Monday, July 17, 2006
"It's an ill wind that blows no good"
Some say that it's the speculators who've been driving up the price of oil in a market that has plenty. The price rise a few months back was fueled by the "Iran crisis"—one of our many manufactured crises. The more gloom and doom that oil speculators see in our future, the more they buy in the hope that a true shortage will develop.
That being the case, it is time for pundits to stop claiming that presidents can't directly affect the price of oil. It is fair to say that George Bush's mouth has been the single greatest source of petroleum price rises. Every time he rattled his little saber at Iran, up went the cost of a fill-up.1
After the Europeans got him to settle down, prices began to fall. That wouldn't do, of course, so Israel's bombardment of Lebanon last week took up where George left off. Today's speculation, however, is that Israel may call a halt to the bombing by the end of the week, so even the destruction of a small sovereign state can't keep the market moving upward forever.
But I speak of the short term. As long as the Bushies and Israel remain principal actors on the world stage, no one should doubt that oil supplies may drop precipitously, least of all Europe's largest oil company BP.2 So BP has set up an Alternative Energy division and now advertises that "BP" stands for "Beyond petroleum."
On Friday the company announced its first foray into wind power—
BP is making its first major investment in wind power with a joint venture that will lead to an exponential expansion of its generating capacity.
The oil giant said yesterday it had entered a five-year supply and development agreement involving five wind energy projects in the US with Clipper Windpower.
.... The projects, with an anticipated total generating capacity of 2,015 megawatts, are situated in New York, Texas and South Dakota.
BP has also secured a mix of firm and contingent orders of up to 2,250 megawatts of additional Clipper turbines in its global wind portfolio, the companies said.
The announcement, which came in the same week that the UK Government published its Energy Review, is thought to be the biggest single investment in wind power.
Clipper claims its turbine, the "Liberty," represents a jump in the efficiency of generating electricity from wind. According to the website,
The patented technology of the Liberty turbine developed by Clipper substantially increases the efficiency of wind-generated electricity, providing a formidable increase in the potential geographic areas for turbine deployment. In recognition of the merits of this advanced technology and for Clipper's highly experienced management and engineering team, the company was awarded grants from the U.S. Department of Energy ("DOE") and the California Energy Commission ("CEC") for development of the turbine.3
Those who took a risk on Clipper did very well in the transaction. The stock rose 28%.
Tearing the world apart doesn't strike me as the best way to promote investment in sensible energy alternatives, but for the moment that's all we have to go on.
1I don't know about you, but I buy gasoline now as if I were trading on the futures market. If I think George may be quiet for a while, I buy just enough to get by, knowing the price will fall soon. On the other hand, when George starts acting up, I fill up the car plus the gas can. I know he's just tossed a bone to his buddies in the oil market. [back]
2Those of a certain age will remember this company as "British Petroleum." The British government, apparently hating to make money, long ago sold its interest in the company, which grew to a size too large to be associated with any particular nation-state. Hence British Petroleum is now just plain old "BP." [back]
3You will also notice that contrary to the advice of neoliberal economists, government has been dabbling in the alternative energy market. So how is that different from socialism? Just that you the investor get no direct benefit if the government picks a winner; it all goes to the corporation. It's a system where the people put in "seed" money but get no benefit from the crop. [back]