When it comes to the environment, John McCain only has the interests of Big Oil at heart. That's why he has over 22 Big Oil lobbyists advising him. That's why he favored lifting the moratorium on off-shore drilling -- a move that prompted Big Oil to donate over $1 million to his campaign."

read more | digg story

September 19, 2008 | Permalink | TrackBack (0)

Legislative Climate Change Targets in the 110th Congress

For those of you teaching climate change, WRI has a great comparison of the emission reduction targets of various legislative proposals. WRI analysis of US climate legislation targets The World Resources Institute’s analysis of emissions targets and cumulative emissions budgets attempts to compare on a consistent basis the GHG reductions from explicit carbon caps and complementary policies contained in climate proposals.  Emissions from capped sectors are calculated based on the text of the respective legislation. For sectors that are not covered by the legislation, emissions are estimated to continue uncontrolled in line with projections published by EPA. WRI disclaims: "This analysis is not a projection of actual future emissions under the various proposals nor is it an analysis of economic impacts resulting from the enactment of these policies."

read more | digg story

September 19, 2008 in Air Quality, Climate Change, Economics, Energy, Governance/Management, Legislation, Sustainability, US | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 17, 2008

Palin can't get her energy facts straight

The Washington Post Fact Checker Michael Dobbs has awarded Sarah Palin four Pinocchios (the worst lie possible) for continuing to claim that she oversees "nearly 20 percent of the U.S. domestic supply of oil and gas" as Governor of Alaska. Fact-checker Post on Palin The real figure is 7.4%.  Besides which, the whole claim is complete campaign hyperbole because no Governor has substantial responsibility for managing production of oil and gas on federal, tribal, and private lands.  The scary thing is that Palin has been touted by John McCain as the most knowledgable person in America on energy issues.  That's a good measure of McCain's ability to assess and recruit 1st class talent if he became president.

As Dobbs observed Palin has been having trouble getting her basic energy statistics straight.

Last week, Sarah Palin told Charlie Gibson of ABC News that her state, Alaska, produced "nearly 20 percent of the U.S. domestic supply of energy." Yesterday, she told a campaign rally in Golden, Colorado, that she had been responsible for overseeing "nearly 20 percent of the U.S. domestic supply of oil and gas." Both claims are way off.

The Facts

While Alaska is a leading producer of crude oil, it produces relatively little natural gas, hardly any coal, and no nuclear power. Its share of oil production has been declining sharply, and now ranks lower than Texas and Louisiana. As the following table shows, Alaska is the ninth largest energy supplier in the United States, accounting for a modest 3.5 percent share of the nation's total energy production.

StateTotal productionPercent of U.S. Total
Texas10,829 Trillion Btu15.6
West Virginia4,0615.8
New Mexico2,7523.9

SOURCE: Energy Information Administration

After the non-partisan pointed out Palin's error in her interview with Gibson, the Alaska governor revised her claim somewhat, limiting it to oil and gas. But data compiled by the Energy Information Administration contradict her claim that she oversees "nearly 20 percent" of oil and gas production in the country. According to authoritative EIA data, Alaska accounted for just 7.4 percent of total U.S. oil and gas production in 2005.

It is not even correct for Palin to claim that her state is responsible for "nearly 20 percent" of U.S. oil production. Oil production has fallen sharply in Alaska during her governorship. The state's share of total U.S. oil production fell from 18 percent in 2005 to 13 percent this year, according to the EIA.

September 17, 2008 in Economics, Energy, Governance/Management, North America, US | Permalink | TrackBack (0)

Blog Action Day is October 15th: Blog on Global Poverty

Blog Action Day is October 15th.  This year the topic is global poverty.  On Blog Action Day, bloggers commit to discussing the topic from the special perspective that their blog brings to the issue.  As it happens, Blog Action Day will coincide with my presentation at the 6th IUCN Academy of Environmental Law Colloquium in Mexico City on Alleviating Extreme Poverty.  I will be speaking on Chartering Sustainable Corporations as a means to address extreme poverty.

For all of you bloggers out there, be sure to register and post your thoughts on global poverty on October 15th.  For information and registration, visit Blog Action Day

September 17, 2008 in Asia, Australia, Economics, EU, Governance/Management, International, North America, South America, Sustainability, US | Permalink | TrackBack (0)

And none of us, including the market, are happy....

With bad news from Goldman Sachs, Wamu and other financial sector entities, U.S. stocks plunged yet again today, with the Dow Jones Industrial Average closing at its lowest level since November 2005.  Despite the $ 85 billion rescue of American International Group, the Dow sank almost 450 points to 10,610, a loss of over 4% of the index's value, after a similar plunge on Monday.

Gigantic banks, brokerages, insurance companies, Fannie Mae, and Freddie Mac failing....the US Treasury already wading in debt, bailing them out....the trade deficit spiraling up...foreclosures continuing at a historic rate...housing prices starts at the lowest point in a generation....unemployment rising rapidly....daily announcements of job cuts by Fortune 1000 employers....

and here's what John McCain assured Americans that— the “fundamentals of our economy are strong.” [The Hill, 20 times video]

That frequent McCain refrain makes sense for someone who has followed the flimsy Republican line on the economy: kill regulations designed to protect the market and hope that corporate greed will keep itself in check.  McCain is now scrambling to become the champion of regulation, but no one is going to buy that given his long record of deregulation.  See Washington Post article on McCain's record advocating deregulation of business    

An e-mail I received this afternoon asked: "Can he be any more out of touch?...[economic indicators] show that the fundamentals are crumbling."

Here's the analysis by America's Future:

* The trade deficit has worsened. The trade deficit has thrown about 400,000 Americans out of work every year for the last few years. Today, the Commerce Department reported that the trade deficit worsened in the second quarter of 2008, increasing by 4.3 percent—despite the decline in the value of the dollar. The second-quarter trade deficit of $183.1 billion means that every day the United States must raise more than $2 billion by borrowing or selling off assets. The trade deficit with China increased by 15 percent in the first half of 2008. More about the trade deficit...

* Housing construction starts continue to decline. Sinking housing starts means fewer construction jobs and a weakened economy. The Commerce Department reported today that both housing construction starts and permits for future construction fell by more than 6 percent in August. August was the worst month for housing construction since January 1991. Housing values—which have dropped 16 percent over the past 12 months—are continuing to decline. More about housing...

* The misery index has risen. Nine million Americans are now unemployed as prices for food, clothing, medical care, and education continue to rise. Yesterday, the Labor Department reported a new inflation rate of 5.4 percent for the 12 months ending in August. The unemployment rate for August was 6.1 percent. So the misery index (unemployment plus inflation) is now 11.5 percent—worse than any month since June 1991, more than 17 years ago. June 2008 was the first time the monthly misery index hit double digits since June 1993. More about the misery index...

Progressive solutions:

Kick start the real economy, don’t just bail out the banks. We need a public investment initiative to get the economy moving, investing in renewable energy, rebuilding green, extending unemployment insurance, helping cities and states avoid deep cuts in health care, police and fire services, and more.

We need a long term agenda that will ensure that the profits and productivity of the next recovery are widely shared. Empower workers to organize. Forge a public social contract to replace the private one that corporations are shredding. Put the full force of the American government behind the goal of full employment. More about solutions...

After years of reading about billions of dollars lost to corporate fraud, incredible compensation for corporate managers of failing companies, and skyrocketing profits, I think we need a new paradigm.  I'm not sure about the specifics of these "progressive" policies, but somehow we need to fundamentally reorient the American economy....or there won't be anything left.

Continue reading

September 17, 2008 in Economics | Permalink | TrackBack (0)

Tuesday, September 16, 2008

AIG to be acquired by Fed at a cost of $ 85 billion

The Federal Reserve is reportedly taking a nearly 80 percent stake in the world's largest insurance company, the American International Group, in exchange for an $85 billion loan.   All of AIG’s assets would be pledged to secure the loan and the Fed would receive warrants giving it an ownership stake. Stock of existing shareholders would be diluted, but not wiped out.NY Times link

September 16, 2008 in Economics, Energy, Governance/Management, US | Permalink | TrackBack (0)

Monday, September 15, 2008

Pope says water is a universal inalienable human right

Pope Benedict XVI supported a universal 'right to water' in a message communicated from the Vatican to an international conference on the issue of Water and Sustainable Development, in Zaragoza, Spain this summer.  Profit should not be the only reason to protect water, he declared. The 'right to water' is based on the dignity of the human person, and it is not simply an 'economic good'...Because of the ...pressure of multiple social and economic factors, we must be conscious of the fact" that today "water must be considered "a good that must be especially protected through clear national and international policies, and used according to sensible criteria of solidarity and responsibility.  But, "[t]he use of water, which is regarded as a universal and inalienable right, is related to the growing and urgent needs of people who live in destitution, taking into account the fact that limited access topotable water has repercussions on the wellbeing of an enormous number of people and is often the cause of illnesses, sufferings, conflicts, poverty and even death." 

Pope Benedict also said that water is "a right that is based on the dignity of the human person." It is "from this perspective that positions of those who consider and treat water only as an economic good must be carefully examined," Benedict XVI continued. "Its use must be rational and solidary, fruit of a balanced synergy between the public and private sector."  He stated water is not just a material good, as it also has "religious meanings that believing humanity, especially Christianity, have developed, assigning it great value as a precious immaterial good, which always enriches man's life on this earth...How can one not recall in this circumstance the thought provoking message that has come to us from sacred scriptures, treating water as a symbol of purification."

The Pope concluded: "The full recovery of this spiritual dimension is the guarantee and implication for an adequate approach to the ethical, political and economic problems that affect the complex management of water on the part of so many interested individuals, both in the national and international realm."

September 15, 2008 in Water Resources | Permalink | TrackBack (0)

Hurricanes Reach Higher Wind Speeds Due to Ocean Warming -- Another Climate Change Effect

A June 27 letter to Nature 455, 92-95 (4 September 2008) | doi:10.1038/nature07234 from James Eisner, James Kossin, and Thomas Jagger, suggests that Atlantic tropical hurricanes are getting stronger due to increased ocean temperatures.  While the same phenomenon is observed throughout the world, the effects are strongest in the tropical Atlantic.  Their study does not indicate necessarily that there are more hurricanes or stronger hurricanes in terms of average wind speed; instead, it is the maximum intensity of the hurricanes that is increasing -- in other words, their destructive potential. 

Abstract: link

Atlantic tropical cyclones are getting stronger on average, with a 30-year trend that has been related to an increase in ocean temperatures over the Atlantic Ocean and elsewhere1, 2, 3, 4. Over the rest of the tropics, however, possible trends in tropical cyclone intensity are less obvious, owing to the unreliability and incompleteness of the observational record and to a restricted focus, in previous trend analyses, on changes in average intensity. Here we overcome these two limitations by examining trends in the upper quantiles of per-cyclone maximum wind speeds (that is, the maximum intensities that cyclones achieve during their lifetimes), estimated from homogeneous data derived from an archive of satellite records. We find significant upward trends for wind speed quantiles above the 70th percentile, with trends as high as 0.3 plusminus 0.09 m s-1 yr-1 (s.e.) for the strongest cyclones. We note separate upward trends in the estimated lifetime-maximum wind speeds of the very strongest tropical cyclones (99th percentile) over each ocean basin, with the largest increase at this quantile occurring over the North Atlantic, although not all basins show statistically significant increases. Our results are qualitatively consistent with the hypothesis that as the seas warm, the ocean has more energy to convert to tropical cyclone wind.

September 15, 2008 in Climate Change, Governance/Management, International, North America, Physical Science, Sustainability, US | Permalink | TrackBack (0)

Corps Jurisdictional Determinations are not Final Agency Actions under APA

The 9th Circuit ruled on Friday in Fairbanks North Star Borough v. U.S. Army Corp of Engineers that a final jurisdictional determination by the Army Corps of Engineers that an entire parcel is subject to CWA 404 jurisdiction is not a final agency action reviewable under the Administrative Procedure Act.  Fairbanks North Star Borough opinion   The decision indicates that, even though the Corps does not contemplate additional action regarding jurisdiction, its jurisdictional determinations do not finally fix or deprive the plaintiff of any rights or privileges.  That occurs only in the permitting decision that follows the jurisdictional determination. 

The Corps had created a regulation establishing a procedure for obtaining final jurisdictional determinations in the 1980s after defending a spat of lawsuits challenging its jurisdictional determinations.  On a policy level, the Corps preferred to litigate the question of jurisdiction early.

The 9th Circuit's decision is consistent with the Fourth Circuit's decision in Champion Intl. Paper v. U.S. EPA that EPA assuming jurisdiction to grant a permit under CWA 402(d) is not final agency action, because the agency will be making a permit decision.

September 15, 2008 in Biodiversity, Cases, Governance/Management, Land Use, Law, Sustainability, US, Water Quality, Water Resources | Permalink | TrackBack (0)

Oil Prices

Despite Hurricane Ike shutting down 17% of the US oil production capacity, crude fell below $ 100 on more bad news about the financial markets.  Merrill Lynch and Lehman Bros. are going under and AIG needs $ 40 billion from the Fed to survive.  So, the Dow is taking a big hit.  Apparently energy stocks are headed south.Dow NY Times on crude oil price.   Thus, the good news on crude is simply bad news on the economy -- no enthusiasm about oil supply, just the realization that without economic activity, oil demand is going to plummet.

Unfortunately, this not so good news was evident in July.  Its just taken a while to realize.  ELP Blog post 7-15

At least some folks agree that this is a short-term reduction in energy stocks and the price of crude.  One analyst, Byron King, considers the energy industry a bull ready to charge, forseeing future rises in energy prices."This time last year -- September 2007 -- a barrel of oil cost about $80, and rising ... Today, a barrel of oil is trading for about $107, or about a 33% increase year over year. That's no plunge ... the recent price retreat is not a plunge. It's just a correction within a long trend of rising prices for energy...Almost all of the world's largest oil fields were discovered over 30 years ago and have been lifting crude oil for 30, 40 or more years. So crude oil output from many of the world's oil fields is either flat (such as in Saudi Arabia) or falling (such as in Mexico). Even Russian oil output is dropping this year. No less an authority than the head of Gazprom recently stated that oil should sell for $250 or more per barrel."He also points out that the world is more hostile to Western oil companies: "As recently as the late 1970s, Western oil companies controlled well over half of the world's oil production. But now the NOC's [state-owned national oil companies) such as Saudi Aramco, National Iranian Oil Co., Kuwait Oil Co., Petroleos de Venezuela, Petroleos Mexicanos (Pemex), etc. control over 85% of the world's oil resources. Western majors control about 7% of the world's oil resource base." MarketWatch


September 15, 2008 in Economics, Energy, Governance/Management | Permalink | Comments (0) | TrackBack (0)