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A Latin American market analyst predicts that the value of Latin American energy stocks are set to hit the roof despite oil futures falling to lower than $50 a barrel recently.
Rudy Martin, the editor of Latin Stock Investing and the president of Latin Capital Market, in a detailed article on the Forbes website, has literally urged readers to invest in these stocks as they are set to witness a meteoric rise. His argument is that, the increase of Russian oil influence in Latin America herald's higher prices for these stocks.  
Russia's LukOil is in discussions to buy 30% of Spain's Repsol one of the leading producers of oil in Latin America. If this transaction takes place, LukOil would become an international oil producer. This coupled with the IAEA's prediction of the world's growing energy needs (45% more than present demand by 2030) and the unlikely chance that the equivalent of four Saudi Arabian oil fields will be discovered by that time have prompted him to make his argument.
To read the whole article on the Forbes website click here.

OPEC producer Venezuela has joined fellow member Nigeria in making a token cut in supply to stem falling oil prices.

OPEC spokesman Omar Farouk Ibrahim said that "Venezuela has formally informed the OPEC secretariat of its voluntary decision to cut production by 50,000 barrels per day" from its 2.5 million bpd output and an overall OPEC quota of 28 million bpd.

Nigeria said it will cut exports by 120,000 bpd. Analysts question whether Nigeria will make good on its supply cuts. They cite strong demand for the country's light, sweet crude that is rich in gasoline and heating oil.

Despite the news oil fell more than $1. This is because there is plenty of oil around at the moment and investors are waiting for evidence that actual cuts are being instigated.

"There is definitely no agreement -- whether formal or informal -- within OPEC to cut current production," an OPEC official said.

OPEC officials say that there are no plans for an emergency meeting but there are plans to meet face-to-face on December 14.

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Update

Key OPEC producers, including Saudi Arabia, have agreed unofficially to cut production to curb falling prices.

With oil falling toward $61 on robust US inventories ahead of the winter heating season, OPEC said that the price slide from summer peaks had gone as far as it should go.

US crude fell to US$61.01 per barrel, reversing the rebound from 6-month lows below US$60.
Easing Middle East tensions, ample fuel stocks and slowing US economic growth have resulted in the steepest decline in oil prices since the Gulf War, falling from July's high of US$78.40 a barrel.

OPEC President Edmund Daukoru said that the slide in prices was harmful for investments and that OPEC was already talking among itself about what needs to be done.

Industry analysts feel that if the price slide continues, OPEC might cut its quota.
It is expected that if prices fall below US$60, it would trigger OPEC action.

While OPEC has avoided setting a target oil price to defend, Saudi Oil Minister Ali al-Naimi said that prices were "reasonable" when they were above US$62 a barrel.

On the other hand, BP is adding to the downward pressure on prices by increasing production at its Prudhoe Bay Field. BP expects to hit 400,000 barrels a day by the weekend, just 50,000bpd below full capacity.US stocks stand at their highest level since January 1999. US stocks of distillates are projected to rise.

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An editorial in the Chronicle last September warned of peaking global oil production in this decade followed by an inevitable decline. If that were to happen, the US needs to invest heavily in developing alternative energy sources or be prepared to endure steep increases in the price of energy.

A study conducted by the US Department of Energy concurred with the editorial's conclusions.

The study, led by Robert Hirsch, affirmed that global spending on developing alternative energy sources should be $1 trillion per year to prevent the economy from being crippled by oil shortages and the resulting chaos. Considering that the study recommends a 20-year lead time, it might already be too late to prevent a crunch.

Hirsch predicts that oil production will certainly peak by 2020, if not in the next 5 years.
In fact, oil production does not need to peak for severe shortfalls in oil supplies to occur. Natural disasters like Hurricane Katrina, wars like the Israel-Hezbollah conflict, political unrest, government intervention, deteriorating equipment like in the case of the Prudhoe Bay field pipeline, accidents or any combination could interrupt the supply of oil.

The trend of dropping oil prices with the end of the vacation season is extremely temporary. ExxonMobil CEO Rex Tillerson predicts that world demand for crude ol will increase by 50 percent in the next 10 years. Demands from countries like India and China and the developing world will only go up.

Perhaps the report's most sobering conclusion is that the free market and private industry alone will not be able to avoid economic catastrophe from energy shortages. A policy for managing the transition from conventional crude oil to other energy forms is required to be set in place by the government.

If oil companies disagree, they need to make good by showing where all the oil to meet excess demand is going to come from, or come up with plans to develop alternative sources.

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Crude oil dipped to below $60 a barrel at $59.80 after Iranian President Ahmadinejad said that Iran is open to discussing "everything" if the US stops its threats against the country.

Crude oil for November delivery fell by 61 cents, or 1 percent, to $59.94 a barrel in after-hours electronic trading on the Nymex.

Hedge-fund managers and other large speculators cut their long positions, or bets prices will rise, by 39 percent in the week ended Sept. 19. Traders with long positions outnumbered short positions by 22,498 contracts on the Nymex.

BP's announcement that it expects to resume production of about 150,000 barrels a day from the eastern field in a week's time is also expected to have helped in the price drop.

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A day after Venezuelan President Chavez called President Bush "the devil" in a speech to the UN General Assembly, he visited a Harlem church and pledged to double the amount of discounted heating oil his country ships to poor Americans.
Chavez announced that Citgo, the US-based refining arm of Venezuela's state-run oil company, plans to increase the amount of heating oil it is making available under the relief program from 40 million gallons to 100 million.
He said the oil will reach people in 18 states, including American Indians in Alaska.

Chavez started the heating oil program last winter, accusing Bush of neglecting the poor.
He called Bush "an alcoholic and a sick man" to applause from the crowd which included activists and supporters at the Mount Baptist Olive Church.
Chavez said that the American people are friends of Venezuela and he hoped that they would awaken before long and elect a better president. He called Bush's policies in Iraq criminal.

The South American country receives billions of dollars from the US as its top buyer of Venezuelan oil, which fund many of Chavez's popular social programs.
Chavez repeated warnings that if the US government tries to oust him, Venezuela would halt oil sales to the US.

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BP and its minority partner, ExxonMobil in the Thunder Horse project in the Gulf of Mexico, are at odds over how to deal with increasing problems at the deepsea oil project.

The world's largest semi-submersile oil and gas platform, has been delayed yet again, this time targeting 2008 production.

According to a BP employee, the delay has been caused by problems including inferior welding on the project's distribution systems and other underwater equipment, as well as defects on the production, drilling and quarters platform.

He said BP is considering a temporary bypass system to get oil flowing in 2007 that will involve the completion of a workover riser, a connecting piece used to install equipment to complete the wells.
This temporary structure would be environmentally very risky from a spill standpoint and 25 percent partner ExxonMobil has pushed for waiting until the permanent structure can be properly repaired before production begins.

While ExxonMobil said that it cannot discuss any business it conducts with co-venturers, it can assure the public that any developments that they are part of will adhere to the "highest standards of safety, health and environmental conduct in design, construction and operation of facilities."

ExxonMobil and ConocoPhillips are also BP's partners in the Prudhoe Bay Field project. As the operator of Prudhoe Bay, and the majority owner in Thunderhorse, BP is the key decision maker on those projects and its partners are said to be suffering from the fallout of BP's decisions.

Analysts noted that the closure of the Alaskan field and the delay of the Thunder Horse project would affect the earnings of ExxonMobil.

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World oil prices dropped to further lows below $61 a barrel after data showed a surge in US stockpiles of distillates, used for heating oil and diesel fuel. The inventories of distillates have gone up by 4.1 million barrels to 148.7 million in the week to September 15.

With the end of the driving season, the market has switched its attention from gasoline to heating fuels.

New York's light sweet crude hit $60.60, while In London, Brent North Sea crude dropped to $60.74.

New York's main contract, light sweet crude for delivery in October fell by 71 cents to $60.95 per barrel in pit trading.

Brent North Sea crude for November delivery plunged $1.03 to $61.14 per barrel in electronic trading.

Crude oil prices have shed almost 23 per cent in value since striking historic highs above $78 in July and August.

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Expectations of rising fuel stockpiles and long drawn out negotiations with Iran caused crude oil to trade near a 6 month low of $61.66 a barrel in New York.

A statement by President Bush that he will give European diplomacy a chance to resolve the dispute with Iran and reports that

US fuel stockpiles have extended their gains from the past month caused the biggest oil price fall in 4 months.

Crude oil fell by $2.14 to $61.66 a barrel, the lowest close since March 21 and the biggest one-day decline since May 15. In after-hours electronic trading on the Nymex, crude oil for October delivery went up by 13 cents.

Hedge funds may also be selling futures after seeing others lose money in the energy market and as the pace of the decline in oil has accelerated, analysts and traders said.

Gasoline for October delivery was at $1.5090 a gallon in after-hours trading, after falling 4.8 percent to $1.5038 yesterday, the lowest close since Feb. 22.
October heating oil was at $1.6980 a gallon, after falling 2 percent to $1.6916 yesterday, the lowest close since March 10.

The UN-Iran dispute looks like it will be a long drawn out affair.
The US seems to have moved over to the European position with French President Chirac proposing the suspension of plans for sanctions if Iran also suspends its enrichment during negotiations.
Bush said that the US would "come to the table" once Iran suspended enrichment and that there was "no objection" to Iran pursuing a truly peaceful nuclear program.

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Notwithstanding the $10 drop in the price of oil over the last few weeks, the government predicts that crude will still average near $70 for the rest of 2006.

The Energy Information Administration said it expects gasoline prices to average $2.55 a gallon by January before rising again next spring.

EIA's bullish price view is based on rising demand with only a limited increase in supply.
The agency expects worldwide petroleum consumption to grow by about 1.7 million barrels a day in 2007 as opposed to the 84 million barrels a day used in 2005.
EIA reduced its estimate of oil consumption by 100,000 barrels a day due to high prices.

Production capacity is expected to increase only slightly during the forecast period, existing and potential supply problems throughout the world will shape the tight supply-demand balance resulting in little relief from current pricing patterns.

Following the EIA's report oil prices briefly turned higher but later gave gains back with US light crude for October delivery trading down 51 cents on the Nymex.
It also provided a little boost to the shares of oil majors like ConocoPhillips, ExxonMobil and Chevron.

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Gas prices have been falling over the last month with a drop of 42 cents from the summer high of $3.04 a gallon.

In the last week, gas prices have fallen by 11 cents to $2.62 a gallon.

With the peak driving season having ended, demand is down and inventories are up. Besides this the crude oil prices have also dropped significantly from $70 a barrel to below $65. With Prudhoe Bay production expected back in full capacity by October, supply looks to be going in the consumer's favor.

Crude oil prices account for about half the cost of gas at the pump.

Gas is cheapest in the Midwest averaging about $2.44 a gallon and has the highest prices in the West Coast averaging $2.90 a gallon. Californian gas fell 6 cents to $2.94.

Though prices might drop a bit more when gas moves from a "summer blend" to a "winter blend" which is cheaper, it is unlikely that there will be more big drops this fall.

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Deputy Prime Minister Barham Saleh of Iraq said that Iraq's emergence as a "secure petro democracy" could suppress sectarian violence and called for partnerships with international companies to boost the country's oil industry.

He conceded that disputes between local officials and the central government over who controls oil proceeds were one of many obstacles to making improvements but said he hoped that oil would be a "unifying force for Iraqis rather than a resource to fight over."

Saleh is aware that foreign oil companies are needed to modernize Iraq's oil sector and meet the country's goal of doubling current crude production. The absence of legal framework governing investments and ownership of oil resources has hampered foreign investments.

Big oil companies are willing to send crews for exploration and pumping to Iraq depite the insurgency and attacks on oil workers as long as there are legal ground rules for their participation.

Iraq is on the way to ushering in a hydrocarbon law that could bring in investments by foreign companies in the oil sector. A law setting ground rules for managing Iraq's huge petroleum reserves is also to be approved by the end of the year.
The country needs invenment and has to push libralization and open up markets.

The main trouble in enacting laws is the difference in opinion about whether the resource is controlled by regional governments or Baghdad.

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With the OPEC keeping current production quotas steady and maintaining spare capacities of 2 million barrels a day added to US inventories hitting their highest levels since 1998, oil prices have dropped to below $66 a barrel.

Light sweet crude for October delivery fell by 60 cents to $65.65 a barrel on the Nymex.
In London, Brent crude fell to a five and a half month low at $64.64 a barrel.

Heating oil futures fell to $1.8240 a gallon while gasoline dropped almost a cent to $1.6000 a gallon. Natural gas prices fell by 35 cents.

Other factors playing in the price fall are BP PLC's announcement that Prudhoe Bay production could resume by the end of October and news of Iran's possible compliance with the UN Security Council demand to freeze enrichment.

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Oil giant BP testifying before a Congressional committee said that its Prudhoe Bay Field facility could be up and running to full capacity by the end of October resulting in oil prices falling back near $67 a barrel.

US light crude for October delivery fell 18 cents to settle at $67.32 a barrel. Earlier in the session crude hit $66.76 on the news.

Crude prices had slipped after the Energy Information Administration reported a jump in total motor gasoline inventories by 700,000 barrels putting them above the upper end of the average range.

Crude oil inventories at 330.6 million barrels remain well above the average for this time of the year.

Following the Israel-Hezbollah cease fire, oil prices have eased from their record highs of around $78.

With the end of the US summer driving season, an innocuous hurricane season and slowing global economic growth, crude prices have been driven lower. But not all analysts are convinced that the decline will continue indefinitely.

Right now the Iran nuclear standoff is giving support to oil prices.
Though OPEC is expected to leave production levels untouched, some analysts are speculating that the oil cartel could impose production cuts if crude prices remain ar their current level.

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Crude oil rebounded from a 5 month low to prices above $67 a barrel as the Petroleum and Natural Gas Senior Staff Association confirmed that they will carry out a three day "warning strike" beginning Sept. 13.

Nigeria's two main oil worker unions pledged to strike unless security in the Niger Delta region improves.
If the strike carries on longer, oil supplies from Africa could be further disrupted. Nigeria is Africa's largest producer and has been suffering from various problems this year including kidnappings of employees, attacks on infrastructure and militant action which has cut output by as much as 715,000 barrels a day.

With the latest issue, crude oil for October delivery has gone up 13 cents at $67.45 on the Nymex.

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Oil prices firmed at under $70 after sliding nearly 5 percent last week due to reduced hurricane concerns with dealers braced for situational rises over the Iran-West nuclear dispute.

The US market was trading electronically on Labor Day but trade was thin. U.S. light sweet crude traded up 30 cents at $69.49 a barrel.

Though Washington pressed for sanctions that oil traders fear could disrupt supplies from the world's fourth-largest exporter, the European Union indicated it wanted more talks.

Iran has been given 2 weeks to clarify its nuclear stance. Iran says it is ready to negotiate but will not halt any enrichment work ahead of talks.

EU foreign policy chief Javier Solana will meet Iran's chief nuclear negotiator, Ali Larijani, next week to try to clear up ambiguities in Tehran's reply to major powers' offer of broad cooperation if it stops the nuclear work.

Tobin Gorey, commodity strategist at Commonwealth Bank of Australia, said that "We're thinking the oil market might downgrade the risk further. A break below $68 would suggest that the downgrade is on."

With the projected number of hurricanes for this season dropping and other supply news being mostly positive over the weekend, has also played a part in the price drop this week as opposed to the closure of 50,000 bpd of Nigerian output.

Authorities in Iraq said they had detained the second most senior Al -Qaeda figure in the country, potentially improving security and freeing a pipeline used to pump 6 million barrales of crude that has been mostly paralyzed by sabotage for the past three years.

Thanks to the Exxon-led Sakhalin-1 field ramping up output, Russian oil production rose 0.9 percent to a record high of 9.759 million bpd in August.

OPEC meets next week to chart output policy and is unlikely to change production even though that may mean that supply is more than market demand.

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A recent bill enacted by the Venezuelan government hikes the income tax rate from 34 percent to 50 percent for 6 foreign oil giants working in heavy oil ventures in the Orinoco basin.

Chevron Corp. is one of the companies affected by the increase which will be effective from January. Chevron did not comment on the Venezuelan announcements and its stocks closed down by 55 cents at $65.19.

Deputy oil minister Bernard Mommer said that the government is looking at a minimum 51 percent stake in those same ventures and a decsion on that will most likely be taken before December.

President Chavez has steadily taken a larger share of the profits from the Orinoco projects, which produce as much as 600,000 barrels a day of oil. Earlier in May, the government had increased royalties on the four projects from 16.6 percent to 33.3 percent.

This move may jeopardize investments as it basically eats into the companies' share of profits while making them shoulder a greater burden of costs.

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Update

With tropical storm Ernesto veering away from the oil and gas region of the Gulf of Mexico contrary expectations of an active tropical storm, oil prices fell sharply to below $70 a barrel. The average retail price of gasoline has fallen by 20 cents nationwide.

A semiannual survey of 195 economists conducted by the National Association for Business Economics said that the US economy would go into recession only if oil prices hit $100 a barrel but predicted that oil would not ultimately move that high.

The median forecast for next summer's oil price is similar to the present rate at about $75 a barrel. Terrorism continued to be the paramount short-term problem facing the US economy according to 34 percent of the respondents with energy and inflation following owing to the small prospects of other technologies substituting oil in the next decade.

Only 35 percent of respondents believed that the war in the Middle East would spread and most agreed that violence in that region would not result in major disruptions in oil supply to the US.

Earlier this month, Federal Reserve policy-makers decided to keep the interest rates unchanged at 5.25 percent after more than 2 years of a successive rate increases intended to curb inflation.

The percentage of respondents who expect the Fed will tighten further has dropped from 89 percent to 57 percent.
And while the majority of respondents at 71 percent say the current monetary policy is about right, the panel is spilt on where it should go with 29 percent wanting further rate hikes, 17 percent wanting cuts and 53 percent opting to leave rates at the current level.

The survey was taken in the first fortnight of August.

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Speaking at an oil and natural gas conference in Norway, ExxonMobil's CEO said that new technological advances that have pushed the frontier of oil exploration and increased production from oil wells will help quench the world's thirst for oil for decades.

Rex Tillerson took over as CEO of Irving-based ExxonMobil, the world's biggest publicly traded oil company, 8 months ago. He said technology allowing oil companies to drill deeper will ensure that there is no shortage of supplies and that the Norwegian sector of the Barents Sea, shared with Russia, could contain one-third of Norway's undiscovered resources.

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As part of a plan to boost Venezuela's oil output, China will invest around $5 billion in energy projects in the country by 2012.

Rafael Ramirez said that the initial investment made by China is very important as it is part of the increase in oil production, which is projected at 5.8 million barrels per day by 2012.

Currently, Venezuela is providing 150,000 bpd of oil and products to China with the joint plan aiming to reach up to 500,000 bpd by 2012.
Ramirez added that the Chinese investment was inclusive of a joint venture to operate the Zumano fields in eastern Venezuela and investment by China's CNPC in the Orinoco heavy crude belt.

PDVSA, the Venezuelan state oil company, plans a total investment of $56 billion by 2012 as part of an expansion plan that includes increasing natural gas production, boosting refining capacity and launching a wide-scale development of the Orinoco heavy crude belt.

Chinese energy company Sinopec will be part of the development of an oil block in the Gulf of Paria. Besides this China will also help Venezuela build 18 new oil tankers by 2012.

President Hugo Chavez of Venezuela just rounded off a visit to China to sign cooperation accords as part of an effort to reduce Venezuela's dependence on US energy markets.

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A storm brewing in the Caribbean weakened and took concerns over US oil supply and prices down with it.
Hurricane Ernesto was downgraded to a tropical storm after it flooded Haiti's southern coast. However, meteorologists predict that the storm is likely to pick up force again as it moved towards the Gulf, possibly reaching hurricane levels.

Light sweet crude for October delivery fell 76 cents to $71.75 on the NY Mercantile Exchange.
Prices at London's ICE Futures exchange fell by 55 cents to $72.15 a barrel.

The unpredictable storm and unease over Iran's nuclear program will make trade in the energy markets hard over the next few weeks, with both factors having the capacity to generate new highs in the crude market.

While large oil producers in the Gulf of Mexico are prepared to evacuate non-essential personnel, world energy markets are also concerned over Iran's stand-off with the West over its nuclear program.

Natural gas futures on the Nymex went down by 51.8 cents to $6.64 per 1,000 cubic feet and gasoline futures fell 4.41 cents to $1.8510 per gallon. Heating oil futures dropped 1.58 cents to $2.0140 a gallon.

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BP has put plans for a 320 million pound liquefied natural gas terminal in Texas on hold.
The proposed LNG terminal was to be located just 10 miles from BP's refinery which killed 15 people in an explosion about a year ago.
While the plan garnered some support in the area as it would have created 80 jobs and increased the level of traffic in Port Galveston, it ran into some controversy from environmentalists and residents caught up in the Texas city blast.

A spokesman claimed that the decision had been made on economic grounds and had not been influenced by local politics.
The company announced that it would renew its lease on the Pelican Island site that had been earmarked for the terminal for another year while it considered the economic viability of Pelican Island.

There is a strong demand for gas in the US, with supply falling short. BP is looking to take a stake in the demand. LNG terminals make it possible to bypass the huge cost of developing pipelines between gas producing countries and countries with more demand than domestic supply.

At present the US has 4 LNG terminals, with proposals for another 40, raising fears of excess gas supply pushing down prices.

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With the prospect of Iran standing defiant on its nuclear work and disregarding UN sanctions, U.S. light crude for September delivery went up by 49 cents to $71.63. London Brent crudefor October climbed to $72.73 a barrel.

The UN has proposed a second deadline of Aug. 31 for Iran to halt its uranium enrichment or face punitive action, but it seems that with the survival of Hezbollah, Iranian confidence has been bolstered setting the stage for a confrontation over nuclear development.

Traders fear that Iran could withhold exports of as much as 2 million barrels per day in retaliation to any sanctions imposed by the UN.

The production boost from the Prudhoe Bay oil field to half its normal capacity and the cease-fire in Lebanon have helped knock over 7 percent off oil prices but concerns remain over the fragility of the cease-fire and now the added worry over Iran's intentions.

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After unprecedented highs, crude oil futures in New York fell to the lowest price in 2 months of $70.44 a barrel.

Demand for motor fuel fell by 1.7 percent resulting in gasoline futures dropping by 17 percent. The demand for gasoline dropped by 167,000 barrels a day causing the price fall in crude oil futures.
Oil also fell this week due to the Lebanon-Israel cease-fire.
The September delivery of crude oil fell by 89 cents to $71 a barrel but oil is still up 12 percent from a year ago.

Gasoline for September delivery fell by 3.31 cents to $1.94 a gallon. The highs in gasoline were based on a lot of speculative buying centered around the hurricane season. But things are looking peaceful and concerns are reduced.

A possible slowdown in the US economy is also contributing to the falling oil prices. The index of leading economic indicators dropped at the rate of 1.4 percent over the last 6 months.

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With the UN effected Lebanon truce resulting in a drop in crude oil prices, investor concerns about riskier assets reduced and US stocks gained.

Technology stocks were the biggest gainers after facing sharp declines in the last few weeks with investors turning away from volatile sectors. Cisco Systems Inc and Intel Corp buoyed the S&P 500. Shares of energy hungry industrial companies such as GE and United Technologies Corp., IBM and Intel were amongst Dow's biggest gainers.
Cisco Systems Inc rose by 55 cents to $20.09.
Intel shares rose 46 cents to $17.87 on Nasdaq.
GE Co closed at $32.82 with a 32 cent rise in NYSE trading.

The fall in crude oil prices prompted investors to sell energy shares, making Exxon Mobil Corp one of the biggest losers down by 48 cents to $69.25 on the NYSE.

With news of the Lebanon truce and BP announcing that half of Prudhoe Bay would still function, US crude oil for September delivery fell 82 cents to settle at $73.53.

Volume was light on the NYSE with about 1.4 billion shares changing hands below last year's daily average of 1.61 billion. Similarly on Nasdaq, the drop was from last year's daily average of 1.80 billion shares to 1.53 billion.

About 5 stocks rose for every 4 that fell on the Nasdaq and gainers outnumbered decliners on the NYSE by a ratio of about 6 to 5.

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BP PLC has bought US wind energy firm Greenlight Energy Inc. for about $98 million to supplement its wind power business in North America.

BP said that the purchase give BP Alternative Energy instant access to a large number of high-quality wind development projects. Greenlight Energy owns the rights to develop 39 wind farms in the US which have the potential to produce a combined power generation of 6.5 gigawatts as opposed to Europe's largest power station which produces about 3.68 gigawatts.

This purchase follows BP's agreeement with Clipper Windpower to acquire 50 percent interest in 5 US wind energy projects and turbine supply options for $30 million.
With BP also securing an option to buy 9.6 million of the Californian firm's shares, Clipper Windpower shares lifted by a third.

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It is welcome news that after the shut down on all operations in the Prudhoe Bay Field last Monday due to pipeline corrosion, BP has gained permission from pipeline regulators to keep oil flowing from a section of the oil field.

Prudhoe Bay which can produce 400,000 barrels a day is now down to 155,000 barrels a day.
At a time when hurricanes might might threaten supplies, the loss of the field stretches supplies. BP was expected to meet with regulators to assess testing results and measure "options for continuing and restoring" production. The company will decide in the next few days if it can keep the western side of the field open.

As per the the regulations set down by the Transportation Department's Pipeline and Hazardous Materials Safety Administration, BP will have to conduct 4 daily surveys of the lines which transport oil from the field to the Trans Alaska pipeline using heat sensors to spot leaks and do a visual check of the entire 22-mile network.

In addition BP will also strip the western line and conduct an ultrasonic test to get a full picture of its condition. A "significant number" of additional workers will be mobilized for this purpose.
The cost of inspection, repair and replacement of the corroded pipes inclusive of the $30 million to repair a line that leake din March is estimated at $200 million.
Exxon Mobil Corp. and ConocoPhillips, BP's partners in the Prudhoe Bay Field, have declared a force majeure on oil deliveries from the field that allows them to avoid penalties for failing to fulfil contracts due to unforseen events.

BP sais it was pleased that regulator's assessments didn't reveal anything that would require an immediate shutdown in the western section.

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PG & E Corps.'s Pacific Gas and Electric utility has signed a contract with Luz II LLC to buy at least 500 megawatts of solar energy that will power up to 350,000 customers, beginning in the spring of 2010.

Luz is waiting for approval on its plans to build hybrid solar-gas design plants that can dispatch electricity all day.

PG & E currently plans to add 300 megawatts of renewable electric power, including wind, solar and geothermal, a year to its supply. The company currently has 12,000 solar customers who generate about 88 megawatts of solar electricity.

PG & E shares rose to $41.55 on the NYSE.

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Alternative Energy Sources Inc. has signed a letter of intent to acquire all of Flex Fuels USA Inc.'s outstanding capital stock and expects to sign a merger agreement by Sept. 15 that will given Alternative Energy access to Flex Fuel's proprietary ethanol production technology.

Flex Fuels has developed methods of producing cellulosic ethanol made from biomass waste streams rather than corn or sugar, making it less vulnerable to supply and price fluctuations and giving it the lowest cost position in the industry.
By merging with Alternative Energy Sources, Flex Fuels hopes to commercialize this technology.

Alternative Energy Sources, which develops, builds and operates ethanol production plants, plans to build the first cellulosic ethanol facility in the US.

Mark Beemer, Alternative Energy's CEO, said that by adding cellulosic ethanol to their portfolio in addition to the greenfield plants and carbohydrate based ethanol evaluation of sites, will provide great diversification to the company's future ethanol production base.

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Modine Manufacturing Co., a Racine-based thermal management products form, announced that it is entering the second phase of a project with Chevron Corp. to develop a way of generating hydrogen on-site for use in automotive fuel cells.

The project aims to produce hydrogen at low cost and of a quality suitable for fuel cell applications. Chevron is working to develop and commercialize fuel-processing technology to convert resources such as natural gas into hydrogen.

Chevron Hydrogen Co. designed and built a purified hydrogen unit that will be used in a hydrogen refueling station. Modine has developed an advanced steam methane reformer that will be incorporated into the unit.
Chevron plans to install the unit at a US military base in Selfridge, Mich., to provide hydrogen for a fleet of light duty fuel cell vehicles in the summer of 2007.

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US oil fell by as much as $1.05 to $75.30 after Britain said that it had foiled a plan to blow up an aircraft in trans-Atlantic flight. Security in Britain and the United States has been stepped up.

There was a simulataneous rise in safe haven bonds and fall in stock markets. Equity markets also fell as investors shifted to government bonds.

The news managed to rein in oil prices that had risen after the shutting down of the Prudhoe Bay Field production.

Energy portfolio manager, Craig Pennington believes that at times of uncertainty people become risk averse and that causes a broader sell-off resulting in the price shift.

Oil demand may be further affected if people's confidence suffers. US gasoline and heating oil fell down but these might be temporary effects with the big question being what the oil demand situation will be like.

Terrorism concerns and the need for the security of supply premium in the oil market might keep the market balanced.

Oil has risen by 25 percent this year due to the war in Lebanon, supply disruptions in Nigeria and Iraq and the uncertainties over Iran's nuclear program.

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Carrizo Oil & Gas Inc. has reported a 43 percent profit decline in its second quarter.
Sharply higher costs offset modest revenue growth to cause the net income of the company to drop to $2.6 million from $4.5 million.

Earnings totaled 9 cents per share in the recent quarter. Though revenue edged higher to $16.5 million from $16.4 million from the previous year, total costs and expenses climbed to as much as $13.5 million.

Though the company's oil production volume slide to 42,645 barrels from 60,326 barrels in the 2005 quarter, its average oil price continued to jump from $55.07 to $66.35.
Natural gas production rose and so did Carrizo's average gas price to $6.88 per thousand cubic feet per share.

Production fell from the first-quarter levels due to mechanical problems, natural reserve declines and pipeline infrastructure delays.

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A lawsuit, filed in 2004, that accuses energy companies of reporting false information to publishers of price indices to manipulate the market during the state's energy crisis of 2000-2001, has reached an interesting place with a San Diego court ruling that 27 energy companies must hand over taped conversations of natural gas traders.

Plaintiff attorney Joseph Cotchett hopes that he can use the tapes to show a pattern of manipulation that pushed natural gas prices in California to 10 times the national average.

Transcripts of conversations of the natural gas traders are laden with expletives and call Californians "a bunch of hippies" who deserve high utility bills because stringent enviromental regulations kept the number of power plants in the state low.

The 16 plaintiffs with separate suits are seeking damages that could reach a total of $3 billion.

55 percent of California's power plants are fuelled by natural gas. So, increase in natural gas prices causes an increase in the price of electricity.

The defendants include EnCana, Duke Energy Corp., Reliant Energy Inc, Sempra Energy and Dynegy Inc.

A transcript of a conversation shows a couple of gas traders talking about whether they could get caught manipulating prices.

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In April, Iranian President Mahmoud Ahmadinejad, had suggested strengthening the OPEC fund to decrease the pressure of rising oil prices on poorer countries while ensuring that rich nations paid the full price.

Iran's oil ministry is now studying the presidential proposal to sell cheap crude to poor countries. However, the proposal would take some time to come through as parliamentary approval is required for any cuts in the crude export prices.

80 percent of Iran's export earnings are from energy exports.

Venezuelan President Hugo Chavez has been notching up cheap oil export deals around poor countries  in the Caribbean and Central America in a bid to counter US influence through cut-rate energy exports.

Ahmadinejad has formed a strong alliance with Hugo Chavez who strongly opposes the US Free Trade Area.

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White Energy Ltd, formerly known as Amerod Resources, placed 23.98 million shares on the Australian, Asian, United Kingdom and US markets. The company raised $3 million over its $20 million target.

White Energy enhances poor quality coal to increase energy efficiency.

The company plans to expand its presence in the Asian coal producing markets including utilizing sub-bituminous coal reserves in Indonesia and China.

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With the corrosion of pipelines in Prudhoe Bay Field, the nation's largest oil field and the subsequent halting of oil shipments from BP PLc, the world's second largest petroleum company, oil prices have risen by $2.22 a barrel.

The Prudhoe Bay Field accounts for 8 percent of all U.S. oil production and serves the West Coast and its loss is most likely to affect California and neighboring states.
This new crisis will add to the already creeping inflation and further slow down growth in the US.

The corroded pipelines are an environmental threat and the extent of the problem became known when BP announced that 16 of their 22 Alaskan pipelines need to be replaced.

The shutdown of production could go on for months and will reduce US oil production by 400,000 barrels a day. Though the Bush government has come up with an alternative for refineries by offering oil from the 688 million barrels of Strategic Petroleum Reserve, analysts feel that it would be very difficult to ship that much oil to the West Coast in the absence of a pipeline.

A spokesman from the Energy Department however said that the high crude oil inventories would serve the refineries and there was no immediate need to dip into the Reserve. Despite this, gasoline prices are expected to rise by few cents or more a gallon.

There has been disagreement among experts about the impact of the Alaskan shutdown.
While few believe that the present loss would be a mere "blip" if supply of heavier crude oil from Saudi Arabia was stepped up for West Coast refineries, most experts are of the opinion that prices can be expectedto rise by $10 to $15 and that the longer the field remains shut, the higher the prices would go.

The situation has drawn a lot of negative attention on BP, which reported record earnings in the second quarter but has allowed extensive corrosion of a pipeline of such importance to the country.

Officials said that the oil pipelines being shut down were clogged by sludge buildup which may have prevented the most sophisticated internal corrosion tests.

While a device called a "scraper pig" was used to clean out the pipes of sludge in 1992, it is unclear whether another device called the "smart pig" which can detect pipeline abnormalities was used.

BP Alaska President said that the company is already in the process of adjusting their corrosion program.

Bob Slaughter, president of the National Petrochemical and Refiners Association, has a hopeful addition in that the US recovered from last year's hurricane caused supply disruption and "that was worse than this."

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OPEC President Edmund Daukory says that oil prices will probably remain $70 a barrel till the end of 2006.

The oil cartel has enough spare capacity to keep the market supplied with crude and Daukoru claims that the international oil market was overreacting by keeping prices close to record level.
Keeping in mind the ongoing Lebanon crisis, start of hurricane season in the US, threat of inflation and the loss of sweet oil from Nigeria coveted by US refineries, the prices are unlikely to drop below $70 a barrel.

OPEC has the capacity to produce more than 2.5 million barrels a day if required, placing the cartel in a comfortable position.

Despite violence in the Middle East, OPEC has no plans of meeting prior to their scheduled meet in Vienna in September.
Daukoru claims that the present situation requires no OPEC emergency response.

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Qatar Petroleum and Royal Dutch Shell PLC have come together to launch an integrated Pearl Gas-to-Liquids project in Qatar.
The project will involve construction of the world's largest integrated GTL complex and include development of Qatar's North Field's natural gas resources and their transport and processing for extraction of natural gas liquids and ethane, and the conversion of remaining gas into clean liquid hydrocarbon products.
1.6 billion cubic feet per day of gas is expected to produce about 120,000 barrels of oil equivalent per day of ethane and condensate, liquefied petroleum gas.

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With the unveiling of the Tesla Roadster which is to hit the market in a year for the price of a Porsche 911, the lies of the oil lobbyists come to the fore.

The Roadster looks great, has a top speed of 130mph, GPS navigating, air conditioning and... pretty much everything a real car would. It's also 100 percent emissions free.

It's not a prototype, it's not a hybrid, it's not a fantasy... it's an honest to goodness street legal, drive worthy car and a symbol of how false the billion dollar corporations' claims are that we still need foreign oil.

All the gainsayers have been proved wrong - you can replace the internal combustion engine, you can eliminate auto emissions without sacrificing performance and you can do it all without oil.

If the country had spent even a part of the $300 billion that has gone into Bush's war effort on the nation's energy infrastructure, like encouraging the development of the Roadster, the United States could be called the epicenter of innovation once again instead of serving as a poster for terrorist recruitment.

The best part is that Tesla is an independent company. It doesn't have to answer to any monoliths like ExxonMObil or GM and says that any sales of the sports car will go to help propel its core technology further and make mass production more feasible.

The car does need a lot of electricity, which we have enough trouble producing, owing to all the years spent lying about how oil is irreplaceable.

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Oil prices rose to new highs of 76 usd as traders watched tropical storm Chris in fear of it developing into a hurricane and damaging rings and refineries on the oil-rich Gulf Coast.

The much hoped for cease-fire in Lebanon also seems like a distant possibility with Israel killing 11 more people and capturing 3 Hezbollah fighters.

Further dissent in the Iranian nuclear matter has also caused the sudden climb in prices as well as concern that Iran and Syria, both backers of Hezbollah, are ordering troops to 'raise readiness'.

Iran's supreme leader Ayatollah Ali Khamenei has called on Muslims everywhere to resist US and Israeli aggression as Iran refuses to bend to the UN deadline and stop uranium enrichment.
In the event that sanctions are imposed against Iran, it is likely that the country might retaliate by blocking the Strait of Hormuz, which is a essential outlet for oil shipments to the US.

While the key issue in the oil price matter is supply instability, it is also expected that the inventory data will show a huge draw in US fuel stocks with high demands despite the $3 gallon prices.

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Retail investors belive that energy will remain the most profitable investment sector over the next 6 months. A large number of the respondents said they are willing to stash their money in energy.

A survey of 600 American clients by the US discount brokerage firm around July 11 to 18 found that 51 percent were already invested in energy.

But the odds of energy stocks leading markets higher are diminishing with US economic growth slowing down to 2.5 percent in the second quarter, its slowest pace since 2005.

The price of oil has tripled in the last 4 years. With companies in the US and Canada basking in record profits and seeing share prices rally, there is talk of a permanent era of high energy prices.

The demand for oil stocks is likely to ensure that prices remain high. The survey showed that people consider consumer goods, telecom and software as more risky investments than the energy sector.

In the last month, 45 percent have not changed their portfolios, 30 percent have moved into stocks and 24 percent have moved out. Of the 24 percent that moved out, at least 50 percent shifted their assets to money market and savings, 9 percent to real estate, 7 percent to mutual funds and fixed income and 4 percent to exchange traded funds and stock options.

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Oil companies in the US have reported significant increases in their profits in the last quarter surprising even optimistic Wall Street analysts.

While ExxonMobil has reported a profit of $10.4 billion, Royal Dutch Shell has increased its net income by 40 percent from the previous year. BP and ConocoPhillips also reported similar boosts in profit and income.

Considering the demand for oil and the uncertainties regarding supply from the Middle East, the industry is expecting to continue its record breaking performance.

With gas prices as high as $3 a gallon, consumers and politicians have expressed iore over Exxon's profit.

The criticism is rather muted as compared to the public outrage following the rise in gas prices after hurricanes Katrina and Rita.

Exxon claimed a simple formula for success: Produce more fuel and command more prices for it.

As is the norm, subsequent investigations have found no evidence of illegal profiteering.

While Exxon Vice-President of investor relations stated that the company is investing in projects to bring in more fuel to help reduce prices, this has found little favor with a group called Exxpose Exxon who are instead demanding a cut in gasoline prices and offers of renewable fuel.

Though the company is increasing its capital spending, one-third of that increase is tied to rising costs of labor and equipment.

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Soaring prices, better refining margins annd higher oil and gas production all combined to yield ExxonMobil Corp a profit of more than U.S. $10 billion.

It was the second highest largest quarterly operating profit ever reported by a US company. While the profit sailed past trade forecasts and significantly increased share costs, it has also sparked off anger among consumer groups and lawmakers over profit amidst the high petroleum prices.

Exxon has raised its capital spending to US $20 billion to be used for fresh exploration and production. The company also plans to increase its stock buy back programme to US $ 7 billion to use its increasing hoard of cash.

With double trouble brewing in Nigeria, oil prices rose all over again in an unending battle of crisis and peace.
Militant attacks on an Italian oil facility and a leak in a Shell Petroleum Development Co. pipeline has caused a singnificant drop in crude oil production leading to mounting prices.

On the New York Mercantile Exchange prices for light, sweet crude rose to $74.59 a barrel while gasoline, natural gas and heating oil futures also saw a upward swing.

The Niger Delta has seen many disputes over the years between oil companies and communities demanding a larger share of the wealth reaped by Africa's largest crude producer.

Traders have also been keeping an eye on the Israel-Lebanon conflict. Oil prices had hit a high 2 days after the fighting broke out but seemed to settle with hopes of the violence remaining contained. Since then, the conflict has escalated with Israel suffering its heaviest losses today and retaliating with jet pounding. Al-Qaida has also jumped into the fray threatening to attack Israel.

If a regional war breaks out and supplies from Iran are disrupted, prices could well sky rocket further.

Adding to this, the U.S. Energy Department said that the demand for gasoline had increased since the previous year by 2 percent despite the heavy pricing.

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U.S. Energy Secretary Samuel Bodman and Iraqui oil minister Hussein al-Shahristani met executives from oil companies in an effort to attract interest in Iraq's untapped oil and natural gas reserves.
The company's that were represented at the meeting include ExxonMobil Corp, Chevron Corp., Royal Dutch Shell PLC and Marathon Oil Co.

Al-Shahristani stated that he would like to sign contracts with major oilcompanies by the end of the year for partnerships aimed at opening up Iraq's resources to the world market.

The oil minister who is on an official visit to the U.S. said the preliminary meeting was to lay out the principles of the partnership and that Iraq is not in talks with any specific company yet though they would like to move fast and reach agreements before the hydrocarbon law is enacted.

The hydrocarbon law of the Iraqui Parliament is to set up the legal framework for energy sector investment.

He also stated that the country is working to increase its crude oil production from the present 2.5 million barrels a day to 3 million by the end of the year and to 4.5 million b/d in 4 years.

Meanwhile, Iraq's Minister of Electricity, who accompanied the oil minister to the States signed a Memoradum of Understanding with the U.S. Energy Deaprtment aimed at increasing cooperation on energy analysis and technology. The Iraqui Parliament is still to approve the agreement.

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Malaysian national oil company has increased its bid for global expansion by buying shares worth US$1.1 billion in Russia's OAO Rosneft.

Petronas chief executive, Hassan Marican, stated that since the company is looking to be a global player, they must have a hold in Russia and have not ruled out raising the stakes.This move helps Petronas to reduce its geographical risk.

More than half of Rosneft's share sale was bought over by 5 investors - three foreign oil companies including Petronas, a Russian state-controlled bank and a mystery individual.

Rosneft is Russia's No.3 oil producer, but faces lawsuits, has issues with its corporate gorvernance and has larger debts and lower production capacity than its peer OAO Lukoil.When questioned Hassain dismissed concerns over the risk of investing in the company.

He also confirmed that Petronas Gas will carry out a multibillion dollar project to build a 480-kilometer pipeline from Sabah to processing plants in the neighbouring Sarawk state for carrying liquefied natural gas.

Hassan stated that Petronas is exploring deals in neighboring countries and has held talks with China National Offshore Oil Corp. to supply liquefied natural gas for its Shanghai terminal.

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