New Report Predicts $150 a Barrel Oil

A new report(pdf) predicts that surging demand in developing economies combined with accelerated depletion of existing supply and widespread delays in getting new oil fields up and running will see the global supply of oil fall as much as eight million barrels.

Mr. Jeff Rubin, Chief Strategist and Chief Economist at CIBC World Markets, predicts that major project delays and increasingly rapid depletion will result in a supply increase of only about three million barrels a day by 2012 - far below the 10 million barrels projected by the International Energy Agency.

Demand for oil in China, India, Russia and in the world's largest oil-producing countries themselves, are increasing the demand-supply gap that will push crude oil prices to as high as US$150 a barrel by 2012.

"Soaring rates of car ownership in countries like Russia and China have boosted fuel demand in both countries," says Mr. Rubin. "For example, gasoline, a key driver of rising oil use, is growing at over six per cent in both countries. But an even more important factor has been massive price subsidization in OPEC countries which has spurred extraordinary near-double-digit growth in oil demand.

This unchecked soaring demand means that oil-producing nations will not be able to add any additional exports to meet the surging demand.

In the U.S. alone, with soaring crude prices pushing the cost of gasoline to US$4.50 a gallon, Mr. Rubin expects American demand for oil to drop by 10 per cent or nearly two million barrels a day by 2012.

Source: CIBC World Markets

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Melons to Ethanol?

Can ethanol really be made from watermelons? Well, yes and it's not that fruity of an idea.

In this audio report (mp3) from the USDA, Bob Morrissey with the National Watermelon Association describes attending a recent bioenergy conference which showed a Ford F-150 that runs on ethanol made from watermelon.

Although the ethanol truck was merely a demonstration that ethanol can be made from alternative sources, the idea of "Melons to Ethanol" will spur initial test projects in several states, including Florida and Georgia.

If research proves successful then the project will branch out to several other states including Maryland, Delaware, North and South Carolina, Texas and California.

Source: USDA

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Strong Demand Driving Higher Egg Prices

With egg prices around $1.50 a dozen in the Midwest and almost double from a year ago, many media stories--aided by foes of ethanol--have "laid" the blame at the feet of higher corn prices. But the stories are all cracked up.

The Salina Journal gets the story right in a recent article. The article includes comments from a poultry specialist with the Kansas State University Research and Extension, Scott Beyer regarding the cost of eggs at the grocery store.

"Most people assume that higher grain prices are boosting egg prices, but most of the increase is due to supply and demand," Beyer said. "Right now supplies are down, demand is up."

Beyer explained that egg supplies are down for a number of reasons including guidelines to increase cage space, which means fewer hens can be housed in their facilities and other animal welfare regulations. The story also mentioned that the strong dollar has also made exports strong. Finally, a backlog of stored processed dried eggs was reduced and summer heat and drought in the southeastern United States reduced egg production and egg sizes.

Consumer demand has been strong, Beyer added, citing per capita consumption that has continued a steady increase after decades of decline.

The mainstream media has had its facts scrambled this year reporting myths rather than the truth concerning the true source of higher food costs.

Higher food prices are not a yolk to consumers, but the least the media can do is to the facts correct without laying a giant goose egg.

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Butter Bus Brings Biodiesel

Around 900 pounds of butter used in the Pennsylvania Farm Show's butter sculpture again will be turned into biodiesel to power tractors and other equipment.

This year's butter sculpture, sponsored by the Pennsylvania Dairy Promotion Program and Mid-Atlantic Dairy Association, depicts a dairy cow with three students boarding a school bus. Sculptor Jim Victor spent nearly 10 days sculpting the tribute to education. The butter was donated by Land O'Lakes Inc.

The famous butter display has a different theme every year. Last year's sculpture paid tribute to two historical icons, Benjamin Franklin and the Liberty Bell. And for the first time at the close of the show, the sculpture was transformed into fuel for the future.

Source: PA Farm Show

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Gasoline Prices Up 80 Cents

The US Department of Energy released its weekly retail gas price survey on Monday. The average retail price for unleaded gasoline is $3.109, up 80.3 cents from last year and also up over 5 cents from last week.

Rising fuel prices are crimping working consumers and increasing costs for all Americans. And the higher costs get passed along to other items like food and clothing as increased transportation costs affect all sectors of the American economy.

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Poll: What Will a Barrel of Oil Cost in 2008?

The cost for a barrel of oil reached over $100 this month. What will be the highest price in 2008? $125? $150? More?

Cast your vote in the Food and Fuel America.com poll in the right-hand column.




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New Hampshire Voters Pick Winners

New Hampshire voters have turned out in record numbers to voice their support for their candidates yesterday. The two primary winners, Senators McCain (R) and Clinton (D) each provide a bit different view on renewable energy which bears reading.

Senator John McCain's energy plans are a bit hard to find on his website. But with a little help from Google, we found the following that may help shed light on his thoughts regarding oil's impact on national security:

America's dependency on foreign oil is a major strategic vulnerability for our nation. One element in al Qaeda's war against us is to target the U.S. economy by driving up the price of oil in the hope that severe recession and higher inflation will follow. Osama bin Laden and other al Qaeda terrorists have spoken many times about the need to "mount ... operations accordingly" in order to hit energy supply points in the Middle East and other regions to spike oil prices.

In regards to alternative fuels, Sen. McCain offers up this support:

Alcohol fuels made from corn, sugar, switch grass, and many other sources, as well as fuel cells, biodiesel derived from waste products, natural gas, and other technologies are all promising and available alternatives to oil. I won't support subsidizing every alternative, or endorse tariffs that restrict the healthy competition which stimulates innovation and lowers costs. But I'll encourage the development of infrastructure and market growth necessary for these products to compete, and I'll let consumers choose the winners. I've never known an American entrepreneur worthy of the name who wouldn't rather compete for sales than subsidies.

Senator Clinton has has a proposed a energy policy on her campaign website HERE. Here's a snippet that includes her renewable fuels plan:

Create a Strategic Energy Fund
Hillary has proposed a Strategic Energy Fund that would inject $50 billion into research, development and deployment of renewable energy, energy efficiency, clean coal technology, ethanol and other homegrown biofuels. Hillary’s proposal would give oil companies a choice: invest in renewable energy or pay into the fund. Hillary’s proposal would also eliminate oil company tax breaks and make sure that oil companies pay their fair share for drilling on public lands. Instead of sending billions of dollars to the Middle East for their oil, Hillary’s proposal will create a new clean energy industry in America and create tens of thousands of jobs here.

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