Today, China consumes only a third as much oil as the US, which burns a quarter of the world's oil each day.

With oil prices approaching the symbolic threshold of $100 a barrel, the world is headed toward its third energy shock in a generation. But today’s surge is fundamentally different from the previous oil crises, with broad and longer-lasting global implications.
Just as in the energy crises of the 1970s and ’80s, today’s high prices are causing anxiety and pain for consumers, and igniting wider fears about the impact on the economy, Iht.com said.
Unlike past oil shocks, which were caused by sudden interruptions in exports from the Middle East, this time prices have been rising steadily as demand for gasoline grows in developed countries, as hundreds of millions of Chinese and Indians climb out of poverty and as other developing economies grow at a sizzling pace.
“This is the world’s first demand-led energy shock,“ said Lawrence Goldstein, an economist at the Energy Policy Research Foundation of Washington.
Forecasts of future oil prices range widely. Some analysts see them falling next year to $75, or even lower, while a few project $120 oil. Virtually no one foresees a return to the $20 oil of a decade ago, meaning consumers should brace for an era of significantly higher fuel costs.
At the root of the stunning rise in the price of oil, up 56 percent this year and 365 percent in a decade, is a positive development: an unprecedented boom in the world economy.
Demand from China and India alone is expected to double in the next two decades as their economies continue to expand, with people there buying more cars and moving to cities to seek a way of life long taken for granted in the West.
But as prices rise, the global economy is entering uncharted territory. The increase so far does not appear to be hurting economic growth, but many economists wonder how long that will last.
Oil is not far from its historic inflation-adjusted high, reached in April 1980 in the aftermath of the Iranian revolution. At the time, oil jumped to the equivalent of $101.70 a barrel in today’s money.
For most of the 20th century, as it transformed the modern world, oil was cheap and abundant. Throughout the 1990s, for example, oil prices averaged $20 a barrel. Even at today’s highs, oil is cheaper than imported bottled water, which would cost $180 a barrel, or milk, at $150 a barrel.
As China turned into a global economic behemoth over the last decade, it also became a major energy user. Its economy has grown at a furious pace of about 10 percent a year since the 1990s, lifting nearly 300 million people out of poverty. But rapid industrialization has come at a price: oil demand has more than tripled since 1980, turning a country that was once self-sufficient into a net oil importer.
India and China are home to about a third of humanity. People there are demanding access to electricity, cars, and consumer goods and can increasingly afford to compete with the West for access to resources. In doing so, the two Asian giants are profoundly transforming the world’s energy balance.
Today, China consumes only a third as much oil as the United States, which burns a quarter of the world’s oil each day. By 2030, India and China together will import as much oil as the United States and Japan do today.
If the Chinese and Indians consumed as much oil for each person as Americans do, the world’s oil consumption would be more than 200 million barrels a day, instead of the 85 million barrels it is today.
More realistically, global demand is expected to rise to about 115 million barrels a day by 2030, a level that is likely to tax the world’s ability to pump more oil out of the ground. Already, the world is running on a limited cushion of spare capacity; any interruption in supplies, whether from hurricanes or armed conflict, causes prices to spike.
For oil companies, high prices have set off a frenzied search for new sources around the world. After a long lull in investments through most of the 1990s because of low prices, major oil companies have invested billions of dollars to bring in more supplies.
The trouble is that these big new developments take a long time, and companies have been hobbled by higher costs. The cost of drilling rigs, for example, the basic tool of the trade, has doubled in recent years. Analysts say it will take time, but new supplies will eventually work their way to market.
Supplies have also been hampered by political tension in the Persian Gulf, the war in Iraq, devastating hurricanes in the oil-producing Gulf of Mexico, production difficulties in Venezuela and violence in Nigeria’s oil-rich province. Many of these geopolitical factors have contributed to a political risk premium variously estimated at $25 to $50 a barrel. Recently, in just nine weeks, oil jumped from $75 to $95 a barrel for little apparent reason.
Veterans of the oil business, having lived through booms and busts, say no one should count on oil rising forever. Economic slowdowns in China or the United States--or especially, in both--would probably send prices tumbling.

The EU target is to replace at least 10% of vehicle fuel with biofuels by 2020.

Making fuels from plants is strongly supported by the business community in Spain, but equally strongly criticized by environmental organizations because of its negative impact on food production.
Bill Glover, environmental performance director for US aircraft maker Boeing, recently said in Madrid that within five or 10 years, the use of biofuels in commercial aviation will be feasible, and will help to reduce carbon dioxide (CO2) emissions caused by air transport by 50 percent, IPSNews.net said.
He added that air transport is responsible for 1.5 percent of European Union CO2 emissions, according to statistics from 2006, while land transport accounts for 52.8 percent.
The importance attached to biofuels in Spain is borne out by the Spanish transnational corporation Abengoa Bioenergy, which has just opened a 35 million dollar pilot plant for biofuels production in the midwestern US state of Nebraska.
The plant is designed to produce 50 million liters of bioethanol a year, using waste biomass unsuited for use as food, according to a company spokesman.
In February, Abengoa signed an agreement with the US Department of Energy, which is to finance half of the project investment.
In preliminary trials, the company produced biofuel from wheat straw, forestry waste and food plant residues. Javier Salgado, the head of Abengoa, says that in one decade’s time, ethanol will substitute for gasoline on a massive scale and supply 40 percent of the world’s fuel consumption.
Meanwhile, one of Spain’s foremost agricultural organizations, the Agrarian Association of Young Farmers (ASAJA), is calling biofuel production into question. On Oct. 31 it asked the authorities to inspect local industries producing biodiesel from sunflower seeds.
Sunflower farmers who have contracted to supply the biodiesel manufacturers are discontented because they are receiving 30 euro cents (45 cents of a dollar) less per kilogram than the market price for food use, and the biodiesel industry will not raise the price.
The secretary general of ASAJA in Castilla-La Mancha, Jose Maria Fresneda, told a press conference that sunflower oil may be being imported to make biodiesel, and the association suspects that no difference is being made between imported oil destined for food use or for industrial use.
Biodiesel plants received incentives from regional administrations to amortize their installation costs, “with money out of taxpayers’ pockets,“ and are set to make a big profit from the price differential, Fresneda said.
Spain and Brazil agreed in late October to develop joint projects for biofuels production, and for increasing energy saving, according to Spanish Minister for Industry, Trade and Tourism Joan Clos.
Some civil society organizations are severely critical of biofuels. The spokeswoman in Spain for the non-governmental Intermon Oxfam, Marisa Kohan, told IPS that the EU’s plans to increase the use of biofuels “could be disastrous for some of the world’s poorest people.“
The EU target is to replace at least 10 percent of vehicle fuel with biofuels by 2020. If it succeeds, the present consumption of biofuels would increase by a factor of 10, and the bloc would have to import biofuels made from crops like sugarcane and palm oil in developing countries.
But producing commodities for biofuels in developing countries could lead to the displacement of poor farmers from their land, the destruction of their way of life, more exploitation of workers, and deteriorating food security, Kohan said.
A report by Oxfam International says that “as much as 5.6 million square kilometers of land--an area more than 10 times the size of France--could be in production of biofuels within 20 years in India, Brazil, South Africa and Indonesia alone.“
The report quotes Abet Nego Tarigan, deputy director of Sawit Watch, an Indonesian non-governmental organization representing communities, farmers and plantation workers affected by palm oil plantation development, who said that “decisions on biofuels made in Europe are directly affecting millions of people in Indonesia.“
“The proposed EU policy will only make things worse, pushing more people into poverty and concentrating land in the hands of a few,“ Tarigan concluded.

A monster offshore oil discovery could help Brazil join the ranks of the world’s major exporters, but full-scale extraction is unlikely until 2013 and will be very expensive.
The “ultra-deep“ Tupi field off the coast of Rio de Janeiro could hold as much as 8 billion barrels of recoverable light crude, and initial production should exceed 100,000 barrels daily, says Guilherme Estrella, exploration and production director of Brazilian state oil company Petroleo Brasileiro (PBR), AP reported.
Petrobras, as it is known, will start pilot pumping in 2010 or 2011 but full production would take several more years, Estrella said late Nov. 8.
After soaring 26 percent in New York on Nov. 8 on news of the find, Petrobras stock opened more than 7 percent higher Nov. 9 on Sao Paulo’s Bovespa exchange.
Getting the oil out will be an expensive and formidable challenge because the oil is so deep. The lag time before production means any impact on world oil prices won’t come soon.
Petrobras, however, is well-known for its experience in extracting oil from extremely deep offshore reserves and is widely regarded as one of the planet’s best-run state oil companies.
Tapping the Tupi field will cost billions of dollars, but Petrobras is flush with cash for strategic investments because of growing production and high international oil prices.
The Tupi field lies under 7,060 feet of water, almost 10,000 feet of sand and rocks, and then another 6,600-foot thick layer of salt. The company drilled test wells that lie under 7,100 feet of water, 177 miles south of Rio de Janeiro.
Bear Stearns analyst Marc McCarthy estimates the value of the oil in the block at $25 billion to $60 billion depending on international prices.
Tupi “is immense and marks the beginning of a new horizon for Brazil,“ he said in a note to clients.
“We are sure the question will arise--will Brazil join OPEC?“ McCarthy wrote. “But more importantly, it has established an aura of optimism for massive future exploration success.“
Brazil on Nov. 8 also announced it would withdraw 41 blocks of prospective underwater oil extraction territory from an auction of 312 oil blocks to be held this month.
The country will put the remaining 261 blocks up for auction but will reserve the most promising areas around the Tupi field for Petrobras.
Petrobras chief executive Sergio Gabrielli said the Tupi field is “only part of a new frontier“ for Brazilian oil exploration. He predicted the field and future finds could give Brazil the world’s eighth-largest oil reserves.
“Brazil’s reserves will lie somewhere between those of Nigeria and those of Venezuela,“ Gabrielli said.
Petrobras says the Tupi field, off Brazil’s southeastern Atlantic coast, has between 5 billion and 8 billion barrels--equivalent to 40 percent of all the oil ever discovered in Brazil.
Brazil’s total oil reserves currently rank 17th in the world, with 14.4 billion barrels of oil equivalent, Gabrielli said.
News of the discovery rocked a country that became a net oil exporter only last year, but must still import light crude oil for the refined products it needs to fuel South America’s largest economy. Brazil produces--and exports--mostly heavy crude oil, which has to be mixed with the light oil in refineries.
For a country that went deeply into debt buying foreign oil in the 1970s and 1980s, “this has changed our reality,“ said Dilma Rousseff, presidential chief of staff.
Petrobras has a 65 percent operating stake in the Tupi field, Britain’s BG Group holds 25 percent, and Petroleos de Portugal--a division of Galp Energia--holds the remaining 10 percent.

British Energy’s shares went into meltdown on Nov. 8 after the UK’s largest power producer found a second faulty wire on one of its nuclear reactors.
The discovery of the failure of a reinforcing wire surrounding the cooling unit at its Heysham 1 nuclear reactor comes just two weeks after the same problem was uncovered at its Hartlepool reactors. The four reactors at the two sites, which account for about a quarter of the company’s nuclear capacity, are now shut. British Energy’s inability to predict when the problems would be resolved sent its shares down 7 percent on the day, closing at 515p per share, News.independent.co.uk said.
“This is a complex issue and a timetable for the return to service of these units can only be formed when inspections and a full assessment of the situation have been completed,“ the company said.
Andrew Wright, an analyst at UBS, suggested the reactors would be out of commission for up to five months. Assuming that they do not begin operating again before the end of the year, British Energy’s yearly power output could drop by as much as 10 percent, which would translate into loss of 12.5p per share this year and next.
Wright said: “The discovery of a second failure means that it is unlikely that these are isolated issues. [British Energy] will need to undertake further inspections, possibly remedial work and the development of a robust safety case.“
It is not the first time the company has been laid low by corrosion issues at its sites. British Energy said last month that production had fallen by nearly 4 percent due to previous reactor problems, and in August the generator reduced its production forecast for the remainder of the year. The company said it would continue its inspections at Heysham and Hartlepool over the next few days.
“This is a legacy issue of the initial construction, identified during the course of baseline inspections,“ the company said. “While this component of the plant was not originally designed to be inspected, improved technology and innovative inspection techniques have been developed which have now allowed inspection as part of the improvement program.
The revelations come just a day after prime minister Gordon Brown revealed in the Queen’s speech a package of bills that were widely interpreted as paving the way for a new generation of nuclear reactors to be built in the UK. Even under the most optimistic scenarios however the prospect of new nuclear power flowing into the grid is still a decade away.
British Energy expects to next update investors on the situation when it gives its financial results on November 13.