Meltdown

[MN Dave]

[BorisG]

U.S. says high oil prices risky to economy

Tue Apr 22, 2008 8:00am EDT

ROME (Reuters) - Oil prices that hit a record on Tuesday are clearly too high and not beneficial for the U.S. economy, a top U.S. energy official said.

The United States has been remarkably resilient in the face of expensive energy, but a rally on oil to more than $118 a barrel is an economic threat, U.S. Acting Deputy Secretary of Energy Jeffrey Kupfer told a news briefing.

"Oil prices are clearly too high. We are not happy with the prices or the direction they're going in," Kupfer said.

Echoing remarks last week by U.S. Energy Secretary Sam Bodman, he said the United States would not delay its plan to buy more oil for its Strategic Petroleum Reserves, in spite of the oil price.

Producer countries have blamed the weakness of the U.S. dollar for the strength of the oil market and have said supplies for now are more than adequate.

By contrast, Kupfer said fundamentals of supply and demand were a major factor.

"Fundamentals are tight right now ... Our message is take a look at fundamentals," he said on the sidelines of the International Energy Forum in Rome, which brings together producers and consumers.

Kupfer dismissed concerns by producers that high prices would erode demand and increase use of alternative fuels, saying fossil fuels would continue to meet the vast majority of energy needs.

The United States has led a push to biofuels, blamed for a steep rise in food prices as they take up land that would otherwise be used for agriculture.

"We are concerned about the issue of rising food prices but don't think the use... for energy is what's contributing in a large way to the run up of food prices," Kupfer said.

He added the United States had committed about one billion dollars to development of next generation biofuels, which would not compete with food supplies.





Clinton threatens to 'obliterate' Iran if Israel attacked

25 minutes ago

WASHINGTON (AFP) — Democratic presidential hopeful Hillary Clinton threatened to "obliterate" Iran if it launches a nuclear attack on Israel, in an interview broadcast Tuesday.

"I want the Iranians to know that if I'm the president, we will attack Iran," Clinton told ABC News, asked what she would do as president were Iran to launch a nuclear attack on Israel.

"In the next 10 years, during which they might foolishly consider launching an attack on Israel, we would be able to totally obliterate them."

The tough talk came just prior to Tuesday's Pennsylvania primary, a key milestone in the marathon Democratic nominations race pitting Clinton against her rival Senator Barack Obama.

Clinton must win the Pennsylvania primary, but she needs to do more than simply scrape past Obama to rescue her trailing White House bid, pundits say.

Obama's camp Monday accused Clinton of trying to scare voters, as she rocked their White House race with a dark campaign ad featuring images of Al-Qaeda mastermind Osama bin Laden.

The ad uses pictures of Pearl Harbor, bin Laden and the devastating 2005 hurricane that swamped New Orleans, mirroring the "3:00 am phone call" spot credited with helping Clinton to win in Texas and Ohio last month.

"You need to be ready for anything -- especially now, with two wars, oil prices skyrocketing and an economy in crisis," the male narrator intones. "Who do you think has what it takes?"

Both Democrats have vowed to defend Israel against any Iranian attack, but they differ on how to engage the Islamic republic over its nuclear ambitions.

Both call for diplomacy, but Obama has gone further, renewing a promise of "direct talks" at a leaders' level with Tehran and others the United States regards as foes, at a candidate debate here last week.

Iran should be presented with "carrots and sticks," the Illinois senator said, while stressing "they should also know that I will take no options off the table when it comes to preventing them from using nuclear weapons or obtaining nuclear weapons."

At the debate, he said: "An (Iranian) attack on Israel is an attack on our strongest ally in the region, one whose security we consider paramount."

"That would be an act of aggression that I would consider unacceptable, and the United States would take appropriate action."

[ezodisy]

all this news is great if you're invested 

[BachQ]

all this news is great if you're invested 

It's great up until the time that the very fabric of society collapses and the house of cards comes tumbling down on top of you .......

[BachQ]

In UK, gas and electricity prices rise by record one-day amount as oil cost hits all-time high

Oil, gas and electricity prices hit fresh records, raising fears that the global economy is becoming "destabilised."   Experts warn the situation is likely to get worse as prices rise by a further 25 per cent by September.  Meanwhile, the price of unleaded petrol is expected to hit an average of £5 a gallon within a matter of weeks.

Gordon Brown will today host a summit at Downing Street to discuss the impact of soaring food and commodity prices across the world.  Millions of Britons have noticed sharp increases in basic foods such as bread, butter, cheese, pasta, rice and meat.   In the Third World, protests have erupted over price rises amid fears of shortages.

The first deputy managing director of the IMF, John Lipsky, said yesteday: "Overall commodity prices, especially those for foods and energy, have now reached levels where they risk becoming a destabilising force in the global economy."   He said costly food and continuing turmoil in the financial markets will mean that global growth will be 1 to 2 per cent below expectations.

[BachQ]

New York Times

April 22, 2008
Fuel Costs Pummel Airlines in First Quarter
By REUTERS
Filed at 10:47 a.m. ET

CHICAGO (Reuters) - Record high fuel prices led three of the largest U.S. airlines to report hefty quarterly losses Tuesday, with UAL Corp (NASDAQ:UAUA) , parent of United Airlines, posting its largest loss since it completed a Chapter 11 restructuring two years ago.

AirTran Holdings (NYSE:AAI) , parent of AirTran Airways, reversed its year-ago profit while JetBlue Airways (NASDAQ:JBLU) also reported a loss, although it was smaller-than-expected and below the loss it posted in the same quarter a year earlier.

The entire airline industry has been clobbered in the first quarter by soaring fuel prices, despite carriers' best efforts to control costs and stir up new revenue streams.

The losses reported Tuesday, which follow those reported last week by AMR Corp (NYSE:AAR) (NYSE:AMR) and Continental Airlines (NYSE:CAL) , put additional pressure on carriers to merge as a way to cut costs and boost revenue.

Last week, Delta Air Lines (NYSE:DAL) and Northwest Airlines (NYSE:NWA) proposed a merger that would create the world's largest airline.

UAL's loss was the largest reported by a major carrier for the quarter. But the airline said it plans to ramp up cost-cutting for 2008, trim domestic capacity and pull 30 aircraft from its fleet.

"We consider the first quarter to be disappointing, though are impressed that the company is taking more aggressive steps than others in response to crushing fuel costs," said Jamie Baker, analyst at JP Morgan, in a research note.

UAL shares fell 9 percent to what would be new 52-week closing low of $19.50 in Nasdaq trading on Tuesday.

Airline shares were broadly weaker on Tuesday with the Amex airline index down more than 8 percent at its lowest level on record after Nymex crude oil futures hit a new record high of $118.47 a barrel.

STEEP LOSS

UAL said it lost $537 million, or $4.45 per share in the first quarter, more the triple the loss of $152 million, or $1.32 per share, a year earlier.

Wall Street analysts had expected the parent of the No. 2 U.S. airline to lose $3.41 per share, according to Reuters Estimates.

UAL, which completed a massive bankruptcy restructuring in 2006, blamed the results on its consolidated fuel bill, which rose $618 million in the quarter. The company reported operating revenue of $4.71 billion, up from $4.37 billion a year earlier.

UAL said it is targeting $200 million in nonfuel cost savings in addition to the $200 million announced earlier in the year. The cost cuts will require a reduction in UAL's salaried and management work force by 500 employees and its unionized work force by about 600 by the end of 2008.

The 1,100 job cuts represent about 2 percent of the company's work force of more than 55,000, according to the UAL Web site. UAL said it would pull 30 aircraft from its operating fleet, 10 to 15 more planes that initially announced in March.

UAL also is reducing capital expenditures by about $200 million from $650 million as previously planned and cutting domestic capacity by about 9 percent by the fourth quarter.

"In this extraordinarily difficult environment, we recognize the pace of change needs to accelerate, and our actions today reflect just that," UAL Chief Executive Glenn Tilton said in a recorded message to employees.

Other major airlines are implementing significant cost cuts. Delta, for example, said in March it would cut 2,000 jobs and scale back operations.

In addition to these steps, airlines -- including United -- are aiming to boost revenue by charging higher fares, and adding new fees for items and services that used to be included in the the price of a ticket. Most notably, some carriers have started to charge passengers to check a second bag. JetBlue announced its new fee to check a second bag Tuesday.

UAL ended the quarter with an unrestricted cash and short-term investment balance of $2.9 billion.

Earlier Tuesday, low-cost carrier AirTran said it lost $34.8 million, of 38 cents per share, in the first quarter, reversing a year-ago profit of $2.2 million, or 2 cents per share. The carrier recorded fuel costs of $268 million, up from $102 million a year earlier.

JetBlue, meanwhile, posted a narrower-than-expected net loss of $8 million, or 4 cents per share, compared with a loss of $22 million, or 12 cents per share, a year earlier.

AirTran shares were down 11 percent at $4.06 on the New York Stock Exchange. JetBlue shares were down 2 percent at $4.83 on Nasdaq.

[BachQ]

High oil price dampening world growth: IMF's Lipsky
Mon Apr 21, 2008 7:59am


By Simon Webb

ROME (Reuters) - Record high oil prices over $117 a barrel are slowing world economic growth, John Lipsky, first deputy managing director of the International Monetary Fund (IMF), told Reuters on Monday.

"It's dampening growth -- that's for sure, but of course it is benefiting exporters," he said.

"It's going to slow growth as we've said before. It's one of the many factors this year, globally."

Lipsky said IMF assumptions for world growth were based on slightly lower prices than at present for oil, which hit a record $117.40 a barrel on Monday.

He reiterated the IMF saw economic growth declining by between one and two percentage points, not just because of oil, but also because of costly food and financial sector troubles.

When asked if he saw a risk to the downside, he replied: "Definitely, yes."

The IMF's latest World Economic Outlook earlier this month put world growth at 3.7 percent this year, down from a growth forecast in January of 4.1 percent.

The global watchdog has predicted the U.S. economy would enter a modest recession in 2008 and start gradually to recover in 2009.

[BachQ]

Middle East energy demand soaring, matching China
Mon Apr 21, 2008 7:59am EDT
By Margaret Orgill - Analysis



LONDON (Reuters) - Energy demand in the Middle East is growing as fast as in industrial powerhouse China and will help to offset any decline in the United States, the world's top fuel burner, as well as keep prices high.

Although it has only a fraction of the population, huge fuel subsidies and an economic boom fuelled by record oil prices have driven a rapid increase in Middle Eastern energy consumption.

"Middle East energy demand looks as if it will grow at the same rate as China but with 10 percent of the population," said Jeff Brown, managing director of Singapore-based FACTS Global Energy consultancy.

Crude consumption in Asia and the Middle East is forecast to grow by almost 900,000 barrels a day this year, whereas U.S. demand could fall by 400,000 bpd in a pessimistic scenario, said Eduardo Lopez, senior oil demand analyst at the International Energy Agency, energy adviser to developed consumer nations.

"The countries driving demand growth are relatively isolated at this point from any financial crisis the United States may face," said Lopez.

Record oil prices, rather than denting demand in the Middle East, will encourage greater consumption as the flow of petrodollars to the region will continue to stimulate rapid economic growth.

Huge subsidies, which make fuel almost free in many states, remove any incentives for energy efficiency, while environmental arguments for reducing carbon emissions have made little impact in the region.

SUBSIDIES TO CONTINUE

Almost all oil-rich countries will continue to subsidize fuel heavily as they have the funds thanks to soaring revenues but also because the region's authoritarian regimes see cheap fuel as part of a social pact with their populations.

"Cheap fuel is seen as a given right. It is a social bargain for political compliance," said Samuel Ciszuk, Middle East and North Africa analyst at Global Insight.

In Saudi Arabia, gasoline costs 12 cents a liter compared with 68 cents in China, $2.14 in Britain and 86 cents in the United States. nL27166010

The exception is Iran, the world's fourth-largest crude exporter, which recently started to ration subsidized gasoline to control costs and to curb imports.

Iran is different because it has a much larger population than other Middle East states and because of U.S. sanctions it finds it more difficult to import fuel, forcing the country to turn to expensive spot market purchases.

In addition, relying on imported fuel makes the country vulnerable to pressure over its nuclear program.

"Iran is an anomaly in the region. You couldn't see (rationing) happening in Saudi Arabia or Kuwait as they do not have the same geopolitical problems," said the IEA's Lopez.

"They are not subject to sanctions so can buy what they need in international markets."

The situation in Iran is likely to change in coming years as the country is increasing its refining capacity and could become a gasoline exporter from 2012.

DEMAND GROWING FAST

Middle East oil demand stood at 6.6 million barrels a day in 2007, and is set to rise to 7 million bpd this year, according to the Paris-based IEA.

Chinese demand is around 7 million bpd and oil use in both China and the Middle East is forecast to grow between 5 and 6 percent a year, said the IEA.

FACTS consultancy forecasts energy demand in the two regions rising between 400,000 and 500,000 bpd over the next 5-7 years.

"If anything, the Middle East looks more robust than China. As oil prices go up, then their economies continue to boom and they don't feel any price impact at the retail level," said Brown from FACTS.

The International Monetary Fund this month revised up its forecast for Middle East economic growth by 0.2 percent to 6.1 percent, up from 5.8 percent in 2007.

Demand is soaring not only for transport fuels, including diesel and jet, but also for fuel oil for power generation as gas projects have failed to keep up with demand for natural gas for electricity production.

Apart from Qatar, all Gulf states are short of gas.

The region, especially Saudi Arabia, is planning a big expansion in refining capacity to meet local demand, including from its rapidly expanding petrochemical industry, as well as for export.

Much of the extra capacity will come onstream around 2013.

[ezodisy]

It's great up until the time that the very fabric of society collapses and the house of cards comes tumbling down on top of you .......

? Time for a girlfriend?

[BachQ]

Note: although this is really not about oil, I'm in the gloom-and-doom mode, so what the hell ....... 



U.S. housing slump may exceed Depression: Shiller
JOHN CHRISTOFFERSEN

The Associated Press

April 22, 2008 at 10:25 AM EDT

NEW HAVEN, Conn. — An influential economist says the slump in the U.S. housing market could cause prices to fall more than they did in the Great Depression.

Yale University economist Robert Shiller, pioneer of a widely watched home price index, says there's a good chance housing prices will fall further than the 30 per cent drop in the historic depression of the 1930s.

He says home prices nationwide have dropped 15 per cent since their peak in 2006.

Mr. Shiller, who long predicted the housing market bubble, spoke Tuesday about the state of the economy at the New Haven Lawn Club.

His Standard & Poor's/Case-Shiller home price index is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.

[ChamberNut]

Oil hits new record above $118 a barrel

Investing in a good pair of roller skates or in-line skates is a wise idea.  Hanging on to car bumpers never looked so enticing.

[BachQ]

Tuesday, Apr. 22 2008
Euro Soars To New Record In Line With Surging Crude Futures

SAN FRANCISCO -- The euro rose to a new record high against the dollar of $1.6007 Tuesday, in line with a surge in crude-oil futures, which came within 26 cents of $120 a barrel. The euro was last trading at $1.5996. "Should a move over $1.6010 occur though, all bets are off, as sources expect significant buy-stops to kick in, which could see a move toward $1.6050 come quickly," wrote currency strategists at Action Economics.

[MN Dave]

Hey, how about posting some nice Henry Purcell news in the Purcell thread?

Of course you'd have to dig it back up. 

[BachQ]

? Time for a girlfriend?

How about a girlfriend with a really doomy & gloomy avatar, like this:

[Guido]

I haven't read throught this whole thread, and I'm sure that someone has commented on this already, but this outrage of gas prices being above $3.50 a gallon is laughable to me - in England they are approximately $10 a gallon depending on where you go. Hopefully this will reduce the amount that people use, but I'm not banking on it.

[(poco) Sforzando]

I haven't read throught this whole thread, and I'm sure that someone has commented on this already, but this outrage of gas prices being above $3.50 a gallon is laughable to me - in England they are approximately $10 a gallon depedning on where you go. Hopefully this will reduce the amount that people use, but I'm not banking on it.

And in Venezuela, last time I read about it, it's $.12 a gallon. The outrage in the US appears to stem less from the actual number than from the precipitious increase in the past year. (Not to mention the inexplicable discrepancies: within 10 minutes yesterday I saw both $3.89 and $3.63 a gallon from Exxon and Sunoco respectively. WTF?)

But I'd have much more sympathy with the outrage over gas prices if there were any signs of people driving less, driving more fuel-efficient vehicles, or driving at moderate speeds. If you're going to drive at 70 MPH in one of those gaz-guzzling monstrosities (aka SUVs) that seem to make up 50% of private American vehicles nowadays, don't complain about the price of gas.

[Guido]

But I'd have much more sympathy with the outrage over gas prices if there were any signs of people driving less, driving more fuel-efficient vehicles, or driving at moderate speeds. If you're going to drive at 70 MPH in one of those gaz-guzzling monstrosities (aka SUVs) that seem to make up 50% of private American vehicles nowadays, don't complain about the price of gas.

I'd never thought of it in that way. Very interesting.

gas prices have seen a huge hike over here during the last few months btw.

[BorisG]

The girlfriends will gravitate to the guys who can spare a dime.

For those who cannot spare a dime, there is always

[(poco) Sforzando]

The girlfriends will gravitate to the guys who can spare a dime.

For those who cannot spare a dime, there is always [picture]

In truth, BorisG, I have no idea what you're saying.

[greg]

But I'd have much more sympathy with the outrage over gas prices if there were any signs of people driving less, driving more fuel-efficient vehicles, or driving at moderate speeds. If you're going to drive at 70 MPH in one of those gaz-guzzling monstrosities (aka SUVs) that seem to make up 50% of private American vehicles nowadays, don't complain about the price of gas.

Oh, driving at moderate speeds is impossible. Why? Because everyday I'm about to be run over by a huge truck or SUV while going 5 miles an hour over the speed limit. I really don't care anymore, I'll just let them run over me. It'll be on their conscience the rest of their life, after all.

How about a girlfriend with a really doomy & gloomy avatar, like this:

That would be great! A person out their to relate to, wouldn't that be a fantasy?