Crude Oil Nears Record on Signs OPEC Will Keep Output Quota

Here are a couple of weird things:

Sept. 11 (Bloomberg) – Crude oil rose to within 50 cents of a record on speculation rising demand and restricted OPEC production may tighten fourth-quarter supplies.

The Organization of Petroleum Exporting Countries pumps 40 percent of the world’s oil and will set its output target for the rest of the year at a meeting in Vienna today. It will probably maintain its current ceiling because of ample supplies and the prospect of slowing U.S. demand, officials said.

Weird Thing One: OPEC (President Bush: that’s OPEC, to which you do not belong, rather APEC, to which you do. Dickhead) not expanding its current quota does not equal “restricted OPEC production”. Or does it? Is it just me?

Weird Thing Two: why are words like “speculation” wandering about? OPEC have refused to increase quotas, at the specific, periodically desperate, request, periodically demand, of the OECD for a good long while now. I’ve mentioned several times here the quite reasonable (to me) analysis suggesting that OPEC has merely a reservoir of excuses for not increasing production as great as their reservoirs of oil – the extraction of which cannot be increase any more (that was pretty clever, right? The way I did that? Pff. Whatever.)

We are calling the oil market “tight” because, of course, we want it less tight. Opinions differ, and it would appear the people with the oil (as much of it as they have) do not agree.

This could all change quickly. The hopefully-not-an-indication-of-things-to-come explosion of Pemex’s pipelines may yet bring pressure to bear on OPEC just at the last minute. I invite the conspiracy theorists out there to ponder aloud the convenience of the timing.

Actually the effect on the US’s supply, despite the significance of Pemex as a supplier, is meant to be small. The effect is probably more likely to be direct, via American firms based in Mexico. Apropos my previous post, though: I’d avoid stocks exposed to the Mexican economy but, then, I’d probably recommend that, anyway. If nothing else, I reckon NAFTA sure will export a recession quickly, but the attacks seem to be targeted at Mexico:

A shadowy leftist guerrilla group took credit for a string of explosions that ripped apart at least six Mexican oil and gas pipelines Monday, rattling financial markets and causing hundreds of millions of dollars in lost production.

…

The group, known as the EPR, is a secretive, tiny rebel group that staged several armed attacks on government and police installations in southern Mexico in the 1990s. It was later weakened by internal divisions, leaving it unclear which splinter group may have carried out Monday’s attacks.

The EPR claimed responsibility for a July attack on a major gas pipeline from Mexico City to Guadalajara in western Mexico that forced at least a dozen major companies, including Honda Motor Co., Kellogg Co. and The Hershey Co., to suspend or scale back operations.

Like I said. Conspiracy theorists: open invitation…

Ford, et al. (another Detroit story)

How can Charles Bronson break Claudia Cardinale’s heart like that? Plus what is he, blind?

Ford has announced that its circumstances are yet more straightened than we’d believed.

Ford Motor Co., the second-biggest U.S. automaker, said it expects to reduce U.S. dealerships by about 300 this year, 50 percent more than initially intended, under a plan to eliminate excess outlets.

…

Ford has said it has too many U.S. dealerships, especially in metropolitan areas where they compete against each other. The Dearborn, Michigan-based automaker began the reduction program before Chief Executive Officer Alan Mulally assumed the post a year ago. Ford has said the effort is voluntary.

U.S. sales of the Ford, Lincoln and Mercury brands fell 32 percent to 2.72 million cars and light trucks last year from 4.01 million in 2000, according to Autodata Corp.

Its share-holders didn’t seem much to mind:

What didn’t seem popular last week was their plan for a third plant in China. At least they’re only laying off employees in dealerships, here, while planning plants in China. Rather than laying off manufacturing-plant workers.

Mind you…

Big Three US automakers union talks stall as deadline looms

With less than a week to go before the current agreement expires, contract talks between the United Auto Workers and Detroit’s Big Three automakers have slowed to a crawl with few signs of progress.

The contracts covering more than 160,000 workers at General Motors Corp., Ford Motor Co. and Chrysler LLC expire at midnight Friday, September 14, though the talks could easily extend through the weekend without any threat to production.

…

The union, which has already made major concessions to help General Motors and Ford manage massive losses, is unwilling to accept major changes without guarantees that jobs both at the automakers and their suppliers will not be shipped overseas.

And then there’s that recession we’re all apparently going to have. Flagging sales, a current workforce that is dwarfed by the former-workforce-on-benefits and fighting a non-unionised workforce in a country that already has a comparative advantage in Auto sales. I’m glad it isn’t my problem. I’m glad my livelihood, my pension and my medical benefits don’t all depend upon the health of Detroit (I’m glad I can state that honestly).

The Economist in me, of course, recognises that it would be better (like the current sub-prime troubles) for us to take our lumps right now. Let those with comparative advantages specialise, just like the textbooks say. For now, I reckon

1. if you’re one such employee, figure out how to get out now so that the “job equity” that you’ve built up is protected under any agreement: once the paper is signed, I reckon the clauses will say that anybody fucked over afterwards stays that way. The UAW can only protect the people covered by the start-up money the Big Three kick in; and
2. standard recession rules. Find economies that are going strongly, and increase your portfolio’s exposure in those directions. Which bodes still less well for Detroit, Chinese plants or no Chinese plants.

More on the Atmospheric Vortex Engine

MSNBC has a story up at the moment about Louis Michaud and his magnificent machines.

We last saw him here when I pointed to a piece on the blog Inhabitat about his unbelievable cool plan to generate electricity.

Michaud is shopping this prototype around to energy companies, hoping to get funding to build a tornado pool the size of a sports arena. The plan is to use warm air expelled by, say, the cooling system of a nuclear power plant, to create tornadoes that stretch up to 9 miles high, spinning turbines to generate electricity. Michaud figures that such a tornado could generate as much power as a nuclear plant, though he allows that his idea is “the type of thing that’s outside the norm.”

The article also mentions SkySails (although as manufactured by a different company). It also strikes what to my sensitive eyes seems like a somewhat patronising tone. Jerks.

Arctic Ice the Size of Florida Gone in a Week

An area of Arctic sea ice the size of Florida has melted away in just the last six days as melting at the top of the planet continues at a record rate.

…

In just the last six days, researchers say 69,000 square miles of Arctic ice has disappeared, roughly the size of the Sunshine State.

Scientists say the rate of melting in 2007 has been unprecedented, and veteran ice researchers worry the Arctic is on track to be completely ice-free much earlier than previous research and climate models have suggested.

And so the pace at which the globe warms picks up a lost-Florida’s worth of pace…

Indonesia court awards Suharto damages in Time defamation suit

Turns out I was wrong about the Suharto family:

US magazine giant Time has been ordered to pay $106m (£52m) in damages to the former Indonesian President Suharto.

Indonesia’s highest court overturned the decision of two lower courts and ruled that the Time article, published in 1999, defamed the former ruler.

Ha. Like bloody fun I was.

Suharto, who has also been accused of widespread rights abuses, filed a lawsuit with the Central District Jakarta and later the Jakarta High Court, both of which ruled in Time’s favor.

A panel of three Supreme Court judges, including a retired general who rose in the military ranks during Suharto’s administration, overturned the decisions on Aug. 31. The ruling ordered Time Inc. Asia and six employees to apologize in leading Indonesian magazines and newspapers as well as Time’s Asian, European and America editions.

I wonder who the other 2 were? Actually it’s hard to make that sort of complaint. We managed to keep Suharto in power for a good long while – I imagine most of Indonesia’s retired generals rose in the military ranks during Suharto’s administration (as the Associated Press is kind enough to characterise it).

Still and all, though. I wonder what Time does. Are they obliged to pay a fine ordered by an Indonesian court? They went to the trouble of appealing and will, it seems, try for the final move (Judicial review). I’d say I feel that I ought to learn more international law, except I’m really not that fussed.

XKCD

Again. You should be reading this comic.