"Crisis is simply if over the next ten years demand grows faster than supply and there's no more excess capacity available to meet demand swings or supply shortages. I think the reason I'm bringing it up is when you look at demand growth–most of which is fueled by China, the Middle East–and you assume a million to a million-and-a-half barrels per day. And the Middle East, with a lot of success in the oil industryâ€”that money being reinvestedâ€”demand growth is pretty unrelenting. So to meet that demand growth that we see projected over the next ten years, we just do not feel the industry is investing enough to grow capacity fast enough to keep up with that demand growth."
Saudi Arabian Oil CEO Abdullah Jum'ah says despite high profits, the oil industry is coming out of a strange year.
"Today, though, we are meeting amid considerable uncertainty in the energy and petroleum markets, as well as the global economy. Over the past year, oil prices have been buffeted by the combination of relatively healthy demand, concern for supply interruptions, stretched refining capacity, world regional events and continued debate about the role financial speculation in oil price volatility. More recently, the facts of the subprime debt problems have repelled through global markets risking global economic growth and creating uncertainty. Volatility among key world currencies has confused the situation further."
CERA estimates overall supply capacity will be more than enough to meet the increase in demand. But it says the "cocktail” of hydrocarbons will change significantly. It says lighter stocks such as natural-gas liquids and biofuels will account for 32 percent of the total supply in 2020, up from 19 percent last year. CERA projects overall crude supply to flatten after 2010. It says flexibility will be key to refiners’ futures as they also encounter new supplies of heavy and sour crudes from the Middle East, Latin America and Canada.
The federal budget so far this year is running at twice the pace as last year’s imbalance. In its monthly review of the government’s finances, the Treasury Department says the budget deficit through the first four months of this budget year totals nearly $88 billion. That is more than double the amount of red ink recorded during the same period in 2007. The Bush administration sent its final budget request to congress last week. The administration projected that the deficit for all of 2008 will total $410 billion, very close to the all-time high–in dollar terms–of $413 billion in 2004.
The Federal Reserve has auctioned another $30 billion in funds to commercial banks in an effort to combat a severe credit squeeze. The latest batch of cash brought an interest rate of just over three percent, down slightly from the previous auction. It marked the fifth in a series of auctions that so far have pumped $130 billion in money into the nation’s banking system in an effort to provide cash-strapped banks with extra reserves. The Fed’s hope is that the increased resources will keep banks lending and prevent a severe credit squeeze from making the current economic slowdown worse.
General Motors is reporting a loss of almost $39 billion last year, the largest annual loss ever for an American automaker. It largely was due to a third-quarter charge related to unused tax credits. The company also announced it’s offering a new round of buyouts to 74,000 hourly workers in the U.S. Retirement-eligible workers will get between $45,000 and $62,500 as an incentive to retire, depending on their skill level. Younger workers can get up to $140,000 if they leave and cut all ties with the company. GM says it expects the majority of workers to leave by July 1st.
The Texas Commission on Environmental Quality is set to decide the future of a closed copper smelter in El Paso. Commissioners will consider whether Arizona-based Asarco should be granted a renewed air quality permit. A hearing is being held today in Austin. El Paso leaders oppose the bankrupt company’s plans to reopen the plant, which closed in 1999 during a global drop in copper prices. Mayor John Cook has said the city plans to sue if TCEQ grants the permit. State Senator Eliot Shapleigh of El Paso says it’s about going to a clean air future or taking a step back to "a polluted past.” Asarco officials deny that the plant would cause or contribute to air pollution, plus hundreds of smelter jobs would help bolster the El Paso-area economy.
Dallas-based Greyhound has a frequent flier program for repeat bus riders. The bus line is taking the road rewards program beyond the Internet, to let people earn points by buying tickets over the phone or at the bus terminal. The loyalty program was launched on greyhound.com in 2006. Since then more than 130,000 customers have signed up. Spokesman Dustin Clark says the offline will expand the reach so much because about 90 percent of ticket sales take place through terminals or on Greyhound’s toll-free number. Greyhound Lines customers can redeem points and get free trips and discounts on companion fares and food. For example, someone who takes eight round trips earns a free round trip. Points must be redeemed within one year. Greyhound is owned by British bus and rail operator FirstGroup.