Posts Tagged ‘oil’


strategic overview of the global financial crisis today

Friday 30 October, 2009

The Chicago Counicil on Global Affairs hosted this event NAVIGATING GLOBAL BUSINESS IN THE NEW ECONOMY featuring David Nelms, CEO of Discover, Carlos Cabrera, former CEO of UOP, & moderated by Paul Laudicina, Chairman of the Board of A.T. Kearney.  They had some interesting insights on how the world is fairing in the global financial crisis.  Laudicina led off by noting there have been 120 actions by WTO countries to battle the financial crisis since the WTO’s November, 2008 meetings, so the world has been working on getting its finances back in order.  AT Kearney’s framework looks @ 5 drivers:

  1. globalization
  2. demographics
  3. natural resources/environment
  4. changes in consumer preferences
  5. activism/regulation

He noted there has been an explosion in productivity, which is what happens when you fire lots of people & force those who remain to do the same work.  Also for every 5 years baby boomers work rather than retiring, it contributes $1T of economic benefit to the economy.

Nelms offered a few interesting tidbits:

  • American savings has risen from 0 in 2004 to 7%
  • debit card use is up 50%
  • lending capacity has been cut so there is less credit available @ higher prices, resulting in less debt & risk:  the new normal should result in lower interest rates

Cabrera posited:

  • there is a standstill in investment in oil, resulting in supply problems
  • since fossil fuels provide 95% of energy world-wide & there is a “cap” of 10-15% for non-fossil fuels, the argument isn’t about carbon, rather “how do we change our energy diet?”-substitution or diversity?
  • China is worried about its environment, but 80% of its energy comes from coal & they have no scale in distribution/transportation.

issues are:

  • sources of lithium for electric cars
  • wind turbines require magnets of which the raw materials come from China
  • the US is the biggest supplier of natural gas in the world, but all oil reservoirs only use 30% of capacity
  • electricity users will see relief if nuclear power comes online
  • demand in the future is coming from the developing world
  • think diesel, not gas


short/medium/long-term outlooks-

  • Nelms-most worried about Fannie Mae/Freddie Mac
  • Cabrera-worried about a China intervention to securing energy sources

Nelms-the fed has done a fine job, but mortgage rates will rise to bite us again & holiday spending will be flat

Cabrera-new energy discoveries are coming:  technology will create opportunities

My last word-Nelms really only addressed domestic issues, but why host a speaker who only talks about the US @ a GLOBAL affairs event?


Energy financing in Turkey

Friday 28 August, 2009

I attended this last minute presentation organized by Central Asian Productivity Center at the International Visitors Center by Hacettepe University‘s Prof. Dr. Hasan KAZDAGLI.  Here’s his presentation:   sunum chicago

And here’s what was not contained in the presentation:  Despite all of the oil flowing through Turkey, as a fast-growing country, it still has too little energy.  Turkey recently signed agreements with the European Union to transport oil through Austria via Nabuko, which will avoid transporting oil from Russia through Ukraine.  It’s already reached Tbilisi.  Turkey also recently signed an agreement with Russia to create a link on the Black Sea.  Turkey signed the Kyoto Protocol last year & are negotiating with the Russians to build a nuclear plant.  Turkey is the 2nd fastest growing energy market after China.  The Turkish gas market is no longer under state control.  Turkey has a goal of producing 2000 megawatts of wind power by the year 2020 & is offering special incentives for renewables.


  • Asians, Germans, Italians, & others are investing in Turkey.
  • Human resources are strong in Turkey.  A law was passed 5 years ago granting tax exemptions to technoparks, resulting in 19 technoparks in Turkey, with 3 in the capital Ankara, which house 142 companies.  Turkey is home to 150 universities, many of which teach in English, which educate engineers, many of whom specialize in automotive.  1.5M apply to Turkish universities, but they only take the top 1% to maintain high quality.  200K graduate each year.

bp world energy review

Friday 26 June, 2009

British Petroleum, the Chicago Council on Global Affairs, Chicagoland & Illinois Chambers of Commerce, brought you this event The 58th Annual BP Statistical Review of World Energy featuring former University of Michigan economics grad Mark Finley (just like me), GM of Global Energy Markets for BP.  Here’s the information contained in the presentation he gave & here’s the story behind the #’s:

Overall:  2008 was a year of volatility & structural change.  Demand for energy by emerging economies exceeded that of developed economies (OECD) for the 1st time ever, especially for natural gas & coal, but not for oil.  World economic growth slowed sharply & exporters suffered most keenly.  Consumer spending was essentially replaced by government spending.  Energy consumption moves with growth & growth slowed, which started in the OECD in 2006-7.

Oil:  consists of 37% of energy consumption & 2/3 of it is traded across borders.  It’s risen for 7 consecutive years, but fell for the 1st time since 1993 & at the biggest rate since 1982.  # of miles driven fell for the 1st time in 30 years.  Diesel & jet fuel grew until the recession hit.  Oil supply changes lag demand changes because it takes a long time to process production changes.  OPEC cut 3M barrels/day.  Countries outside of OPEC cut 600K barrels/day, the most since 1992.  Russia dropped for the 1st time in a decade, but because of tax changes is now up again.  Oil inventories & spare capacity are up to 2o year highs because although production is down since 2007, supply is up, while demand is down.  The world is not running out of oil. Reserves continue to build.  The issue is distribution.  Margins have fallen, so there’s little incentive to produce.

Natural Gas:  mirrors oil.  China showed strong growth.  The US had the biggest growth in history because of greater productvity while Canada showed its biggest decline.  The Atlantic Basin is shipping to China to serve its 12% demand.  There is still too much supply chasing demand.

Coal:   is the fastest growing @ 3.1%, although China fell with it electricity generation in the 4th quarter.  While it’s cheap, prices are more volatile than oil & gas.  Natural gas grew while coal fell in both Europe & the US.  While coal is not as widely traded, Europe shipped coal to Asia & the US.

Renewables:  grew in OECD countries where governments can afford subsidies.  Ethanol increased 31% (60% in the US), but still accounts for only 1% of oil demand.  Wind grew 30% to 1 1/2 % of all power generation.  Solar grew 70%.  CO2 emisssions grew because of the growth in coal.  Australia postponed their carbon credit program because of its affect on the economy.


  • the oil companies recognized the recession before it was announced
  • the cost of cap & trade programs will depend on supply & demand for those credits
  • natural gas is trading at a record discount to oil-coal plays a role too
  • US has shown the biggest growth in renewables (7 wind companies are now headquartered in Chicago)
  • reserves & production change over time which leads to changes in reserves, but figures don’t include new sources, i.e. Canadian oil sands, supplies off the Brazilian coast, etc.
  • there are tons of opportunities to increase procution in the OECD
  • you can’t separate the politics from the economics in hypothesizing about an instability tax-there is too little trust in market mechanisms
  • OPEC cartels have led to higher prices, but the industry is prone to booms & busts, & OPEC didn’t set quotas for 22 years

My take-I was a little disappointed with the lack of focus on new sources/renewables, I guess I shouldn’t be, given this presenation was made by a petroleum company.


Azerbaijan & Turkey oil presentations

Monday 15 June, 2009

The Central Asian Productivity Research Center & National Strategy Forum sponsored “The Energy Security Triangle: Defining Risks and Rewards,” the 2009 edition of the Silk Road Conference.  Last year’s conference featured high quality presentations from Azerbaijan, Kazakhstan, India, Pakistan, Turkey & brief overview from the Asian Development Bank to an audience of 100+ attendees.  This year’s conference offered talks given by diplomats from Azerbaijan & Turkey & introductions/off-the-cuff remarks from the Export-Import Bank & sponsors to a group of about 35.

Although powerpoint presentations were not presented, Elshan Baloghlanov of Azerbaycan Respublikasinin sent along his (silkroad09) to the attendees.  In addition he said pipelines were spearheaded by British Petroleum, whose 1st exports began in 1997.  His country suffered collateral damage from the conflict in Georgia in August, 2008 & supplies were interrupted. There are business opportunities in IT & telecom.  Their office has facilitated relationships between 10 partnerships with companies from Silicon Valley including Microsoft & Cisco in egovernment & wimax technologies since 2006.

The consul general from Turkey noted, Turkey has proximity to 72% of the oil reserves in the world.  62% of gas & 32% of oil from Russia flows through Turkey.  5 western companies have invested heavily, but their names remain secret to keep them protected.


  • Putin will be Turkey to discuss pipelines
  • Pipelines are relatively easy to protect from terrorists
  • Turkey is a democratic country where money has little to do with political decision-making, so Turkey refuses to do the bidding of the US despite $30B in economic aid
  • Turkey is a natural economic, military, etc. ally to Israel, being the 1st to recognize it as a country in 1948 & making anti-semitism a crime.
  • Azerbaijan’s relations with Pakistan are good, so that mitigates against danger there
  • Hesitation & lack of support/conduits are obstacles to the Nabuko natural gas pipeline project
  • Governments are looking beyond the reign of oil to “convert black gold into human gold.”  Azerbaijan has a joint venture with Korean companies to build 40 windmills.  Turkey is using its resources to invest logically in renewable energies resulting in 12% coming from hydroelectric & geothermal power.

My take-maybe this conference is an example of the fallout of the economic crisis.  Its contraction could indicate the decline in interest on both sides of the coin (presenters & attendees) in international topics & be a reflection of the tendency to revert to looking inwards rather than externally @ the rest of the world for global opportunities.  If so, I think that’s a shame because now is when change is occurring & those who engage the rest of the world during these trying times will be the 1st to reap the benefits when things inevitably turn around.