On Tuesday, November 17, Members of the Organization for Economic Cooperation and Development (OECD) struck a deal to restrict financial subsidies used to support the export of technology related to coal-fired power plants in developing countries. The deal came after months of difficult, sometimes contentious, negotiations.
The January Brent oil futures contract has broken down in the last 48 hours to approach its late-August lows. It has fallen a little more than 10% over the past week. The January light sweet crude contract is also heading south, falling about 12% since the recent high on November 3. It too sold through the October lows. The late-August low was just below $40.
One casualty of the oil price downturn could be the megaproject.
For years, as conventional oil reserves depleted and became increasingly hard to find, oil companies ventured into far-flung locales to find new sources of production. Extracting oil from these frontier areas required advanced technology and a lot more capital: Ultra deepwater, Arctic offshore, heavy oil sands, and increasingly, the Lower Tertiary.
At first glance, it seems an almost inexplicable paradox. A right-wing British government has invited companies controlled by the Chinese Communist Party – and in one case, the Chinese military – into the heart of the UK’s strategically vital energy infrastructure. The nuclear deal between Britain and China goes against the advice of the security services, the military, and the US government.
Federal Energy Minister Josh Frydenberg, commenting last week on the recent environmental re-approval of the Carmichael coalmining project, sought the moral high ground against the government’s critics, claiming that there is “a strong moral case” for mining and exporting coal to poor countries.
In return, Bernie Fraser, a former head of the Reserve Bank who last month resigned as chair of the Climate Change Authority, blasted Frydenberg’s argument as “nonsense” and “obscene”.
We are a little more than a month away from OPEC’s next meeting in Vienna on December 4, 2015.
OPEC altered the course of the oil markets last year when it decided to cast aside its traditional role of maintaining balance through production cuts. Instead, it pursued a strategy of fighting for market share, contributing to an immediate rout in oil prices. WTI and Brent then went on to dive below $50 in the weeks following OPEC’s decision.
October has been billed as a pivotal month in which indebted shale companies would see their credit lines cut, precipitating a faster consolidation in the industry that would sow the seeds of a rebound.
The mere hint of a successful deal over Iran’s nuclear programme is enough to get people excited. In addition, as the country emerges from economic isolation, nowhere is the enthusiasm more keenly felt than in the huge oil firms with a chance to make a splash in one of the world’s most resource-rich nations. However, are the conditions there for a boom that will ripple across our lives?
As we approach winter, many of us start turning the heating back on, but there are thousands of people across the UK who dread the onset of colder weather as they fall into the fuel poverty trap. It is a phenomenon that kills, and worse, it is something to which we have become accustomed. Another year, another set of headlines that should shock us into action, but rarely do.
The Chancellor of the Exchequer, George Osborne, has recently been waving huge wads of cash at different (but similarly delinquent) parts of UK nuclear policy. In August, he sailed triumphantly up the Clyde to the Trident-hosting Faslane Naval base to announce £500m of investment. This was a move many considered to be jumping the gun, or even “arrogant” given that no final decision has been made on its renewal.
