Last update: 0753 BST September 9
Hundreds of people gathered at Britain's third largest oil refinery today
(Saturday) in the latest protest over high fuel prices. Police said a convoy
of around 50 lorries had been joined at the Texaco refinery at Milford
Haven, Pembrokeshire, by members of the public, farmers, taxi drivers and
bus operators. Access to the plant had not been blocked and production
remained unaffected because most of the distribution is through pipelines
and by sea. In Cheshire two men were arrested after an incident at a picket
line as farmers and lorry drivers turned out for the second night in a row
to demonstrate at the Shell Oil Refinery near Ellesmere Port. Police said
there was an incident involving a tanker driver and a number of pickets. A
driver, 35, from Merseyside was held for attempted assault and a man, 21,
from Denbighshire was arrested for damaging the tanker. (0730 BST)
Times Online special: petrol war
http://www.the-times.co.uk/onlinespecials/britain/petrol/
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French hauliers refuse to end protests
FROM CHARLES BREMNER IN PARIS
THE French fuel crisis deepened last night after thousands of lorry owners
defied orders from hauliers' leaders to call off their blockade of oil
depots after winning new concessions from the Government of Lionel Jospin.
Petrol supplies were running low around the country as the blockade ended
its fifth day amid signs that the revolt over fuel prices could run out of
control, threatening the economy and the fortunes of the Socialist-led
Government.
http://www.the-times.co.uk/news/pages/tim/2000/09/09/timfgneur01007.html
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Petrol pumps will run dry, says Shell
BY RUSSELL JENKINS, ARTHUR LEATHLEY AND VALERIE ELLIOTT
HUNDREDS of petrol stations will start drying up today after a protest
outside one of Britain's biggest refineries forced oil company executives to
abandon fuel deliveries yesterday.
Hauliers and farmers angered by fuel price rises issued a warning last night
that they will intensify their demonstrations, which also brought chaos to
the A1 in the North as lorry drivers blocked all lanes.
http://www.the-times.co.uk/news/pages/tim/2000/09/09/timnwsnws01028.html
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Leading Article from the London Times [see how fantasy has begun to crash
into reality at last]
THE PRICE OF OIL
This has become a combustible political issue again
Twenty years ago President Jimmy Carter accused those oil-exporting nations
that had engineered a tripling of crude oil prices of the "moral equivalent
to war". If so, the protests of French, and now British, truckers and
farmers over the past few days might be described as a late-night pub brawl.
>From the White House to the blockaded streets around British oil refineries
yesterday, oil has once again become a combustible political issue.
The surge in crude oil prices to nearly $35 a barrel, and predictions that
petrol at British pumps will soon cost �4 a gallon, are beginning to rattle
not just consumers but their governments. Talk of a third oil shock is rife
and, as the Organisation of Petroleum Exporting Countries convenes for its
40th anniversary celebrations in Vienna, pressure at the highest level is
being exerted. The signs are that Opec will be led by Saudi Arabia to oblige
with a boost to production; but nobody should rely on oil prices coming down
soon.
The current crisis was born of an unfortunate coincidence of limited supply
and booming demand. It was only two years ago when crude prices languished
at $10 a barrel, making it unprofitable to develop new oil and gas fields.
There has been scant evidence so far that investment plans have been stepped
up in response to the recovery in prices. Non-Opec countries have been slow
to develop new deepwater fields in West Africa, Brazil and the Gulf of
Mexico. Within Opec, it is estimated that eight out of 10 of the cartel's
members are at or near capacity limits. Only Saudi Arabia and, to a far more
limited degree, the United Arab Emirates are able to raise production
substantially.
At the same time, demand is booming with all major economic blocs enjoying
upswings in growth at the same time. In America, oil stocks stand at a
24-year low and winter is coming, along with a presidential election.
President Clinton gave warning this week that, barring a significant fall in
oil prices, America's long economic boom could come to a premature end. The
oil shocks of 1973 and 1979, with inflation triggering higher interest rates
and a sharp slowdown in growth, suggest that Mr Clinton is right to call in
favours from Saudi Arabia; but he would be ill-advised to take the Western
arm-twisting of Opec's birthday revellers too far.
Risk-laden the current situation may be, but it is not incapable of rescue.
In real terms, oil prices are still one third of their level in 1990 when
Iraq invaded Kuwait and, although developing countries remain vulnerable,
industrialised economies are half as dependent on oil as they were in the
1970s, thanks to a move from manufacturing to services, improved energy
efficiency and a switch to different fuel sources. The economic impact of
the current oil price is still not inconsiderable but governments have
policy options available.
A cut in fuel duties could be delivered in a fiscally painless way and
cushion consumers and business from higher costs and the economy from
increased inflation. A more radical option is available which could even net
taxpayers a profit. Oil-importing governments have strategic stockpiles of
an estimated 1.2 billion barrels of crude and oil products. Some barrels
could be dumped on the market under the same kind of swap arrangements used
by central bankers in which stocks are bought back in the future - at a
lower price, if the strategy worked. In the longer term, governments should
reinvigorate their efforts to cut oil dependency and develop environmentally
sustainable alternatives. Low oil prices caused complacency. High prices -
which may be here for some time - must now prick governments into action.
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Eleven million square miles - the ozone hole is getting bigger
BY NIGEL HAWKES
The largest ozone hole ever seen has opened up over Antarctica, an expanse
of blue covering 11 million square miles and stretching to the southern tip
of South America, as levels of ozone-destroying chemicals continue to
increase
Photograph: REUTERS/NASA
THE biggest ozone hole ever seen has opened up over Antarctica, scientists
from the US space agency Nasa say.
It covers the whole of Antarctica and the southern tip of Latin America, an
area of 11 million square miles - three times larger than the area of the
US.
Its size is graphic evidence that ozone-destroying chemicals are continuing
to increase in the stratosphere, where the hole forms. Production of the
chemicals has been reduced by international agreement, but the effects will
take years to show up.
The hole has also formed earlier than before. "It is remarkable to find
these low ozone values so early in September, perhaps one or two weeks
earlier than in any previous year," a spokesman for the World Meteorological
Organisation said.
Paul Newman of Goddard Space Flight Centre, who is responsible for the
satellite-borne instrument that measures ozone levels, said a big hole had
been expected this year, but not this big. "We expect to see the ozone hole
every single year; we will be very old people when we actually see the ozone
hole disappear," he said.
"What's unexpected is how big it is this year. We expect some variation from
year to year, but it has really started early and it is considerably larger
than we expected."
The monster hole may have been caused by a change in high-level air currents
over Antarctica, which swirl around the Pole like a whirlpool, trapping air
and allowing the hole to form.
This year, the vortex extends farther north than it has in the past. "We're
not really sure why that happened," Dr Newman said.
The closest the hole has ever come to this size was in 1998, when it reached
10.5 million square miles. The Antarctic ozone hole, first spotted by
British scientists in 1985, is caused by the depletion of Earth-shielding
ozone by chlorofluorocarbons (CFCs).
Even though they were banned in 1987, they still remain in the atmosphere
and will continue to do so for years. The peak years for the ozone hole will
continue until 2010 or so, Dr Newman said.
-------------------------------------------------------------
The UK is at the mercy of inadequate markets and a weak and divided oil
cartel, says Carl Mortished
Petrol price ignites fuel crisis for Britons
THE world oil market has sparked two global crises in the past 30 years. One
was the 1973 oil price shock when the Arabs first set out to show the West
who was boss. The second was the Gulf War.
British holidaymakers caught up in this week's protests in France were left
in no doubt that the world, once again, is in the grip of a fuel-induced
crisis. With UK petrol prices set to rise to nearly �4 a gallon over the
next few weeks, British motorists are being treated to an unpalatable lesson
in the workings of a cartel. There is a reminder, too, as with cigarettes,
of the extent to which tax bumps up the price. Each 10p a gallon rise in
petrol nets the Treasury an extra �270 million in VAT.
The rebellious French farmers and lorry drivers reckon they have found the
weak link in the price chain, and may yet force their Government to cut
petrol taxes. The phlegmatic British appear to have no such option. The UK
is at the mercy of the weather, of inadequate markets and a weak and divided
oil cartel.
We have been on this rollercoaster before. In December 1998, the price of a
barrel of crude oil was about $10, less than a third of this week's price
peak of $34.50. Then, the consumer was in clover. All but the most efficient
oil companies were spending more to get oil out of the North Sea than it was
fetching at Rotterdam refineries. In the Middle East, Opec's least solvent
members were having trouble paying the bills. Even the Saudis were forced to
raise emergency loans.
The oil companies overreacted, sacking staff and abandoning production.
Budgets were slashed, and producers turned their back on the high-cost North
Sea. Even The Economist abandoned its usual cynicism and pronounced that oil
would slip further. In the end, the great future of cheap oil was just a
cyclical trough.
The oil market and its two great financial exchanges, London's International
Petroleum Exchange and the Nymex commodity exchange in New York, are built
on a myth. There is no global crude oil market. Instead, there are various
oils with different markets. This summer, while motorists in America howled
in protest at the cost of petrol, the Saudis were protesting that they could
not find buyers for their cargoes. Shortage? they said. What shortage?
What was not said was that the Saudi oil was flowing the other way. The
Saudis sell a heavier and dirtier crude that is ill-suited for refineries
producing petrol for US motor cars. It is true that Saudi Arabia is the
biggest producer of crude oil, speaking for more than 10 per cent of world
demand. But contrary to popular belief, its natural market is not Europe and
the US but the Far East, where the heavier crude is used in power stations
and factories.
As Leo Drollas, of the Centre for Global Energy Studies, puts it: "There is
no global shortage of oil. There is a shortage of the right kind of oil
product in the right place."
Petrol may be petrol, wherever you fill up, but oil is not oil. Brent blend
is not Arab light and Venezuelan crude does not fetch as good a price as
West Texas Intermediate.
Refineries seek specific oils to produce different products: gasoline for
motor cars or middle distillates such as diesel or heating oil. Timing
matters. In the summer Northern Hemisphere refineries want light low sulphur
crudes to make gasoline for the driving season and in the autumn they build
up supplies of heating oil.
But the different oils do not have their own marketplaces. The two financial
exchanges act as global benchmarks for "global oil" - windsocks that warn
investors which way the trade in oil is moving or which way the speculators
like to think it is moving. Markets are about supply and demand. But they
are also about perception.
Nymex and the IPE are inverted pyramids. The IPE daily trade averages about
70,000 contracts, each representing 1,000 barrels of Brent crude oil. Those
70 million barrels are, as it happens, almost equal to daily worldwide oil
production, but the futures market is nothing to do with real oil.
It is a theoretical construct used by people to hedge their energy risk or
just to make speculative bets. And over the past few months the speculators
have been very active. Underlying the theoretical Brent futures contract is
a small, but real, daily market of just 400,000 barrels - a tanker load -
from the Brent fields in the North Sea.
Bonny Light from Nigeria or Urals crude from Russia, not to mention Arab
Light from Saudi Arabia, are produced in much bigger volumes than Brent and
serve a multitude of different markets. For all that, their prices are
benchmarked off movements in the price of Brent. The tail seems to be
wagging the dog.
Such volatility is curious in a long-term business. A new oilfield takes
years to bring into production. Seismic data must be gathered, wells
drilled, production platforms built and pipelines laid.
If oil companies are planning, not for next year but for the next decade,
why are we suffering a three-year boom and bust? The 1998 trough caused an
investment blip and we are now reaping the thin harvest of low stocks and
high prices. The oil companies are spending again, but this is little
consolation to hard-pressed motorists.
Violent booms and busts were a feature of the last century. Companies wanted
a quick return on investment so they pumped oilfields dry as fast as
possible, accelerating a build-up of oil stocks. Falling prices led to an
investment famine and oil shortages only to send the price roaring up again.
When Rockefeller's empire was smashed by the courts in 1911, the tycoon's
progeny, "the seven sisters", recreated a cartel that attempted to reduce
volatility.
Then Opec arrived on the scene. The world's top oil producers attempted to
stop the volatility by controlling surplus production. But their failure to
manage excess capacity is clear for all to see. Before the end of the coming
winter, speculators will be shorting Brent and WTI futures in expectation of
a future bust.
Markets are about perception, not reality. Oil traders care little about
today's price for a cargo of Arab light in Bombay. What matters is the price
in six weeks' time.
Oil tankers from the Gulf take many weeks to reach Rotterdam refineries and
tanker rates are rising. The increase is a particular concern for the Saudis
who are finding that their crude is not selling at the usual discount to
Brent.
Logically, this global energy market needs to be freed up. Saudi Arabia
needs to put its oil cargos out to tender, not benchmark them against the
Brent/WTI system. With so much oil being exported from the Gulf, it is
extraordinary that the region lacks a proper market and the biggest producer
is able to peg its price artificially to that of another commodity in
another part of the world.
Opec exporters want to keep a grip on the sale of their only asset, but they
have shown themselves incapable of playing the useful role of Rockefeller to
the contemporary energy market. Saudi Arabia knows that the current oil
price is unsustainable. Given its appalling record at managing the market,
the Kingdom could do us all a favour by allowing the world to put a real
price on its product.
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