By Ed Crooks: JULY 15. 2016
“War is the realm of uncertainty,” wrote the great Prussian military theorist Carl von Clausewitz. “Three quarters of the factors on which action in war is based are wrapped in a fog of greater or lesser uncertainty.”
That applies to price wars every much as it does to the real kind. Almost from the moment crude began falling in 2014, news outlets started running confident-sounding claims that one side or another was winning the battle often depicted as a struggle between Saudi Arabia on one side and US shale producers on the other.
Like many conflicts, the oil price war has gone on for longer than most people expected when it began, and its eventual outcome is still shrouded in von Clausewitz’s fog of uncertainty. This week, the reports from the front have been as inconclusive as ever. Bloomberg pointed out that oil production from the Middle East has hit a record while US output is in decline, describing it as “a sign that OPEC’s strategy of defending market share is succeeding.”
An FT editorial observed that oil-consuming countries were locked in a co-dependent relationship with producers in the Middle East that was very difficult to break, and said consumers needed to work out how to live with that addiction.
On the other hand, the research company Wood Mackenzie published research suggesting that most of the world’s potential new oil production that could profitably be brought on at $60 per barrel was in US shale. The relatively low costs and greater flexibility of shale production mean that oil companies are reluctant to commit to new large projects, particularly for the higher-cost resources such as deepwater fields.
Liam Denning at Bloomberg Gadfly highlighted Wood Mac’s prediction that US shale would not by itself be able to meet rising oil demand, and higher-cost deepwater production would eventually be needed.
A year on from Iran’s agreement to a deal to lift sanctions over its nuclear programme, it has been successful in raising oil production and exports, but the benefits to its economy have been smaller than some had hoped. The former lead sanctions expert for the US team negotiating with Iran explained some of the reasons why results so far have been disappointing.
Investment in renewables and other “clean” energy was 23 per cent lower in the first half of this year than in the equivalent period of 2015, according to Bloomberg New Energy Finance. The slowdown, driven in part by declines in China and the Asia-Pacific region, means that investment in 2016 as a whole is very likely to fall short of last year’s record total.
Oil was up and then down again during the week, with Brent crude starting Friday at about $47 per barrel, as huge excess stocks of refined products weigh on prices.
Theresa May, Britain’s new prime minister, abolished the separate Department of Energy and Climate Change as she formed her first government, merging into the business ministry. Some environmental campaigners were furious, but Roger Harrabin at the BBC argued that it was really too soon to tell what the implications for the UK’s climate policies would be. Andrea Leadsom, the unsuccessful challenger to Mrs May for the party leadership, has been made environment secretary, and has made it clear that she backs action to cut Britain’s greenhouse gas emissions.
China is expected to suspend construction of any new coal-fired power plants until the start of 2018, as the utilisation rate of its existing coal plants has been dropping. The new policy follows concerns highlighted by Greenpeace over the rapid rate of coal plant construction in China, following a “permitting binge” in 2015.
There was more bad news for coal from the US: coal-fired generation is expected to drop by 9 per cent this year, as gas-fired power reaches a new record high.
The most entertaining read of the week was a great Bloomberg BusinessWeek piece about a $100m biofuels scam. If Hollywood has made a movie about mortgage-backed securities, surely it could do the same for Renewable Identification Numbers.
Quote of the week
“The big takeaway for me is that this has cost us $62bn. We have learned a huge amount, and we are still here. There are not many companies that could take that $62bn charge, and still be around.” – Brian Gilvary, chief financial officer of BP, speaking after the company drew a line under the costs of the 2010 Deepwater Horizon disaster, setting the final bill at about $61.6bn.
This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
