German military study warns of a potentially drastic oil crisis

A study by a German military think tank has analyzed how “peak oil” might change the global economy. The internal draft document — leaked on the Internet — shows for the first time how carefully the German government has considered a potential energy crisis. (excerpts)
Update: English translation of table of contents and lead paragraphs.

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The Peak Oil Crisis: Prospects for China

Although climate change, decreasing exports, and depleting mineral resources will all eventually impact China’s ability to grow economically, the availability and affordability of oil is still likely to impact first.

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Ethanol Blend E85 Case Study: Iowa

Iowa - The Saudi Arabia of Ethanol

Iowa is to corn ethanol what Saudi Arabia is to oil. At present Iowa has the capacity to produce 3.5 billion gallons of ethanol per year, which is 26% of the nation’s total (Source). This is of course due to the large amount of corn production in Iowa, enabled by ample rainfall and rich topsoil.

But Iowa differs from Saudi Arabia with respect to energy production in one very important detail: Saudi Arabia satisfies their own energy needs with the oil they produce, and exports the excess. Iowa on the other hand exports the vast majority of the ethanol they produce while importing gasoline as motor fuel.

Gasoline consumption in Iowa is presently around 1.6 billion gallons per year (Source). This is the energy equivalent of 2.4 billion gallons per year of ethanol. Yet amazingly, Iowa does not have an E10 blend mandate (that is, a mandate for a mixture of 90% gasoline and 10% ethanol) that is so common in many other states. Of the 3.5 billion gallons of ethanol Iowa produces each year, only 100 million gallons is consumed in the state (less than 3%!). Perhaps even more amazing is that Iowa — seemingly the best candidate in the U.S. for biofuel self-sufficiency — ranks in the Top 10 consumers of gasoline per capita in the U.S. (Source).

Iowa is a state that by all accounts should be able to satisfy their own liquid fuel needs with ethanol, and still have some left for export. They are perhaps unique in the U.S. in that respect. Instead, petroleum continues to supply over 90% of the motor fuel in Iowa, and virtually all of the fuel used in the farm equipment for growing all of that corn. Something is wrong with this picture.

Why Isn’t Iowa Self-Sufficient?

That is a perplexing question. If ethanol is a real alternative to gasoline, why hasn’t it taken over the marketplace in Iowa? Ethanol should have a greater advantage over gasoline in Iowa than probably in any other state. And in fact, the price spread between gasoline and E85 (the 85% ethanol blend) is consistently higher in Iowa than in other states (Source). The reported price spread in Iowa as of July 2010 was 30.1%, which should be large enough to drive consumers to E85 over gasoline. So what is the problem?

There are three possible problems that I can identify:

1). Perhaps there isn’t enough E85 infrastructure in place.
2). There aren’t enough E85 vehicles on the road;
3). The price is still too high relative to gasoline.

Regarding infrastructure, as of January 2010, there were an estimated 136 service stations in Iowa selling E85 (out of 977 total service stations) and a total of 2,233 Stations selling E85 in the United States (Source). Iowa also has an incentive program in place to install new E85 infrastructure (see below), but with 136 stations across the state (and growing), availability doesn’t seem to be a major limiting factor.

The availability of E85 vehicles may be a more serious impediment. As of 2009, there are reportedly around 8 million vehicles on U.S. roads that are E85 capable (Source). Given a total vehicle population of around 250 million, that means that only around 3% of the cars on the road are E85-capable. (I could not find statistics specific to Iowa). This would seem to be a limiting factor at present for E85 penetration; E85 can’t capture 10% of the market if only 3% of the cars can burn it.

Yet even with some E85 vehicles on the road, sales of E85 in Iowa have been falling and sales of ethanol in general lag the rest of the U.S.:

Final 2009 Iowa Ethanol Sales Figures Show Step Back for State

JOHNSTON, IA – The Iowa Renewable Fuels Association (IRFA) today announced that Iowans chose E10, a 10 percent ethanol and 90 percent gasoline blend, only 73 percent of the time during 2009 according to Iowa Department of Revenue (IDR) figures. According to the Des Moines Register, Iowa ranks 32nd in ethanol sales despite being the leading ethanol producer.

“Iowa’s ethanol sales did not reach the 2009 goal of the Iowa Renewable Fuels Standard,” said Monte Shaw, IRFA Executive Director. “These are figures based on mandatory reporting of taxable gallons to the State of Iowa and the IRS – not an incomplete, voluntary report. Obviously, IRFA members are disappointed in the results. The state has also released E85 sales for the first nine months of 2009. During those three quarters, E85 sales were down 15% compared to 2008.”

The number of E85 vehicles has been slowly rising, so if E85 sales are falling then there is also apparently a cost factor that is coming into play. For much of 2008, the price differential between E85 and gasoline was 15-20% (historical pricing available at E85prices.com). For the first half of 2009, that price differential had fallen to only 10%. Clearly, if E85 is ever to become the dominant fuel in Iowa, the price differential will have to properly reflect the fuel economy difference of E85 versus gasoline. E85 contains about 25% less energy than gasoline on a volumetric basis. Owners that experience a 25% reduction in fuel economy will expect to pay 25% less for their fuel. In fact, they may expect to pay 30% less due to having to refuel more often.

But, a real game-changer could be ethanol-optimized engines such as that touted by Detroit-based automotive engineering firm Ricardo. While their engine is projected to cost more, they project that they will deliver fuel economy from E85 that is comparable to what can be achieved with gasoline. (I reported on this concept in some detail in All BTUs Are Not Created Equally). In that case, consumers may be willing to buy E85 at a lower differential. The caveats here are that the engine is still in the lab, and the higher engine cost will determine the E85 differential that consumers will expect.

Recommendations

Before making recommendations, it is important to clearly set out the objective. As I have said numerous times, corn ethanol may not be a sustainable solution that is broadly applicable across the U.S. However, I do believe that it could be a very good solution in specific regions. Ethanol made from irrigated corn and shipped to California is in an entirely different sustainability category than ethanol produced and used locally in Iowa. In fact, despite my reputation as an enemy of ethanol from people who are careless with their interpretations, I have used Iowa for years as an example of what sustainable corn ethanol could look like. I have long believed that Iowa is in a good position to lead the way forward.

So from my perspective, the objective would be to increase the sustainability of ethanol — starting in Iowa — by increasing local consumption. This would decrease U.S. dependence on foreign oil more than if we have to transport oil from the coasts inland to Iowa while transporting ethanol from Iowa to the coasts.

Pump infrastructure in Iowa does not appear to be the limiting factor. Plus, Iowa already has good incentives in place that support rolling out additional E85 pumps (See Current E85 Incentives below). Iowa also already has a tax credit in place that is specifically directed at E85 sales (which is on top of the national ethanol tax credit). Ultimately, additional incentives may be required, as evidenced by falling E85 sales in the past year. Incentives could be in the form of direct E85 tax credits or fuel tax reductions or waivers. But the real issue seems to be lack of E85 vehicles.

According to automakers, the vehicles are on the way:

US automakers on track for more ethanol vehicles

U.S. automakers also expect to meet a goal of making half their vehicle production flex-fuel by 2012, up from around 30 percent now. But they warn that they could pull back if there aren’t enough gas stations with ethanol pumps.

On the other hand comes news that people may not be interested in buying them:

Flex fuel vehicles may be on the way out

When it comes to buying cars, Americans are still using the price of the vehicle as the primary deciding factor. A well-priced, fuel-efficient vehicle is the car of choice for Americans and this is bad news for the flex fuel vehicle industry. In a survey conducted by Harris Interactive, only 5 percent of respondents said they would be extremely likely to purchase a flex fuel vehicle, even if it only added $250 to the base price of the vehicle.

So it would appear that consumers may need some convincing before they are ready to take the plunge on an E85 vehicle. There are several ways to incentivize sales of E85 vehicles. The worst is probably just to mandate that vehicles sold in the state of Iowa are E85-compatible. (I think this is the worst because mandates often have unintended consequences; hence I prefer incentives over mandates). Probably the most manageable would be rebates or expanded tax credits — at the state or federal level — for the purchase of an E85 vehicle. Instead of a Cash for Clunkers program (which I was not a fan of), we would have been better served to have a cash for E85 vehicles program.

Such a program should probably be driven from within Iowa. After all, they arguably stand to benefit from using the ethanol they produce and moving toward true energy independence. Transportation costs cited in the recent DOE study on the proposed ethanol pipeline (that I discussed here) suggested that railing ethanol costs $0.19/gallon (shipping via pipeline was cited at $0.28/gal). Imagine that only half of the ethanol produced in Iowa is used in Iowa; there is a potential shipping savings of over $330 million per year. (However, under the present system these costs are passed through to consumers out of state, so it might be hard for Iowa to justify a program on the basis of savings for Iowans).

Beyond personal transportation, corn growers should be pushing for tractors that can run off of ethanol. They can be built. In 2006 the Saskatchewan Research Council unveiled a tractor modified to operate on 100 per cent hydrated ethanol. More on that development here:

From late December 2006 to late January 2007, the 120 horsepower ethanol-fuelled tractor clocked 60 hours of running time and got fuel mileage of 24 litres per hour. It takes about 15 bushels of wheat to create one tank of hydrated ethanol for the tractor, says Rueve, explaining that the fuel consists of 94 per cent alcohol and 6 per cent water.

As farm input costs increase, both the tractor and the truck are examples of developments that may make farm operations more sustainable in the future. Meanwhile, biofuels in general offer one option for those who are looking for ways to revitalize the rural economy.

So often we hear about how ethanol is providing homegrown fuel for automobiles, and yet the tractors that produce the homegrown corn run off of petroleum. I think it would be in the best interest of Iowa and of the country as a whole (given Iowa’s importance as a food producer) to break the petroleum dependence of Iowa’s farms by building tractors that can run off of ethanol (or biodiesel).

Conclusions

Iowa could be self-sufficient with their ethanol production if certain policies are supported. Some policies are already in place that are meant to address E85 availability and cost. However, the availability of E85 vehicles and the willingness of consumers to buy them is probably the key limiting factor. Ultimately, building up an E85 market in Iowa and eventually in the rest of the Midwest could solve a number of issues for the ethanol industry. If the Midwest adopted E85 as its flagship fuel, there would be no blend wall to be concerned about, nor would an expensive ethanol pipeline be needed to export ethanol out of the region. The potential market across the Midwest is triple the nation’s current ethanol production, giving ethanol producers an ample opportunity to grow without forcing national mandates that put E15 into cars that aren’t designed for it.

Current E85 Incentives

Iowa has tax credits in place specific to E85 sales:

E85 Retailer Tax Credit

A tax credit is available to retail stations dispensing E85 for use in motor vehicles in the amount of $0.20 per gallon for calendar year 2010, and $0.10 per gallon in calendar year 2011. After 2011, the tax credit decreases by $0.01 each year and expires after December 31, 2020. Taxpayers claiming the E85 tax credit may also claim the tax credit available for retail ethanol blends for the same gallon of fuel and tax year. (Reference Iowa Code 422.11O)

And toward blending infrastructure:

Biofuels Infrastructure Grants

The Renewable Fuel Infrastructure Program provides financial assistance to E85 and biodiesel retailers. Cost-share grants are available for up to 70% of the total cost of the project, or $50,000, whichever is less, to upgrade or install new E85 or biodiesel infrastructure. Applicants may also qualify for supplemental incentives for up to 75% of the cost of making the improvement, or $30,000, whichever is less, to upgrade or replace an E85 fueling dispenser that has not been approved by an independent testing laboratory. The supplemental incentive is available only to applicants who made the improvement no later than 60 days after the date of the publication in the Iowa administrative bulletin of the state fire marshal’s order providing that a commercially available fueling dispenser is listed as compatible for use with E85 by an independent testing laboratory.

Biodiesel distributors may apply for a cost-share grant for infrastructure upgrades and installations at biodiesel terminal facilities. Facilities blending or dispensing blends ranging from B2 to B98 are eligible for up to 50% of the total project, or $50,000, whichever is less. Facilities blending or dispensing B99 or B100 are eligible for up to 50% of the total project, or $100,000, whichever is less. The Renewable Fuels Infrastructure Board was established under the guidance of the Iowa Department of Economic Development; this 11-member board has authority to determine the eligibility of applicants. (Reference Iowa Code 15G.202-15G.204)

BP’s Deepwater Oil Spill - Continuing to Wait; Wave Glider - and Open Thread

Additional work near the Deepwater Horizon well site continues to be delayed by high waves. Once the current weather pattern clears, work can commence again.

We understand that today, Wednesday, BP is expect to submit a new report evaluating lessons learned in its response to the oil spill in the Gulf of Mexico to U.S. regulator the Bureau of Ocean Energy Management, Regulation and Enforcement. According to BP, “This report focuses in particular upon the key equipment, facilities and planning tools that were successfully deployed in responding to the spill.” There will be another report released by BP later this month, which will examine the causes of the explosion.

Some new devices that we have not commented on are the new Wave Gliders that will monitor water quality. BP is deploying these in the Gulf of Mexico, near the Macondo well site. According to an August 25th press release:

As part of its long term monitoring and research program in the Gulf of Mexico, BP is deploying a new technology that will enable nearly constant monitoring by two satellite-controlled, unmanned vehicles.

The vehicles, known as Wave Gliders and developed by Liquid Robotics in Silicon Valley, California, get their propulsion power from wave action and use solar power for their electronics. They will be deployed beginning today and begin a months-long, ongoing research program in the Gulf of Mexico.

According to the press release, the types of monitoring performed will include

• water quality – detection of any emulsified, dissolved and dispersed oil in water; phytoplankton (chlorophyll); colored, dissolved oxygen matter (CDOM) and other scientifically useful variables
• marine mammal vocalizations
• weather and water temperature data

The first step in using the devices will be calibrating the optical sensors, according to Roger Hine, president and CEO of Liquid Robotics. “We look forward to working with BP on this extended research program.”

There is also a Wave Glider Fact Sheet available. It indicates

Typically robotic systems have been challenged by limited battery power. The Wave Glider innovatively overcomes this challenge. It uses no fuel, has no motor, and no propeller - but it can swim in any direction at speeds up to two knots - for as long as necessary. It uses a unique, patented, system for converting even the tiniest amount of wave motion into thrust, in any direction. It uses solar panels to power electronics, and houses a sophisticated set of sensors, satellite communications, and microprocessors.

According to the fact sheet, the technology was invented, originally, to listen to humpback whale song. The Wave Glider fleet has been at sea for a combined total of 11.5 years and has covered over 100,000 miles.

Drumbeat: September 1, 2022

Oil Price Ignores Long-Term Supply Worries

You could be excused for seeing a grim metaphor for the death of the oil age in the scenes of destruction visited on the U.S. Gulf coast this summer.

However, production from the ocean floor is growing more quickly than from any other type of reserve and is supposed to allay concerns about ‘peak oil’, the idea that the amount of crude the world can produce might suddenly decline.

Now, so far, this notion hasn’t had much of an impact on energy prices.

But, as cheaper oil fields are run down and more crude is drawn from expensive, hard-to-reach offshore reserves, the costs of energy supply are starting to rise.

Drilling agency imposes conflict-of-interest rules

WASHINGTON – Scandalized by federal regulators who had sex with oil company executives and negotiated with them for jobs, the agency that oversees offshore drilling is imposing a first-ever ethics policy that bars inspectors from dealing with a company that employs a family member or personal friend.

Michael Bromwich, head of the Bureau of Ocean Energy Management, said the new policy should help restore credibility to his beleaguered agency, which was widely criticized under its former name — the Minerals Management Service — for being too close with oil and gas companies.

President Barack Obama and Interior Secretary Ken Salazar have pledged to end the agency’s “cozy relationship” with industry and slow the revolving door between government and the energy industry.

Pemex looks to shale

Pemex is considering opening an entire line of exploration that concentrates on shale gas wells in the northern state of Coahuila.

Pemex board member Hector Moreira told Market News International the new line could reduce the company’s dependence on natural gas imports.

OPEC oil output falls to lowest since Nov 2009

LONDON (Reuters) - OPEC crude oil supply fell in August to the lowest since November 2009 as reduced supplies from Nigeria, the United Arab Emirates and Iraq offset increased output in Angola, a Reuters survey showed on Wednesday.

Supply from the 11 members of the Organization of the Petroleum Exporting Countries with output targets, all except Iraq, averaged 26.83 million barrels per day (bpd) last month, down from 26.95 million bpd in July, according to the survey of oil companies, OPEC officials and analysts.

The Gas Bulls of Summer Turn into Bears

Recently, the last of the raging bulls on natural gas prices traded in their horns for bear uniforms – and we don’t mean the Monsters of the Midway variety! By throwing in the towel on gas prices for this year, these bulls-turned-bears then proceeded to claw their future gas price forecast by stating they expected $6 per thousand cubic feet (Mcf) to be the long-term average. The reality is that these bulls of summer were really merely acknowledging the power of the market as natural gas prices are about two dollars per Mcf below where they were at the start of 2010, and well below the $7.50/Mcf average gas price the bulls had forecast.

Feds downplay risk of leak when well cap moved

The federal government’s point man on the Gulf of Mexico spill response said Wednesday there is no “significant risk” that more oil will leak into the sea when engineers remove the temporary cap Thursday that first contained the gusher in mid-July.

Retired Coast Guard Adm. Thad Allen said vessels will remain on standby just in case to collect any leaking oil.

FACTBOX - Key political risks to watch in Uganda

(Reuters) - Uganda expects to become an oil-producing nation in 2011, but a protracted dispute with British exploration firm Heritage Oil may delay production and risks unsettling other investors.

With the potential to be a top 50 oil producer, Uganda stands to reduce its budget dependence on foreign aid and improve poor infrastructure.

Nissan starts selling all-electric Leaf sedan today

At long last, Nissan begins taking actual orders today for the first next-generation fully electric car from a major automaker, the Leaf.

Carpooling

Passengers might be the most under-appreciated factor in how much fuel and money you waste. As I write this, for example, a business headline boasts of Toyota’s multi-million-dollar plan to boost fuel efficiency by 25 percent, with the usual discussion of what this will mean for the economy and the climate. Any of us, however, can boost the efficiency of our cars by several hundred percent instantly, with no additional expense or technology, simply by getting more people in the car.

This fact is also forgotten when we judge car owners by the wastefulness of their vehicles. An SUV is a spectacularly inefficient machine compared to a Prius, for example, but pack that Dodge Durango full of people and suddenly it is greener than the electric hybrid driven alone.

Transit systems easier to predict with smart phone apps

Allen Stern says he had a 40-minute wait between buses when he lived in Manhattan. Using a free mobile app that became available about a year ago, he could at least tap into the Metropolitan Transit Authority with his cellphone and find out exactly how far away the next bus was from his stop.

Jatropha: A new form of energy

SINGAPORE - Biotechnology firm JOil is confident that it can breed and genetically engineer the Jatropha plant to be a more sustainable alternative to fossil fuel and other biofuels.

It plans to create a Jatropha hybrid that can produce more fruits and match the four to six tonnes of oil per hectare that palm trees can generate.

Pedal power takes off as exercise produces electricity

Pedal power is gaining traction as thousands of bikes and elliptical machines are retrofitted to produce electricity.

Gyms are using sweat equity to help power their facilities. A Brooklyn eatery uses it to make smoothies. Female inmates at a Phoenix jail pedal to power their TV to watch soap operas. Actor Ed Begley Jr. bikesrides a bike to run his toaster.

Obama lobbied to add solar panels to White House

A campaign to make the White House greener is intensifying as a group of environmentalists plan this month to give President Obama a solar panel that used to sit atop 1600 Pennsylvania Avenue.

Points of departure

There is a strong correlation between energy consumption and economic growth. We can for sure hope for “decoupling” - to be able to have continued economic growth while maintaining or even reducing energy use - but no country has ever managed this Indian rope trick and that does not bode well. Maybe we are high on energy, listening a little to closely to the voice of intoxication, but it will unfortunately all too soon be replaced by a massive hangover.

The Peak Oil Crisis: Prospects for China

The key question in all this is how much longer China’s economic miracle can continue before the realities of finite mineral resources force a slowdown? Another five years of 10 percent annual economic growth will result in Beijing increasing its oil consumption by another 2.5-3 million barrels per day. This alone would likely mop up much of the world’s spare capacity to produce oil and result in very large price increases. When China’s ever growing demand is added to that of India, Brazil and the oil exporting states, the likelihood that we will see a substantial increase in oil prices within the next five years becomes very high.

Secret German military study warns of dramatic oil crisis

Berlin : A confidential German army study warned of a looming oil crisis which could have dramatic political and economic consequences for the world, the Hamburg-based weekly news magazine Der Spiegel said Tuesday.

According to the report, a think-tank of the German army has for the first time ever analyzed the security policy dimensions of the peak oil problem.

Peak Oil from a Security Studies Perspective

The Strategic Institute of the German Bundeswehr has now published a document on the implications of peak oil for security (more precisely: the study was leaked). The study is very well written and recommended as an essential read not only for geostrategist but especially for those involved in global sustainability questions. In fact, at least in wording the authors care about such diverse issues as environmental impact of unconventional oils and the impact of global-marked-induced land-use change on indigenous populations. It is worthwhile to have a closer look on some of their results:

Remembering Matt Simmons

Matt Simmons, a long time friend of the Maine coast and its islands and a student of the winds and waters of Gulf of Maine, loved to tell the story of his first trip to Maine, courtesy of a labor strike while he worked construction one summer as a college student in his home state of Utah. When a labor dispute suddenly shut down the construction site, he and a buddy were only too happy to collect their strike checks and head out on a jaunt. They went north into the Canadian Rockies then turned right and headed toward the Inscrutable East, dipping back down into the United States via the border at Jackman, where they drove along the shores of Moosehead Lake before ending up in Boston. On a lark, Matt ducked into the Harvard Business School, which had not had a long history at that point of actively recruiting students from Mormon country in Utah, but the visit was enough to entice him to apply and enroll. Matt loved telling that story because it held the kinds of mutually opposed contradictions he loved to explore-a businessman who owed his right future to a labor strike. If genius is the ability to hold mutually opposing ideas in the mind at the same time without being paralyzed, Matt Simmons would certainly qualify.

Oil Drops, Caps Worst Month Since May, as Hurricane Earl Threatens Demand

Oil tumbled, capping its worst month since May, on forecasts Hurricane Earl will pelt the U.S. East Coast, curbing fuel demand during the Labor Day holiday weekend.

Crude dropped the most in 12 weeks amid speculation that stormy weather will keep beachgoers and travelers at home. Labor Day is the traditional end of the U.S. summer driving season, the peak gasoline demand period. U.S. gasoline demand slid to a 12-week low last week, MasterCard Inc. reported today.

“It’s the last thing we need,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “It’s a big gasoline consumption weekend. Given how poor the gasoline demand has been, it will be a final parting blow for the summer driving season if people won’t hit the beach in droves.”

Ethanol Surpasses Gasoline for First Time Since December

For the first time since December, ethanol prices are higher than gasoline as corn surges and refiners profit from tax breaks.

Gas Prices Explained

So what determines the price of gasoline? Speculators? Evil conspiring oil companies? Well, actually no. It’s demand and supply, of course. On the demand side the American automobile fleet gets better gas mileage than it did a few years ago and Americans, whacked by the recession and high unemployment rates, are driving a bit less than they used to. In addition, thanks to government subsidies, about 9 percent of what goes into our gas tanks is ethanol produced from corn, which also reduces the demand for refined crude. On the supply side, global oil supplies are ample and refiners in the U.S. evidently believed the Obama administration’s rosy “recovery summer” scenarios and stockpiled a lot of gasoline.

Sinopec Plans to Cut September Oil Processing by 4% at Refinery in Hainan

China Petroleum & Chemical Corp., Asia’s biggest refiner, will process 4 percent less crude oil at its Hainan plant in September compared with last month, an official at the refinery said.

FACTBOX-Key political risks to watch in Saudi Arabia

(Reuters) - Saudi Arabia, under the rule of an ageing King Abdullah, has the dilemma of making reforms that keep the austere clerical establishment that opposes change on side and violent Islamist militants at bay.

Any instability at the helm of Saudi Arabia, which controls more than a fifth of the world’s crude oil reserves and is a regional linchpin of U.S. policy in the Middle East, would be a concern for the rest of the Arab Gulf region.

FACTBOX-Key political risks to watch in Yemen

(Reuters) - Rising al Qaeda militancy, a surge in violence in a secessionist south and crushing poverty will be this year’s critical tests for Yemen, neighbour to top oil exporter Saudi Arabia.

Reid hopeful for GOP energy votes after elections

WASHINGTON (Reuters) – Senate Majority Leader Harry Reid said he hoped to pick up Republican votes for a pared-down energy bill after the midterm congressional elections.

“Maybe after the elections we can get some more Republicans to help us on these issues,” Reid, a Democrat, told reporters in a teleconference on Tuesday.

Sinopec Sees Solid Gas Growth Ahead

While oil production experienced sluggishness in the first half, natural gas production showed solid growth. China is ramping up gas production as it seeks to find alternatives to coal, which emits high carbon levels. It is set to raise the country’s energy needs from the current 3% to 10% by 2020.

Insurance likely to reduce BP’s liability for Gulf of Mexico oil spill

BP PLC has taken on some of the blame for the Deepwater Horizon rig that spilled millions of gallons of oil into the Gulf of Mexico earlier this year, but the company is still expected to have limited liability for mistakes made misreading pressure data that indicated a blowout was imminent.

BP Raises $363 Million in Malaysian Asset Sale to Help Pay for Gulf Spill

BP Plc, seeking cash to help pay for the worst U.S. oil spill, agreed to sell its Malaysian chemical assets to Petroliam Nasional Bhd. to focus on projects in China and India.

BP will sell its 15 percent stake in Ethylene Malaysia Sdn and 60 percent interest in Polyethylene Malaysia Sdn for $363 million, the London-based company said today in a statement. It will also be eligible for a possible $48 million dividend from the ethylene unit.

A Nuclear Giant Moves Into Wind

Exelon, a nuclear giant that recently backed away from building new nuclear plants, is moving into wind.

Canada company builds major waste-to-biofuel plant

VANCOUVER, British Columbia (Reuters) - A Canadian company started construction on Tuesday on what it says is the world’s first industrial-scale plant to turn municipal waste into biofuel.

Privately-owned Enerkem Inc said the C$80 million ($75 million) facility in Edmonton, Alberta, will produce enough biofuel to keep more than 400,000 cars a year running on a 5 percent ethanol fuel blend.

Thorium Cures the Free Market

Obama could kill fossil fuels overnight with a nuclear dash for thorium … If Barack Obama were to marshal America’s vast scientific and strategic resources behind a new Manhattan Project, he might reasonably hope to reinvent the global energy landscape and sketch an end to our dependence on fossil fuels within three to five years.

New Warnings About Costs of Nuclear Power

As anticipation grows about a possible renaissance for the nuclear power industry — and about its potential for curbing greenhouse gas emissions — some politicians are stepping up warnings about the high cost of such projects.

Last week, Traicho Traikov, the Bulgarian economy and energy minister, said the cost of building a second plant near the Danube River had reached 9 billion euros, or $11.4 billion, according to the Sofia News Agency.

The original cost of the project for two reactors was expected to be just under $4 billion.

Homeowners Must Pay Off Energy Improvement Loans

Many homeowners who participated in a program that let them repay the cost of solar panels and other energy improvements through an annual surcharge on their property taxes must pay off the loans before they can refinance their mortgages, two government-chartered mortgage companies said Tuesday.

The guidance came from Fannie Mae and Freddie Mac as efforts to resolve a dispute over the program — called Property Assessed Clean Energy, or PACE — have failed.

Calif. rejects ban on plastic shopping bags

SACRAMENTO, Calif. – California lawmakers have rejected a bill seeking to ban plastic shopping bags after a contentious debate over whether the state was going too far in trying to regulate personal choice.

The Democratic bill, which failed late Tuesday, would have been the first statewide ban, although a few California cities already prohibit their use.

A Greener Champagne Bottle

“This is how we’re remaking the future of Champagne,” he said, pointing to the area just below the neck. “We’re slimming the shoulders to make the bottle lighter, so our carbon footprint will be reduced to help keep Champagne here for future generations.”

The Champagne industry has embarked on a drive to cut the 200,000 metric tons of carbon dioxide it emits every year transporting billions of tiny bubbles around the world. Producing and shipping accounts for nearly a third of Champagne’s carbon emissions, with the hefty bottle the biggest offender.

Cleaner Cars, A to D

The Obama administration has proposed new stickers for cars and light trucks that will make it easier to see whether you are buying a fuel-efficient one or a guzzler, and how much it contributes to global warming. The stickers are a symbol of how far this country has come in providing a wider range of environmentally responsible choices to help ensure cleaner air and a healthier planet.

L.A. mayor, Latino activists take on oil companies over Proposition 23

They say the ballot initiative to suspend the state’s climate change law would hurt low-income communities already suffering the most from pollution.

Jeff Rubin: High energy prices make Copenhagen green

There is certainly much to be said for Denmark’s leadership in green energy. While North American carbon emissions have risen by around 30 per cent since 1990 (the reference point for the Kyoto Accord), Denmark’s emissions are actually lower than they were two decades ago. That’s generally ascribed to the fact that a world-leading 20 per cent of the power generated in Denmark comes from wind.

Less commonly known is the source of the other 80 per cent. I was surprised to discover that it comes from good old King Coal. In fact, coal’s share of power generation in Denmark’s power grid is basically the same as it is in China.

Tiny creatures reveal ancient sea levels

“It was a very big surprise,” says David Barnes, lead author of the study at the British Antarctic Survey, of the find of similar bryozoans 2400 kilometres apart in seas on either side of the West Antarctic ice sheet, which is 2 kilometres thick.

“The most likely explanation of such similarity is that this ice sheet is much less stable than previously thought and has collapsed at some point in the recent past,” he says.

“And if the West Antarctic ice shelf has been lost in recent times we have to re-think the possibility of loss in future with climate change.”

Wall Street and miners help FTSE 100 to a strong close

So, according to the old City adage, traders should sell in May and then go away for their summer breaks. Late last month they started to drift back into the market hunting for bargains. Over the past two days, however, they have returned with a vengeance. Now it is not the fundamentals of the economy that are driving prices higher. Guessing the target of the next big bid is the name of the game.

After last month’s audacious $39bn swoop on Potash Corp by BHP Billiton anything is possible, traders argue. No hoary old rumour is going unspread. Discovering themselves in the yesterday were a host of blue chip firms from travel agent Tui Travel to phone provider Cable & Wireless Communications.

There was, however, only news of one actual possible deal. Having been fending off the attentions of Cinven since the private equity firm made an approach in May, water meter group Spice said yesterday that another - unnamed - bidder has entered the fray. Although it stressed a deal may not materialise, shares in Spice closed up 6.75p - or 12% - at 63.25p valuing the firm at £223m.

News that the Chinese economy remains strong, according to the latest purchasing managers data, helped boost mining stocks early in the trading day. Kazakhmys closed up 80p at £12.36 with Xstrata up 62.5p at £10.88.5. Shares in Rio Tinto closed up 201p at £35.01 with Antofagasta up 62p at £10.94 and Anglo American up 116.5p at £24.56.5.

Further support was given to the FTSE 100 index later in the day by stronger-than-expected US manufacturing data which broke with the downbeat trend of recent US data. On Wall Street the DJIA was pushed more than 200 points higher, helping the FTSE 100 index to close up 141.19 points at 5,366.41.

Results from workwear rental company Johnson Services Group showing a 17% increase in half year profits, helped its shares gain 21% to 17.5p. ‘Apps’ creator 2ergo, meanwhile, saw its shares leap almost 10% to 59.5p after an upbeat trading update.

Land Securities added 29.5p to 641p after JP Morgan Cazenove named the property company as its top large cap pick as it moved its recommendation to overweight from neutral.

Lastly, traders are watching Aqua Bounty Technologies with keen interest. The company has developed a genetically engineered salmon, which grows twice as fast as traditional salmon. Heath officials in the US are due to debate whether it should be approved on September 19 and hopes among some traders are high. Even though the shares remained unchanged at 10.5p, it seems fitting that on a day filled with so many fishy tales, one bit of speculation should actually be about fish.

FTSE extends gains after rare US data surprise

The FTSE 100 has extended gains in afternoon trading to be up more than 2% while the Dow Jones industrial average is also up sharply following stronger-than-expected US manufacturing data that has broken the recent chain of downbeat reports from America.

The Institute for Supply Management said its index of US factory activity rose to 56.3 in August from 55.5 in July. That was ahead of a consensus forecast for a reading of 53.0 in a Reuters poll of analysts.

The report - in which a reading over 50 denotes expansion and below 50 shows the sector is contracting - marked the 13th straight month of growth for manufacturing. It contrasts with other recent economic indicators that have fuelled a debate over whether the world’s largest economy is headed for a double-dip recession.

Still, looking forward the ISM report did suggest tougher times ahead for America’s factories. The new orders component of the survey fell to 53.1 in August, its lowest since June 2009.

For now though, stock markets are dwelling on the upside surprise in the headline activity index as well as news that hiring also picked up pace in August. The FTSE 100 is currently up 123 points, or 2.4%, at 5349 while on Wall Street the Dow Jones is up 230 points, or 2.3%, at 10244. Both indices were up before the data thanks to positive sentiment after strong economic indicators out of Australia and China.

James Knightley, economist at ING Financial Markets said the latest report from the US “adds to the uncertainty over the potential outcome of Friday’s payrolls report”, referring to the closely-watched monthly US government jobs numbers.

“Given the conflicting signals regarding the US economy, financial markets are ikely to remain choppy and nervous ahead of Friday’s figures. Payrolls are likely to be poor though given nearly 120,000 census workers have been laid off over the past month and state and local government job losses will add to the downside risks.

“Consequently, we continue to expect a weak recovery with limited inflation hreat that suggests further policy stimulus is looking increasingly likely.”

Redrow gains ground and Inmarsat takes off as bid speculation swirls

Housebuilder Redrow has been in focus in the run-up to lunchtime on talk that colourful chairman Steve Morgan, who founded the business back in 1974, is planning to take it private.

Shares in the company have added 7p to 114p - a rise of almost 7% - on the back of the talk swirling the market on a day choc full of takeover rumours.

Morgan, who swooped on Wolverhampton Wanderers after making an abortive bid for control of Liverpool FC, became the firm’s largest shareholder last Spring as it bought shares from Toscafund, a hedge fund that was previously Redrow’s largest shareholder. In late March, Morgan was appointed deputy chairman and took up the chairman’s role at the end of June

There has been persistent talk ever since that he might one day take the firm private. The Flintshire-based builder is also due to announce full year results next week.

Elsewhere, satellite company Inmarsat has added 18p to 687p, on rumours of a possible buyout. There has long been speculation that American hedge fund Harbinger Capital might make another approach for the firm.

Two years ago, Harbinger halted talks with Inmarsat after a few weeks citing the very long regulatory process involved in any bid. It still has a 28% stake in the firm and owns US peer LightSquared which has a spectrum deal with Inmarsat.

But a report in Forbes says David Bonderman, a co-founder of Texas Pacific Group, is now interested in Inmarsat. The report adds:

Bonderman, whose failed investment in Washington Mutual during the financial crisis dented his reputation, needs a potentially lucrative sizable deal. According to people familiar with the transaction, an expected offer could come in the range of $6 billion-$7 billion–something TPG can likely afford without outside partners on the deal.

There are some deals in the market that are more than merely speculation. Water meter company Spice has just admitted that it has received another potential offer.

Since May the company has been fending off the approaches of private equity firm Cinven. Its last offer - announced in early July - valued the firm at 62p-65p per share, or between £218m and £229m. The board rejected it out of hand as undervaluing the business.

In a statement accompanying the group’s annual meeting today, however, the company said it has in fact “engaged in discussions with Cinven” but it has also “received a conditional proposal from another potential offeror”. It adds:

The Group confirms that confidential discussions are taking place which may or may not lead to a formal offer being made. There can be no certainty that any offer will be made, nor the terms on which any offer might be made.

Spice shares are up 4.75p at 61.25p.

The FTSE 100 index, meanwhile, is up 77.62 at 5302.84.

Cable and Wireless Worldwide joins buyout bonanza

Cable & Wireless Worldwide, the part of the former C&W empire which rather confusingly is predominantly made up of its UK business, has seen its share price rocket this morning on rumours that American giant AT&T is considering a bid for the business.

AT&T was heavily involved in the corporate telecoms market in Europe before the dotcom crash - it was even a sponsor of the ill-fated Jaguar Formula 1 racing team - but as Europe experienced a heavy technology recession between 2002 and 2004 the company retrenched back across the Atlantic.

But it still has a major presence outside the US - it serves thousands of business customers as well as governments across six continents and is also a major player in the wholesale business. Whether it needs to get more involved in the cut-throat UK and European markets, however, is a very moot point.

Cable & Wireless Worldwide, which includes the Thus and Energis businesses which management - lead by chairman Richard Lapthorne - have rolled into the business over its four year turnaround, was one of the first major British companies to warn on the impact of the coalition’s budget cuts.

C&WW shares were up more than 5% in late morning trading - at 70.3p - having been up more than 10% earlier in the day.

Buyout talk boosts Tui Travel

Shares in Tui Travel, which last month warned on profits, have shot to the top of the FTSE 100 leaderboard on the back of a report that its largest shareholder is mulling an all-out bid.

Germany’s TUI owns 42.5% of its namesake and according to a report in Financial Times Deutschland, its supervisory board will meet this week to discuss whether to buy the rest.

Shares in Tui added 10.4p to 211.7p, a rise of just over 5%.

Last month, Tui warned on profits, blaming the uncertainty created by the emergency budget which had caused British holidaymakers to leave it to the last minute to book their foreign travel as they search for cheap deals. Its shares dropped 10% on that news.

Across the general market, the FTSE 100 index is up more than 57 points at 5,282.38 points

with mining stocks boosted by strong economic data from China overnight.

Fresnillo is up 39p at 139p, Kazakhmys up 32p at 1188p and Vedanta Resources up 20p at 136p.

Overnight, data from China showed that the country’s official purchasing managers’ index rose to 51.7 in August from 51.2 in July.

Data out this morning about the UK, however, was slightly more mixed.

The Markit/Chartered Institute of Purchasing and Supply Manufacturing PMI shawed that the UK’s manufacturing sector slowed more than expected last month - predominantly because of low new orders. It fell to 54.3 in August - below forecasts - from a downwardly revised 56.9 in July.

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