Global Developments

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Association for the Study of Peak Oil & Gas USA Wednesday, December 19, 2012

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Global Developments

1. OIL FUTURES MIXED, BRENT NEARS $109/BBL

(Dow Jones, Wednesday, December 19, 2012) -- Crude-oil futures were mixed in Asian trading Wednesday, following gains in recent days on hopes that U.S. lawmakers will reach a deal on the fiscal cliff and expectations of a decline in U.S. crude inventories. On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $87.84 a barrel at 0629 GMT, down $0.09 in the Globex electronic session. February Brent crude on London's ICE Futures exchange rose $0.14 to $108.98 a barrel. Oil prices have settled higher in the previous three sessions on signs that U.S. lawmakers are showing willingness to reach a deal to avoid the so-called fiscal cliff--the tax increases and spending cuts set to go into effect next

year. A weaker dollar, which slid to an eight-month low against the euro on Tuesday, also helped boost prices. Prices could see gains as the U.S. budget talks develop in the coming days, although gains are likely to be more muted than those in the stock market, said Ritterbusch and Associates, an energy consultancy. "As we shift focus to the February WTI contract, we see a test of $90 a barrel resistance as a high probability through the balance of this week," Ritterbusch and Associates said. [more]

2. OIL RISES AS GERMAN BUSINESS CONFIDENCE IMPROVES

BANGKOK (AP, Wednesday, December 19, 2012) -- The price of oil rose Wednesday as a key measure of German business optimism showed slight improvement. Benchmark crude for January delivery rose 24 cents at late afternoon Bangkok time to $88.17 per barrel in electronic trading on the New York Mercantile Exchange. A SURVEY by the Ifo institute said its main index rose to 102.4 from 101.4 the month before. The survey shows growing confidence in the German economy, based on a poll of 7,000 business executives. Many economists think Germany will avoid a recession before growth improves next year. That could lead to rising demand for energy in Europe's biggest economy. Prices rose Tuesday on a growing belief that political leaders in Washington could soon reach a budget compromise to avert the series of spending cuts and tax increases that take effect on Jan. 1. The contract finished up 73 cents at $87.93 a barrel on the Nymex. [more]

3. BRENT CRUDE GAINS FOR SECOND DAY AS U.S. STOCKPILES DECLINE

(Bloomberg, Wednesday, December 19, 2012) -- Brent crude rose for a second day in London after an industry report showed stockpiles fell the most in more than three months in the U.S., the world's biggest oil consumer. Brent futures gained as much as 0.5 percent after closing $1.20 a barrel higher yesterday. U.S. crude supplies dropped by 4.1 million barrels in the seven days ended Dec. 14, the most since the week to Aug. 31, data from the American Petroleum Institute showed. A government report today may say inventories fell by 1.75 million barrels, according to a Bloomberg News survey. Oil has advanced this week amid speculation that U.S. lawmakers will agree on steps to avert tax increases and spending cuts known as the fiscal cliff. "Any kind of progress in the fiscal-cliff debate will drive prices up," Thina Saltvedt, an analyst at Nordea Bank AB, said today by telephone. "That's been the main driver in the last few days and in the short term the inventory report today could have an impact, but yesterday's API figures didn't seem to affect the oil price that much." Brent for February settlement on the London-based ICE Futures Europe exchange was up 34 cents at $109.18 a barrel at 9:24 a.m. local time. The European benchmark crude was at a premium of $20.68 to the corresponding WTI contract, from $20.44 yesterday. Traded volume for all Brent contracts was 20 percent below the average for the past 100 days. The front-month contract has risen 1.8 percent this year. [more]

4. NATURAL GAS RISES 1.8% AS COLDER WEATHER APPROACHES  --Natural-gas futures higher as forecasters see cold weather ahead  --Nymex natural gas gains 1.8% to $3.418/MMBtu  --"Everything is being dictated by the weather outlook," says analyst

NEW YORK--Natural-gas futures prices gained 1.8% Tuesday as forecasts for colder weather through the end of the year suggested gas-fired heating demand will increase. After a mild start to the season, winter weather is expected to descend on the U.S. over the next two weeks. Private forecaster Commodity Weather Group expects "much colder" temperatures to descend across the middle of the U.S., with cold spreading to the Northeast by the end of the 10- to 15-day forecast. The temperature drop is boosting prices as traders wager that an increase in demand for heating will lower domestic gas stockpiles. Half of U.S. homes use gas-fired heat, and many more homes are heated with electricity generated at gas-burning utilities. "Everything is being

dictated by the weather outlook," said Matt Smith, an analyst at Summit Energy. "We're seeing cooler temperatures in the weather outlooks through the end of the year...that's bringing buying interest back in." Natural gas for January delivery settled 6 cents, or 1.8%, higher at $3.418 a million British thermal units on the New York Mercantile Exchange. [more]

5. ENERGY JOURNAL: U.S. MAY ALREADY BE WORLD’S TOP OIL PRODUCER (Wall Street Journal, December 18, 2012)

COUNTING BARRELS IN THE U.S.

As everyone knows by now, the U.S. is all set to become the world’s No. 1 oil producer. This should happen some time in the next 10 years, if you choose to put your faith in the IEA, or the week before last, should you believe the Next Big Future blog and its author, Brian Wang. He’s taken the EIA’s domestic production numbers, added production of “others,” namely natural gas liquids (read more about them in the New York Times) and renewable fuels, and concluded that in terms of total liquids the U.S. is already the world’s largest fuel producer. As Platts explains, some of this can be explained away by allowing for refinery gains–essentially the amount by which total output is greater than input, something that can happen when processing some crudes into some products. And, Platts concludes, Saudi Arabia is still the world’s swing producer. If it wanted to, the Kingdom could shift the price of oil so much that some of the world’s highest-cost production–most of which is in the U.S.–would no longer be economical. This is unlikely right now, because energy money is needed to underpin the Gulf states’ expensively subsidized way of life, as the BBC explains. [more]

Middle East

6. JAPAN TO EXTEND CUTS IN IRAN OIL IMPORTS IN 2013, JX CHIEF SAYS

(Bloomberg, Wednesday, December 19, 2012) -- Japan will import fewer than 160,000 barrels a day of oil from Iran next year to avoid sanctions aimed at the Middle Eastern country's nuclear program, the head of Japan's oil industry group said. JX Nippon Oil & Energy Corp., the country's biggest refiner, will cut its imports from the current contract of about 80,000 barrels a day, Kimura Yasushi, who serves as chairman for both JX and the Petroleum Association of Japan, said at a press conference today. Secretary of State Hillary Clinton in March exempted Japan from sanctions on banks doing business with Iran because of the Asian country's steps to reduce imports from the Persian Gulf nation. The waiver was renewed in September for a second six- month term for Japan, which was the world's biggest importer of Iranian crude after in China in the first half of 2011, according to the U.S. Department of Energy. Imports from Iran averaged 190,000 barrels a day from January to October, 40 percent less than the same period last year, and fell to 160,000 barrels a day in October, Kimura said. "Maintaining that 160,000 barrels a day as a ceiling, refiners will look into reducing more, as JX cuts its own imports," said Kimura, who declined to comment on how much purchases would be cut. "We will tackle this while keeping a close eye on the U.S.'s policy on Iran." [more]

7. INVESTORS SHUN POSTWAR IRAQ AS OPEC STAR'S RECOVERY LAGS

(Bloomberg, Wednesday, December 19, 2012) -- Ziad Makkawi set up a private equity investment firm last year to capitalize on Iraq's plans for reviving an economy gutted by wars and sanctions. Makkawi's zeal faded as OPEC's second-largest oil producer struggled, and he now sees brighter prospects elsewhere in the Middle East, including Libya, where deadly attacks persist after the 2011 revolt against Muammar Qaddafi. "In Iraq, there are suicide bombings, political problems, the Central Bank governor was dismissed, others have been arrested -- these things cast a big shadow on the business environment, and investors shy away," said

Makkawi, the chairman of Dubai-based Blue Gate Capital Partners. Nine years after U.S.-led forces toppled the dictatorship of Saddam Hussein, even specialists in frontier markets are backing off from Iraq. Daily blackouts, congested ports and other infrastructure woes compound investor concerns about violence and corruption, and a broad recovery continues to elude this energy-rich nation of 33 million people. [more]

8. RUSSIA SENDS WARSHIPS TOWARD SYRIA FOR POSSIBLE EVACUATION

MOSCOW (New York Times, Wednesday, December 19, 2012) -- Russia sent warships to the eastern Mediterranean Sea on Tuesday, the Defense Ministry announced, in what appeared to be preparation for a possible evacuation of Russian citizens from Syria. Russian officials began formulating plans during the summer for an evacuation, but have delayed announcements, analysts say, to avoid signaling a loss of confidence in President Bashar al-Assad, a longtime strategic ally. Moscow staunchly opposes international intervention in Syria and has blocked United Nations Security Council resolutions meant to force Mr. Assad from power. Officials have repeatedly said that Russia's position has not changed. However, Moscow has signaled in recent days that it sees Mr. Assad's forces losing ground, and that it is beginning to prepare for a chaotic transition period. One immediate concern is the large number of Russian citizens scattered across Syria, as a result of decades of intermarriage and longstanding economic ties. Late on Monday, Russian diplomats said that two Russian citizens had been kidnapped by an armed group. The two Russians, evidently workers in a privately owned steel factory, were seized as they traveled on a road between Homs and Tartus and were held for ransom. An Italian citizen, Mario Belluomo, was abducted with them, the Italian Foreign Ministry said. [more]

9. SYRIAN TROOPS BATTLE REBELS IN DAMASCUS SUBURBS

BEIRUT (AP, Wednesday, December 19, 2012) -- Syria's state media say the military is carrying out a broad operation against rebels in the suburbs of Damascus. The state-run SANA news agency says the troops have killed "scores of terrorists" - the government term for opposition fighters trying to topple President Bashar Assad. It says Wednesday's FIGHTING was taking place in southern districts of Daraya, Harasta, Douma and Hajar Aswad, which is near the Palestinian refugee camp of Yarmouk. The areas have been opposition strongholds since the uprising started in March 2011. The rebels have recently made significant advances in the capital's outskirts, capturing military bases and fighting a pro-government Palestinian group deep in Yarmouk. On Tuesday, Syrian fighter jets bombed Yarmouk for the second time in a week, sending thousands fleeing. [more]

Africa

10. ANGOLA: WATER FOR CHEVRON AND A LESSON FOR THE GOVERNMENT

(Maka Angloa, Wednesday, December 19, 2012) A U.S oil multinational, Chevron, recently kick-started a new venture in Luanda's most affluent residential area, Talatona: a water well for the consumption of its employees. The first well for the rich, privileged and expats, in a luxury gated community, is about to pump water to the 100 houses of Condomínio Monte Belo (Beautiful Heights), where most of Chevron's expat employees live. Since the August 31 elections, the Angolan capital, Luanda, a sprawling urban chaos with more than five million people, has been plagued by severe water and electricity shortages. Monte Belo is one of the extravagantly expensive gated communities that have mushroomed south of Luanda and it is worth over US $250 million. Chevron commissioned the real estate project to the Brazilian construction multinational Odebrecht, in a joint-venture with a local private company Sakus Empreendimentos e Participações, set up by Sonangol oil executives. Sakus is currently fronted by Mirco Martins, the stepson of the previous Sonangol

CEO and current vice-president, Manuel Vicente. In Angola, it is not unusual for such a luxury-tailored project to resort to rudimentary approaches to overcome the lack of basic infrastructures, such as running water. [more]

Latin America

11. PEMEX UPS YEAR-END OIL OUTPUT, BUT IS LIKELY TO MISS 2012 TARGET  --December crude-oil production is second highest for any month this year  --November output of 2.577 million barrels a day was best month this year  --Pemex likely to see oil production fall for eighth-straight year, missing goal MEXICO CITY--Mexico's state-owned oil company Petroleos Mexicanos, or Pemex, is currently having one of its best months this year for crude-oil production, and it comes after an even better November. However, it looks like the oil monopoly will fall short of its internal goal of ending the year-on-year slide in oil output since 2004, Pemex's numbers show. In the first two weeks of December, Pemex crude-oil production averaged 2.573 million barrels a day after November's 2.577 million barrels a day. Both easily beat the full-year 2011 average of 2.553 million barrels a day. But Pemex got off to a slow start this year and will likely fall short of last year's average output by a few thousand barrels a day. Pemex said in a statement Tuesday November's crude-oil output was the highest level in 19 months, as it brought new wells online at offshore sites in the Gulf of Mexico and at onshore sites in the east and south. Beginning in May of this year, the company said, the combined new projects added an average of 156,000 barrels of oil per day. [more]

12. VENEZUELA: CHÁVEZ DEVELOPS INFECTION AFTER SURGERY

(New York Times, Wednesday, December 19, 2012) -- President Hugo Chávez has come down with a respiratory infection as he seeks to recover from a complicated procedure for cancer, a government official in Caracas said Tuesday. The official, Ernesto Villegas, the information minister, said doctors detected the infection on Monday and "proceeded immediately" to treat it. "It has been controlled," he said. He added that Mr. Chávez was in stable condition. The president is in a hospital in Havana, where he had the operation last week. Officials have said that he may be too sick to return to Venezuela to begin a new six-year term on Jan. 10. [more]

North America

13. AMERICAN OIL GROWING MOST SINCE FIRST WELL SIGNALS INDEPENDENCE

(Bloomberg, Wednesday, December 19, 2012) -- The U.S. expanded its oil production this year by the most since the first commercial well was drilled in 1859, upending a belief that Americans were increasingly hooked on foreign crude. Domestic output grew by a record 766,000 barrels a day to the highest level in 15 years, government data show, putting the nation on pace to surpass Saudi Arabia as the world's largest producer by 2020. Net petroleum imports have fallen by more than 38 percent since the 2005 peak and now account for 41 percent of demand, down from 60 percent seven years ago, moving the U.S. closer to energy independence than it has been in decades. Seven years after President George W. Bush declared "America is addicted to oil, much of which is imported from unstable parts of the world," the country has so much crude that it was able to join Europe in choking off exports from Iran without pushing U.S. benchmark prices over $100 a barrel. And refining capacity helped make the U.S. the world's largest fuel supplier. Even in Venezuela, where Exxon Mobil Corp. (XOM)'s assets were seized, more and more cars run on gasoline made in America. [more]

14. GREEN CALIFORNIA TO VIE WITH TEXAS AS U.S. OIL HEARTLAND: ENERGY

(Bloomberg, Wednesday, December 19, 2012) -- California, even as it seeks to be the greenest of U.S. states, stands a good chance of emerging as America's top oil producer in the next decade, helping the nation toward what once seemed an unlikely goal of energy independence. The catalyst is the U.S. Bureau of Land Management's sale last week of 15 leases covering about 18,000 acres of the Monterey Shale, a geologic formation whose sweet spots stretch from east of San Francisco more than 200 miles south to Monterey County. The auction was dominated by Los Angeles-based Occidental Petroleum Corp. (OXY) and smaller companies betting on a coming boom. Yesterday California regulators issued a draft of new rules to sharpen their oversight of the surge in fracking. While shale developments have been most associated with natural gas, the ribbed-shaped Monterey could hold 15.4 billion barrels of oil, according to the federal Energy Information Administration. That amounts to 64 percent of all estimated U.S. shale oil reserves and double the combined reserves of North Dakota's Bakken Shale and Texas' Eagle Ford Shale, where energy companies are spending billions to ramp up output. [more]

15. MARKEY 'DISAPPOINTED' WITH LNG STUDY

WASHINGTON, (UPI, Wednesday, December 19, 2012) -- U.S. Rep. Ed Markey, D-Mass., said he was "disappointed" there were flaws in a study on the potential benefits of natural gas exports from the United States. Markey, ranking member of the House Natural Resources Committee, said a report submitted to the U.S. Department of Energy on gas exports was outdated and contained "key missteps." NERA Economic Consulting produced a report under a commission from the Energy Department. The report stated that potential exports of liquefied natural gas could have "net economic benefits" for the United States but not affect the country's overall employment picture. "I was disappointed to find fundamental flaws with the study that I fear may have led to conclusions that severely underestimate the negative impacts of large-scale natural gas exporting," Markey said in a letter to U.S. Energy Secretary Steven Chu. When the report was released, Markey said it was clear that the industry would benefit and the consumer would pay for LNG exports. [more]

Europe

16. EURO ZONE RESCUER DRAGHI FACES DAUNTING 2013

FRANKFURT (Reuters, Wednesday, December 19, 2012) -- With two short sentences, the head of the European Central Bank took the heat out of the euro zone crisis this year. In 2013 Mario Draghi has to live up to even bigger expectations. The ECB's own forecasts suggest the euro zone economy will shrink 0.3 percent next year and markets remain skeptical that the bloc's weaker members, such as Spain and Italy, can fund ballooning government deficits without formal aid programs. Progress towards closer economic and fiscal union -- deemed essential by policymakers to solve the euro zone crisis -- is likely to be painfully slow in 2013 because two of the bloc's top three economies, Germany and Italy, hold elections. Draghi's inbox will fill up quickly. "There will be a lot of focus on preparation for the ECB as the new single supervisor," said Nick Matthews, economist at Nomura, referring to new plans for the ECB to take over supervision of the bloc's biggest banks. "The other big challenge is the performance of the real economy - does confidence return as the ECB is expecting?" [more]

17. DUTCH GOVERNMENT'S THINK-TANK IN RECESSION CALL

AMSTERDAM (AP, Wednesday, December 19, 2012) -- The Dutch government's financial think-tank has joined the central bank in forecasting a recession in 2013 as a result of waning global trade prospects. The Central Planning Bureau said Wednesday the Dutch economy would shrink 0.5 percent, in contrast to its previous forecast of 0.75 percent growth. Last week the central bank predicted a 0.6 percent contraction, reversing its previous forecast of a 0.6 percent expansion. If the Dutch economy shrinks again in the fourth quarter following the 1.1 percent quarterly contraction recorded in the third quarter, it will be in recession, officially defined as two straight quarters of negative growth. Because the recession will likely dent tax revenues and increase welfare payments, both forecasters are predicting that the country's budget deficit will be slightly above the 3 percent of GDP limit mandated by European rules. Finance Minister Jeroen Dijsselbloem said Tuesday he was aware of the worsening projections but that he has no plans to alter the budget struck last month. [more] Discussion & Analysis 18. THE NEED FOR CROWDSOURCING ENERGY DATA

(The Oil Drum, Wednesday, December 19, 2012) -- This is a guest post by Andreas Ligtvoet a PhD. Researcher at TU/Delft department of Energy and Industry in the Netherlands. Andreas is a contributor to EniPedia (energy wiki), a site that his colleague Chris Davis created and maintains. The effort to get a better grip on peak oil runs into the problem of data availability, data accessibility and data quality. As most TOD readers will recognise, there seems to be data asymmetry between the oil producers (NOCs and IOCs), international energy agencies, and the general public. Some transparency has been achieved by streamlining and organising data collection, e.g. through the JODI initiative. However, this encompasses top-down data collection that runs the risk of being polluted by non-data-driven incentives (the political need to over- or under-report, for example). There have been a lot of bottom-up attempts to collect and combine data, many of which have been reported in TOD. This high-quality information is often represented in such a way, that does not allow others to build upon the work. Excellent collective efforts like the megaprojects taskforce on Wikipedia seem to have died. One of the reasons for this demise could be the lack of analytical power the current setup of Wikipedia allows: timeline data, conflicting sources, and large sets of relatively unworthy facts (e.g. location of wellheads) are not handled well. But also the Wikipedia community may not be aware of the notability of energy data. [more]

19. TOO BIG TO FLOOD? MEGACITIES FACE FUTURE OF MAJOR STORM RISK

(Resilience.org, Wednesday, December 19, 2012) As economic activity and populations continue to expand in coastal urban areas, particularly in Asia, hundreds of trillions of dollars of infrastructure, industrial and office buildings, and homes are increasingly at risk from intensifying storms and rising sea levels. By the middle of the century, the scores of billions it cost to compensate the greater New York City area for being unprepared for superstorm Sandy may seem like a bargain. Without major adaptation measures to increase the level of storm protection beyond a 1-in-100-year event, the value of the city’s buildings, transportation, and utilities utility infrastructures currently at risk from storm surges and flooding — an estimated $320 billion — will be worth $2 trillion by 2070, according to continuing studies by the Organization for Economic Cooperation and Development (OECD). By then, the OECD says, the metropolitan area will rank behind only Miami and Guangzhou, China, at the head of a list of the world’s megacities with the most flood-vulnerable assets. In all these cities, sea level rise will meet a tide of urbanization in the coming decades and set the scene for storms with ever-more catastrophic consequences.

Saeed Khan/AFP/Getty Images: The flooding in Bangkok in 2011 was the worst in 50 years.

Some of those cities with the most at-risk assets now — Tokyo, New Orleans, Amsterdam, Rotterdam, and Nagoya — will, over the next 50 years, be surpassed by Calcutta, Shanghai, Mumbai, Tianjin, Bangkok, Ningbo, and Ho Chi Minh City, booming Asian coastal metropolitan areas where trillions of dollars in economic assets will be vulnerable. So will many millions of these cities’ residents, most of them poor and living in low-lying areas. [more] Alternatives 20. PIKE RESEARCH MAKES 10 ELECTRIC VEHICLE PREDICTIONS FOR 2013

(Green Car Congress, Wednesday, December 19, 2012) -- Sales of plug-in vehicles (PEVs) in 2013 will continue to outpace the first years of hybrid vehicle sales as more than 210,000 PEVs will be sold globally and more than three dozen PEV models will debut,according to a year-end free whitepaper published by Pike Research, that makes 10 specific predictions about electric vehicles in 2013. More broadly, Pike envisions PEV sales in California-the leading market for such in the US-expanding into smaller urban and suburban regions with more dealers beginning to offer the vehicles. Pike also anticipates forward momentum with PEVs in China. The research company also projects that several startup electric vehicle (EV) companies are likely to be absorbed or discontinue operations during the year. Within that context of accelerating sales growth, the 10 specific predictions are: Capital veers from vehicles to battery components. Private funding for EV companies looking to start a business or expand in 2013 has largely dried up, Pike notes. The lack of funding opportunities will force some companies to exit the market or be acquired on less than generous terms. During 2013, investment will shift toward companies developing battery components, rather than companies that develop complete packs. For 2013, chemical conglomerates, such as Dow Energy Materials and BASF, will continue to invest heavily in anode, cathode, and electrolyte material research and development (R&D). Established players will face increasing competition from smaller companies and the recent startups. [more]

Full Stories

1. OIL FUTURES MIXED, BRENT NEARS $109/BBL

On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $87.84 a barrel at 0629 GMT, down $0.09 in the Globex electronic session. February Brent crude on London's ICE Futures exchange rose $0.14 to $108.98 a barrel.

Oil prices have settled higher in the previous three sessions on signs that U.S. lawmakers are showing willingness to reach a deal to avoid the so-called fiscal cliff--the tax increases and spending cuts set to go into effect next year. A weaker dollar, which slid to an eight-month low against the euro on Tuesday, also helped boost prices.

Prices could see gains as the U.S. budget talks develop in the coming days, although gains are likely to be more muted than those in the stock market, said Ritterbusch and Associates, an energy consultancy.

"As we shift focus to the February WTI contract, we see a test of $90 a barrel resistance as a high probability through the balance of this week," Ritterbusch and Associates said.

Despite continued global economic headwinds, oil prices have been trading within a tight range--Brent around $109 a barrel and Nymex around $86.50 a barrel--since the end of October, supported by tensions in the Middle East and lately by signs of improvement in the Chinese economy.

Expectations of a decline in U.S. crude oil inventories in the past week have also helped boost prices in recent days. Stockpiles are expected to have fallen by 900,000 barrels in the week ended Friday, a Dow Jones Newswires poll of analysts showed.

The American Petroleum Institute, an industry group, said in its survey released Tuesday that crude oil stocks dropped by 4.1 million barrels. The government survey from the Energy Information Administration is due at 15.30 GMT Wednesday.

Nymex reformulated gasoline blendstock for January--the benchmark gasoline contract--rose 28 points to $2.6937 a gallon, while January heating oil traded at $2.9989, 24 points higher.

ICE gasoil for January changed hands at $929.00 a metric ton, up $0.75 from Tuesday's settlement. [Back to Top] ------

2. OIL RISES AS GERMAN BUSINESS CONFIDENCE IMPROVES

BANGKOK (AP, Wednesday, December 19, 2012) -- The price of oil rose Wednesday as a key measure of German business optimism showed slight improvement.

Benchmark crude for January delivery rose 24 cents at late afternoon Bangkok time to $88.17 per barrel in electronic trading on the New York Mercantile Exchange.

A SURVEY by the Ifo institute said its main index rose to 102.4 from 101.4 the month before. The survey shows growing confidence in the German economy, based on a poll of 7,000 business executives.

Many economists think Germany will avoid a recession before growth improves next year. That could lead to rising demand for energy in Europe's biggest economy.

Prices rose Tuesday on a growing belief that political leaders in Washington could soon reach a budget compromise to avert the series of spending cuts and tax increases that take effect on Jan. 1. The contract finished up 73 cents at $87.93 a barrel on the Nymex.

Some traders are now taking it for granted that a deal will be reached.

"I think people are looking past the fiscal cliff," said Chris Weston of IG Markets in Melbourne. "A good outcome in the fiscal cliff is largely priced in."

Brent crude, which is used to price international varieties of oil, rose 57 cents to $109.41 a barrel on theICE FUTURES EXCHANGE in London.

Capital Economics said oil prices were ending 2012 on a "lower note, partly due to fears over the `fiscal cliff.' " Other factors that pointed to lower oil prices in 2013 are steady but not spectacular U.S. economic growth, and sluggish growth in Japan and Europe - which together use roughly the same amount of oil as the U.S.

"Elsewhere, growing demand from China and other emerging economies might cushion the downside, but we don't expect it to be enough to provide much of a lift," Capital Economics said in a market analysis.

Other ENERGY FUTURES on the New York Mercantile Exchange:

- HEATING OIL rose 1.8 cents to $3.0121 a gallon.

- Natural gas fell 6 cents to $3.358 per 1,000 cubic feet.

- Wholesale gasoline rose 1.4 cents to $2.6978 a gallon [Back to Top] ------

3. BRENT CRUDE GAINS FOR SECOND DAY AS U.S. STOCKPILES DECLINE

Brent futures gained as much as 0.5 percent after closing $1.20 a barrel higher yesterday. U.S. crude supplies dropped by 4.1 million barrels in the seven days ended Dec. 14, the most since the week to Aug. 31, data from the American Petroleum Institute showed. A government report today may say inventories fell by 1.75 million barrels, according to a Bloomberg News survey. Oil has advanced this week amid speculation that U.S. lawmakers will agree on steps to avert tax increases and spending cuts known as the fiscal cliff.

"Any kind of progress in the fiscal-cliff debate will drive prices up," Thina Saltvedt, an analyst at Nordea Bank AB, said today by telephone. "That's been the main driver in the last few days and in the short term the inventory report today could have an impact, but yesterday's API figures didn't seem to affect the oil price that much."

Brent for February settlement on the London-based ICE Futures Europe exchange was up 34 cents at $109.18 a barrel at 9:24 a.m. local time. The European benchmark crude was at a premium of $20.68 to the

corresponding WTI contract, from $20.44 yesterday. Traded volume for all Brent contracts was 20 percent below the average for the past 100 days. The front-month contract has risen 1.8 percent this year.

Contract Expiring

West Texas Intermediate crude for January delivery was at $88.01 a barrel, up 8 cents, in electronic trading on the New York Mercantile Exchange. The contract expires today. The more- actively traded February contract gained 20 cents to $88.60. The volume traded for all contracts was 45 percent below the average of the past 100 days. Front-month futures rose 0.8 percent yesterday to $87.93, the highest close since Dec. 4.

Oil in New York has fallen 11 percent in 2012 as the U.S. shale boom deepened a supply glut at Cushing, Oklahoma, the country's largest storage hub and the delivery point for WTI. That has left it at an average discount of $17.41 a barrel to Brent this year, compared with a premium of about 7 cents in the five years through 2010. Brent, the benchmark grade for more than half the world's crude, has risen 1.5 percent this year.

More than $600 billion in spending cuts and tax increases are set to start in the U.S. in January unless an agreement to avert the measures is reached. House Speaker John Boehner said yesterday he will push a budget "plan B" measure that would include higher taxes for people earning more than $1 million, while continuing to negotiate with President Barack Obama.

'Creeping' Optimism

"There's a level of optimism creeping into the market about the fiscal cliff coming to an end," said Jonathan Barratt, the chief executive officer of Barratt's Bulletin, a commodity newsletter in Sydney. "I don't think there are any reasons for oil prices to come off at the moment."

U.S. gasoline stockpiles climbed 4.2 million barrels last week, the API said. Supplies are forecast to rise 2 million barrels in today's Energy Department report, according to the median estimate of 11 analysts surveyed by Bloomberg. Distillate inventories, including heating oil and diesel, decreased 1.9 million barrels, compared with a 1 million-barrel gain predicted in the survey.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department in Washington for its weekly survey.

Oil's advance in New York may stall as prices approach technical resistance along the upper Bollinger Band, according to data compiled by Bloomberg. Futures halted rallies from mid- July to mid-September and in early December near this indicator, around $89.37 a barrel today. Sell orders tend to be clustered near chart- resistance levels. [Back to Top] ------

NEW YORK--Natural-gas futures prices gained 1.8% Tuesday as forecasts for colder weather through the end of the year suggested gas-fired heating demand will increase.

After a mild start to the season, winter weather is expected to descend on the U.S. over the next two weeks. Private forecaster Commodity Weather Group expects "much colder" temperatures to descend across the middle of the U.S., with cold spreading to the Northeast by the end of the 10- to 15-day forecast.

The temperature drop is boosting prices as traders wager that an increase in demand for heating will lower domestic gas stockpiles. Half of U.S. homes use gas-fired heat, and many more homes are heated with electricity generated at gas-burning utilities.

"Everything is being dictated by the weather outlook," said Matt Smith, an analyst at Summit Energy. "We're seeing cooler temperatures in the weather outlooks through the end of the year...that's bringing buying interest back in."

Natural gas for January delivery settled 6 cents, or 1.8%, higher at $3.418 a million British thermal units on the New York Mercantile Exchange.

Price gains in the past two sessions halted a sharp slide in gas futures through most of December that was sparked by rising U.S. natural-gas inventories.

Data from the U.S. Energy Information Administration released last week showed a surprise increase in gas stockpiles. Inventories rise throughout the spring and summer, and by December rising heating needs typically result in stockpile withdrawals.

On Friday, natural gas settled at a two-month low, down 15% from recent highs above $3.90/MMBtu notched in mid-November. Mild temperatures to start the winter-heating season left U.S. stockpiles near record levels.

Early estimates are forecasting a smaller-than-average withdrawal for data due Thursday. But analysts say the cold weather ahead will likely put a floor under gas futures.

"Prices are adjusting to take into account a more normal winter," said Aaron Calder, an energy analyst at Gelber & Associates. [Back to Top] ------

5. ENERGY JOURNAL: U.S. MAY ALREADY BE WORLD’S TOP OIL PRODUCER (Wall Street Journal, December 18, 2012)

COUNTING BARRELS IN THE U.S.

He’s taken the EIA’s domestic production numbers, added production of “others,” namely natural gas liquids (read more about them in the New York Times) and renewable fuels, and concluded that in terms of total liquids the U.S. is already the world’s largest fuel producer.

As Platts explains, some of this can be explained away by allowing for refinery gains–essentially the amount by which total output is greater than input, something that can happen when processing some crudes into some products.

And, Platts concludes, Saudi Arabia is still the world’s swing producer. If it wanted to, the Kingdom could shift the price of oil so much that some of the world’s highest-cost production–most of which is in the U.S.–would no longer be economical. This is unlikely right now, because energy money is needed to underpin the Gulf states’ expensively subsidized way of life, as the BBC explains.

Even so, although U.S. output is at its highest level since 1994 and talk abounds that energy self-reliance (if not independence) is on the horizon, Uncle Sam is still a big spender in the oil market, splashing $37 billion on imports in August alone, according to the Pickens Plan.

MIXED OUTLOOK FOR RUSSIA’S GAS

Traditionally this is the time of year when Ukraine and Russia argue about the price of gas, and one or the other decides to cut off the flow, therefore disrupting supply to Western Europe and causing much hand- wringing and pledges of future action.

Well this year, the presidents of the two countries will meet to try to resolve the issue once and for all, Reuters reports, with Ukraine coming under IMF pressure to cut its domestic subsidies as part of paying down its debt.

The parlous state of Ukraine’s finances, along with the continuing construction of new gas pipelines from Russia to Europe that bypass Ukraine, means Vladimir Putin goes into the talks with Viktor Yanukovich with the upper hand.

But some are questioning whether the amount of money being laid out on new gas pipes–the Nord Stream, Blue Stream and South Stream projects–represents good value given uncertain levels of European demand. In fact, should all Russia’s plans come to fruition, its export capacity to Western Europe would be more than double the amount it sent there in 2011, Platts says.

And large gas-consuming nations are keen to change the price they pay, away from Russia’s favored model of being index-linked to the price of oil. This is because the extraordinary increase in U.S. production has moved to reduce the price paid on the spot market.

So some of Russia’s traditional European customers are either turning their faces to the west–France’s Total will buy Louisiana LNG for 20 years, Dow Jones Newswires reports–or looking under their own feet for shale gas, as the Daily Telegraph reports from the U.K.

A SLIGHT NORTH SEA REVIVAL

Oil has been commercially produced from the North Sea since 1964 and a broadly held consensus is that it’s a producing region in decline.

While it is hard to argue with official data, there is perhaps more life in the region now than for the past few years, as a combination of new technology, new investment flows and government tax breaks encourages drilling and enhanced extraction.

The last oil and gas licensing round was described by the government as a bonanza, and the North Sea has been alive with deals.

Not least of these was the entry of China’s Cnooc, via its purchase of Nexen, but this week alone saw approval of a £1 billion ($1.62 billion) development project by Dana Petroleum and a deal involving BP and SSE.

A moment also for the Norwegian continental shelf, which is itself going through something of a late-period renaissance–12 discoveries so far this year, and deals to extend the life of part-depleted wells, despite a year of disappointing overall production, as The Wall Street Journal reports. [Back to Top] ------

6. JAPAN TO EXTEND CUTS IN IRAN OIL IMPORTS IN 2013, JX CHIEF SAYS

JX Nippon Oil & Energy Corp., the country's biggest refiner, will cut its imports from the current contract of about 80,000 barrels a day, Kimura Yasushi, who serves as chairman for both JX and the Petroleum Association of Japan, said at a press conference today.

Secretary of State Hillary Clinton in March exempted Japan from sanctions on banks doing business with Iran because of the Asian country's steps to reduce imports from the Persian Gulf nation. The waiver was renewed in September for a second six- month term for Japan, which was the world's biggest importer of Iranian crude after in China in the first half of 2011, according to the U.S. Department of Energy.

Imports from Iran averaged 190,000 barrels a day from January to October, 40 percent less than the same period last year, and fell to 160,000 barrels a day in October, Kimura said.

"Maintaining that 160,000 barrels a day as a ceiling, refiners will look into reducing more, as JX cuts its own imports," said Kimura, who declined to comment on how much purchases would be cut. "We will tackle this while keeping a close eye on the U.S.'s policy on Iran."

U.S. and European Union officials say Iran's nuclear development is aimed at producing atomic weapons, while the government in Tehran says the project is for civilian purposes. [Back to Top] ------

7. INVESTORS SHUN POSTWAR IRAQ AS OPEC STAR'S RECOVERY LAGS

(Bloomberg, Wednesday, December 19, 2012) -- Ziad Makkawi set up a private equity investment firm last year to capitalize on Iraq's plans for reviving an economy gutted by wars and sanctions.

Makkawi's zeal faded as OPEC's second-largest oil producer struggled, and he now sees brighter prospects elsewhere in the Middle East, including Libya, where deadly attacks persist after the 2011 revolt against Muammar Qaddafi.

"In Iraq, there are suicide bombings, political problems, the Central Bank governor was dismissed, others have been arrested -- these things cast a big shadow on the business environment, and investors shy away," said Makkawi, the chairman of Dubai-based Blue Gate Capital Partners.

Nine years after U.S.-led forces toppled the dictatorship of Saddam Hussein, even specialists in frontier markets are backing off from Iraq. Daily blackouts, congested ports and other infrastructure woes compound investor concerns about violence and corruption, and a broad recovery continues to elude this energy-rich nation of 33 million people.

Iraq generated $7.8 billion a month from oil sales this year and seeks to triple output of crude by 2020. The economy is set to expand by 14.7 percent in 2013, 12 percent in 2014 and 9.3 percent in 2015, according to an International Monetary Fund forecast. Spreading the wealth beyond the energy industry is proving harder, though.

Political Logjam

"The government has ambitious spending plans, but political disunity, capacity constraints and perceptions of insecurity have meant that very few projects have yet come to fruition," said Liz Martins, a senior economist at HSBC Holdings Plc (HSBA) in Dubai.

Reconstruction efforts have stalled amid deepening divisions between Iraq's majority Shiite Muslims and minority Sunni Arabs and Kurds. The Sunni-backed al-Iraqiya coalition boycotted parliamentary and cabinet sessions for several weeks this year, demanding that the Shiite prime minister, Nouri al- Maliki, share power. Political differences have caused delays for seven years in the enactment of an energy law, damping investor interest in oil and natural gas projects.

Friction has intensified between the central government and Iraq's semi-autonomous Kurds, since the U.S. withdrew its last combat troops in December. The northern Kurds have angered authorities in Baghdad by signing agreements with foreign oil companies such as Exxon Mobil Corp. (XOM) and Total SA (FP), which have criticized terms offered by the national Oil Ministry. Government soldiers clashed for the first time with Kurdish forces on Nov. 16, leaving one person dead.

Adding to the country's instability, President Jalal Talabani, a respected mediator between rival ethnic, religious and political factions, was hospitalized two days ago after a stroke. Doctors from Germany and Iran are treating him, and a British medical team plans to arrive today.

Attacks Mount

Iraq has endured "a troubled year" of worsening graft, bloodshed and apprehension about the conflict in neighboring Syria, Stuart Bowen, a U.S. special inspector general, said in a report published on Oct. 30. Attacks in Iraq have escalated this year, with 4,019 civilians killed in the first 10 months compared with 3,467 in the same period in 2011, according to the Iraq Body Count website.

"The instability, the problems and the daily struggles never end," said Ali Hussein, a car-parts dealer in Baghdad. "Leaving the country has become a priority," the 40-year-old said. "What would a bit more income do for me, if my kids or other members of my family can get kidnapped on any given day?"

Crude Wealth

To be sure, Royal Dutch Shell Plc (RDSA), OAO Lukoil and other energy investors are pressing ahead with projects in much of the country. Iraq holds the world's fifth-largest crude deposits, according to BP Plc (BP/), and overtook Iran in June as the biggest producer, after Saudi Arabia, in the Organization of Petroleum Exporting Countries.

The nation pumped 3.35 million barrels a day in November, according to data compiled by Bloomberg, and Deputy Prime Minister Hussain al-Shahristani said Oct. 10 that Iraq wants to produce 10 million barrels a day by 2020. Iraqi crude will account for almost half of the increase in global supply this decade, the International Energy Agency said Oct. 9.

"The growth there is boosting our business," said Richard Davidsen, chief commercial officer of Aqaba Container Terminal in neighboringJordan. Half of the goods unloaded at his facility on the Red Sea journey by truck to Iraq, and Davidsen wants to capture more of the trade.

Empty Skyline

The government is budgeting $118 billion in spending next year, up 18 percent from 2012. Still, bureaucratic delays and corruption probes have impeded many projects, and Iraqi officials often can't spend all their budgeted funds, said Sam Wilkin, an analyst in Dubai at Control Risks Group, a consultant.

Transparency International ranks Iraq 169th among 176 countries and territories in its 2012 Corruption Perceptions Index.

Business outside the oil and gas industries has languished. Baghdad's skyline is almost bare of construction cranes, and security checkpoints and 3 meter- (10 foot-) high blast walls choke traffic. The capital's only ATMs are located inside banks, where armed guards frisk customers and remove mobile phones.

Tariq Najim, a Baghdad grocer, sees scant evidence of new building even though officials have spent "so much money" since 2003. "How many decades do they need to show us their achievements?" the 28-year-old said.

'Bit Scary'

One of the country's biggest projects is a $6 billion planned upgrading of Grand Faw Port in southern Basra province. The government, which has been discussing the work since 2004, awarded a contract to build a first breakwater only last month. Iraqi power plants still can't produce enough electricity, and the government buys power from Iran and three Turkish generating ships to ease outages lasting several hours a day.

"The last 12 months have been really bad," said Makkawi of Blue Gate Capital, which opened an office in Libya in November. [Back to Top] ------

8. RUSSIA SENDS WARSHIPS TOWARD SYRIA FOR POSSIBLE EVACUATION

Russian officials began formulating plans during the summer for an evacuation, but have delayed announcements, analysts say, to avoid signaling a loss of confidence in President Bashar al-Assad, a longtime strategic ally. Moscow staunchly opposes international intervention in Syria and has blocked United Nations Security Council resolutions meant to force Mr. Assad from power. Officials have repeatedly said that Russia's position has not changed.

However, Moscow has signaled in recent days that it sees Mr. Assad's forces losing ground, and that it is beginning to prepare for a chaotic transition period. One immediate concern is the large number of Russian citizens scattered across Syria, as a result of decades of intermarriage and longstanding economic ties.

Late on Monday, Russian diplomats said that two Russian citizens had been kidnapped by an armed group. The two Russians, evidently workers in a privately owned steel factory, were seized as they traveled on a road between Homs and Tartus and were held for ransom. An Italian citizen, Mario Belluomo, was abducted with them, the Italian Foreign Ministry said.

Then on Tuesday, the Russian Defense Ministry announced that a flotilla of five ships - a destroyer, a tugboat, a tanker and two large landing vessels - was being sent from Baltiysk, a port in the Baltic Sea, to relieve ships that have been near Syria for months. At typical cruising speeds for such vessels, the ships would arrive on station around the beginning of January.

A naval official, speaking on the condition of anonymity as is customary, told the Interfax news service that the ships were "on their way to the coast of Syria for possible participation in the evacuation of Russian citizens" to a Russian port on the Black Sea. The official said that the mission had been planned swiftly but under total secrecy, and that the timeline for the ships' return to port "depends on the development of the situation in Syria."

Aleksandr I. Shumilin, a regional analyst and a foreign correspondent, said that Russian leaders had avoided openly taking steps toward evacuation until now, to avoid signaling that Russia was scaling back its support for Mr. Assad, but that they also risked public anger if Russians became targets of violence in Syria.

"It appears that some break has taken place, but whether that means a change of policy, or a modification of policy, that's hard to say," said Mr. Shumilin, who is head of the Middle East conflict analysis center at the Russian Academy of Science's Institute for Canada and the United States. "The decision makers are now concentrating on humanitarian questions, the protection of Russian citizens."

The Syrian rebels have been moving aggressively around the capital, Damascus, in recent weeks, and Mr. Assad's forces have responded by firing Scud missiles. On Tuesday, Syrian fighter jets bombed thePalestinian refugee camp of Yarmouk for the second time this week, seeking to drive back rebel forces that had moved in, The Associated Press reported.

Iran, Syria's last ally in the region, appeared to remain firmly committed to Mr. Assad. On Tuesday, Deputy Foreign Minister Hossein Amir Abdollahian of Iran told reporters in Moscow, "The Syrian Army and the state machine are working smoothly."

A planned visit by the president of Iran, Mahmoud Ahmadinejad, to Ankara, the capital of Turkey, was suddenly canceled on Monday amid tensions between Iran and Turkey over NATO's decision to deploy Patriot antimissile batteries on the Turkish border with Syria.

Iranian leaders, politicians and commanders of the Islamic Revolutionary Guards Corps have denounced NATO's decision on Dec. 4 to send six batteries of American, German and Dutch Patriot systems to intercept any Scud missiles that the embattled Syrian government may launch toward Turkey.

Iran fears that NATO will use the batteries, which are staffed by about 1,000 soldiers and can also be used against aircraft, to set up a no-fly zone and a rebel safe haven in northern Syria.

Iran's top general, Hassan Firouzabadi, said at a meeting of senior commanders on Saturday that the deployment was part of a Western plan to start a "world war" and that Iran's own ambitious missile program was the real target.

"They signify concerns over Iran's missiles and the presence of Russia for defending Syria," he said. "The sensible people in America, Turkey and Europe must prevent this situation from getting out of control."

The mobile Patriot systems could technically be used to intercept Iranian as well as Syrian missiles. They are effective against missiles at a range of about 12 miles, and against aircraft up to 100 miles.

Iran has threatened to fire missiles at Israel if its nuclear installations come under attack.

On Tuesday, Iran's defense minister, Brig. Gen. Ahmad Vahidi, said Israel was the winner in the Syrian conflict because it was witnessing the destruction of an enemy - the Assad government - while the Syrian people were being "manipulated" by "terrorists."

Turkey's foreign minister, Ahmet Davutoglu, urged Iran to use its political clout with Damascus to end the violence in Syria, instead of making statements about the Patriot systems.

"Turkey and NATO have stressed over and over again that this system is solely for defensive purposes," Mr. Davutoglu told reporters. "Turkey has the right to do what it wants in order to protect its territory. It is time for Iran to give a clear message to the Syrian regime." [Back to Top] ------

9. SYRIAN TROOPS BATTLE REBELS IN DAMASCUS SUBURBS

BEIRUT (AP, Wednesday, December 19, 2012) -- Syria's state media say the military is carrying out a broad operation against rebels in the suburbs of Damascus.

The state-run SANA news agency says the troops have killed "scores of terrorists" - the government term for opposition fighters trying to topple President Bashar Assad.

It says Wednesday's FIGHTING was taking place in southern districts of Daraya, Harasta, Douma and Hajar Aswad, which is near the Palestinian refugee camp of Yarmouk.

The areas have been opposition strongholds since the uprising started in March 2011. The rebels have recently made significant advances in the capital's outskirts, capturing military bases and fighting a pro-government Palestinian group deep in Yarmouk.

On Tuesday, Syrian fighter jets bombed Yarmouk for the second time in a week, sending thousands fleeing.

[Back to Top] ------

10. ANGOLA: WATER FOR CHEVRON AND A LESSON FOR THE GOVERNMENT

The first well for the rich, privileged and expats, in a luxury gated community, is about to pump water to the 100 houses of Condomínio Monte Belo (Beautiful Heights), where most of Chevron's expat employees live. Since the August 31 elections, the Angolan capital, Luanda, a sprawling urban chaos with more than five million people, has been plagued by severe water and electricity shortages.

Monte Belo is one of the extravagantly expensive gated communities that have mushroomed south of Luanda and it is worth over US $250 million. Chevron commissioned the real estate project to the Brazilian construction multinational Odebrecht, in a joint-venture with a local private company Sakus Empreendimentos e Participações, set up by Sonangol oil executives. Sakus is currently fronted by Mirco Martins, the stepson of the previous Sonangol CEO and current vice-president, Manuel Vicente.

In Angola, it is not unusual for such a luxury-tailored project to resort to rudimentary approaches to overcome the lack of basic infrastructures, such as running water.

As Maka Angola has gathered, U.S. expats have been demanding regular tests on the water provided daily to their buildings' underground tanks by cisterns. There is no trust on the source of the water brought in by the truck cisterns, which can range from rivers to piped water. As a safety alternative, U.S. families are advised to use bottled water for drinking, cooking and tooth brushing. At Monte Belo, the Chevron expats will continue to buy bottled water, as the water from the well, once operational, will be used only for other purposes.

The concerns of the expat American families with water safety are in stark contrast with those of the Angolan ruling elite. The latter seems unfazed by the untested water that reaches their underground tanks and their taps and is more interested in acquiring luxury goods. In fact, such an elite is now in an open competition with Russian oiligarchies and other state-controlling mafias of the world, in squandering public resources in the untrammeled consumption of luxury goods. More and more, Angolan nouveaux riches are buying Ferraris to adorn their garages the same way art collectors buy paintings to hang on their walls.

For the majority of ordinary Angolans, the lack of piped water and electricity has been part of daily life. In provinces like the diamond-rich Lunda-Sul, less than seven percent of the local population has access to clean water.

Angola has been claiming, for several years now, to have one of the fastest growing economies in the world. It is one of the most water-endowed countries in Africa. But the massive billions of dollars from oil revenues continue to either be siphoned away by the country leaders, or misused due to chronic incompetence and mismanagement. Water and electricity shortages have become more severe nowadays than in the worst times of civil war.

During the electoral period, the ruling People's Movement for the Liberation of Angola (MPLA) claimed that in 2011 clean water consumption reached 56 percent of people living in urban areas, compared to 33 percent in

2009. Domestic propaganda and the international fascination with the Angolan economic growth and construction boom gave credence to such inflated statistics. Both have been determinant in creating an image of a country moving forward at a faster pace. In fact it is, but where is it headed?

Last year, President José Eduardo dos Santos approved the Oil Fund, and endowed it with 100,000 barrels a day and the mission to invest in water and energy infrastructures. After the elections, the same fund, now with a budget of US $5 billion, became the Angola Sovereign Fund (ASF), without proper legal procedure. In a clear case of nepotism and wholesale plunder of public resources, the President appointed his son Filomeno José dos Santos "Zenú" to manage ASF. The fund's mission suddenly changed. Instead of energy and water projects for Angola, the fund will now be used to promote investment in the West and to build hotels and touristic infrastructures.

What kind of economic growth or development can be sustained with acute water and electricity shortages? It is unlikely that Angola will produce such a miracle. In the meantime, it is important to swiftly address the problem of access to water.

Agostinho Martins, a middle-class manager living in the center of Luanda, spends over US $300 a month to fill up the water tank of his two-bedroom apartment, in order to provide water for a family of three. Yet, every month the water utility company charges him over US $300 for water it does not provide, and keeps threatening him with cuts. "I laugh and I say: 'Go ahead'," he states jokingly.

Recently, the secretary-general of the ruling People's Movement for the Liberation of Angola (MPLA) called upon the citizens to be patient and understand the chronic water and electricity shortages in the country's capital. "We need to develop gradually. The money is not enough for everything, and we must understand this situation."

After the elections, the government claimed that the lack of water in the capital was due to drought. Nature denied any responsibility by providing heavy rains soon after. More recently, the spokesperson for the state- owned water company EPAL, Domingos Paciência, provided another explanation of sorts. He said that the company lacked fuel to keep power generators running in the water distribution centers.

But Angola is the second largest oil producer in Africa, after Nigeria. The lack of water for lack of fuel is hard to fathom.

Moreover, Luanda is running on fuel as the city has been experiencing severe electricity shortages. The reconstruction initiatives, implemented under the oil-for-infrastructure deals with China, worth US $15 billion, have not included serious water and electricity projects.

While Chevron can dig a water well for its employees at an affordable cost, the same type of easy, inexpensive fix cannot be engineered to solve power blackouts. Chevron's offices, as well as many office buildings in Luanda and even the presidential palace, consume nowadays more electricity from power generators than from the electrical grid. Some office buildings in the city center run up monthly bills of up to US $30,000 in fuel consumption for the generators.

Either affordable or expensive, these fixes are not long-term alternatives that can sustain the economic growth of Angola. Rather then patch-up solutions and scanty official excuses, the country needs a serious program for infrastructure construction, urban planning and institutional change that can provide a solid foundation for sustainable socio-economic development.

A recent article on water in the New York Times highlights precisely this point. John Briscoe, a professor of environmental engineering and environmental health at Harvard University, told the paper that "in the developing world, the most pressing water needs center on providing more infrastructure and ensuring that administrative institutions function better."

One can only hope that the MPLA government officials are working on such a plan right now, instead of thinking of ways to rig the statistics or in new excuses to explain water shortages and power blackouts. [Back to Top] ------

MEXICO CITY--Mexico's state-owned oil company Petroleos Mexicanos, or Pemex, is currently having one of its best months this year for crude-oil production, and it comes after an even better November. However, it looks like the oil monopoly will fall short of its internal goal of ending the year-on-year slide in oil output since 2004, Pemex's numbers show.

In the first two weeks of December, Pemex crude-oil production averaged 2.573 million barrels a day after November's 2.577 million barrels a day. Both easily beat the full-year 2011 average of 2.553 million barrels a day. But Pemex got off to a slow start this year and will likely fall short of last year's average output by a few thousand barrels a day.

Pemex said in a statement Tuesday November's crude-oil output was the highest level in 19 months, as it brought new wells online at offshore sites in the Gulf of Mexico and at onshore sites in the east and south. Beginning in May of this year, the company said, the combined new projects added an average of 156,000 barrels of oil per day.

One of Pemex's new offshore projects, the Tsimin-Xux complex, began production in August and has averaged nearly 11,000 barrels a day, Pemex said in the release.

In a separate report, Pemex figures showed that the mature, offshore Cantarell complex held mostly steady this year at around 400,000 barrels of oil production per day, and the top-producing Ku-Maloob-Zaap complex was at historically high levels in early December at 867,000 barrels a day.

Although Pemex is likely to fall a bit short of its internal crude-oil production goal this year if current rates hold, the oil monopoly is well on course to beat the targets set out by Mexico's Congress in the 2012 budget for crude-oil production, for export levels, and for the average-price for a barrel of export oil. Pemex provides about a third of the federal budget through taxes, royalties and other charges.

High oil prices in recent years have allowed Pemex to partially compensate for the drop in oil production from its peak of nearly 3.4 million barrels a day in 2004. [Back to Top] ------

12. VENEZUELA: CHÁVEZ DEVELOPS INFECTION AFTER SURGERY

13. AMERICAN OIL GROWING MOST SINCE FIRST WELL SIGNALS INDEPENDENCE

Domestic output grew by a record 766,000 barrels a day to the highest level in 15 years, government data show, putting the nation on pace to surpass Saudi Arabia as the world's largest producer by 2020. Net petroleum imports have fallen by more than 38 percent since the 2005 peak and now account for 41 percent of demand, down from 60 percent seven years ago, moving the U.S. closer to energy independence than it has been in decades.

Seven years after President George W. Bush declared "America is addicted to oil, much of which is imported from unstable parts of the world," the country has so much crude that it was able to join Europe in choking off exports from Iran without pushing U.S. benchmark prices over $100 a barrel. And refining capacity helped make the U.S. the world's largest fuel supplier. Even in Venezuela, where Exxon Mobil Corp. (XOM)'s assets were seized, more and more cars run on gasoline made in America.

"The U.S. has a huge lead in the 21st century in maintaining its superpower status," said Ed Morse, global head of commodities research at Citigroup Inc. in New York. "There was absolutely no way to anticipate the level of growth in the oil supply."

Faster, Cheaper

America's latest oil rush was spurred by new technology that has made drilling faster, cheaper and better at unleashing oil from rock formations, even as it has raised alarms among environmentalists about the potential danger to drinking-water supplies and intensifying greenhouse-gas emissions.

Producers, eager to profit from prices that have remained above $75 for more than two years, deployed as many as 1,432 rigs, the most in records going back to 1987. Trucks bearing pipe traversed Wyoming's high desert plains and Oklahoma's back highways, geologists pored over well logs from Colorado to New Mexico, and landmen trying to secure mineral rights crowded into courthouse record rooms from North Dakota to the Gulf Coast.

The U.S. will produce an average of 6.41 million barrels a day this year, a 14 percent increase from 2011, according to a Dec. 11 report from the Department of Energy. It's the biggest annual gain in the number of

barrels since the industry began when Pennsylvania's Drake well ignited the first American oil rush in 1859, department data show. Saudi Arabia pumped 9.7 million barrels a day in November, according to data compiled by Bloomberg. The Paris-based International Energy Agency said last month the U.S. is on track to become the top producer in about eight years.

'New Thing'

"The shale oil revolution is a new, new thing," said Francisco Blanch, the head of commodities research for Bank of America Merrill Lynch in New York. "It has come out of nowhere in the last year and a half."

The nation's stockpiles increased by a record 13 percent this year, and U.S. refiners are paying less for crude than much of the rest of the world. Landlocked by export restrictions and limited transportation, the glut of U.S. light, sweet crude -- cheaper to process than the high-sulfur, sour grades pumped by Saudi Arabia and Venezuela -- pushed domestic prices down to as much as $28 a barrel less than Brent, the European blend that sets prices for more than half the globe's oil.

That discount handed Gulf Coast refiners an advantage over competitors and helped the U.S. become a net fuel exporter last year for the first time since 1949, surpassing Russia as the world's largest. Venezuela quintupled its imports from the U.S. this year to a record 196,000 barrels a day in September, according to Energy Department data.

Global Clout

Rising output from the U.S. has also increased the nation's sway in the global market by forcing the Organization of Petroleum Exporting Countries into an unpalatable choice: Increase production to bring prices down and maintain market share; or keep prices high to sustain state spending, and thereby subsidize the competition from U.S. producers, which can provide crude to domestic refineries at a lower price.

The unprecedented gains came so quickly that the industry is rushing to regroup. The 500-mile Seaway pipeline, which was reversed last year and now carries U.S. crude south to Gulf Coast refineries instead of moving imports north, will expand to 400,000 barrels a day as early next year from 150,000 now.

Northeastern fuel makers, on the verge of insolvency a year ago, have begun replacing foreign cargoes shipped by tanker from Africa, Europe and the Middle East with cheaper domestic oil brought in by rail. A pipeline shortage has boosted profits at tank-car maker American Railcar Industries Inc. and at BNSF Railway Co., owned by Warren Buffett's Berkshire Hathaway Inc.

Exports Limited

Even if there were enough pipelines to carry more crude from swelling storage hubs to the coasts, oil exports are limited by rules imposed by Congress following the 1973 Arab oil embargo.

Exports may be necessary to avert a surplus that would depress prices and discourage drilling, said Bank of America's Blanch. West TexasIntermediate oil, the U.S. benchmark contract, could fall to as low as $50 a barrel within the next two years unless the rules are eased to relieve the glut, he said. Until prices drop, it may be difficult for politicians to persuade the American public to allow expanded exports.

"What I see is basically an inability to go out and explain to the public that we have to change the rules before the prices give us the signal," Blanch said. "If you're in the White House, why are you going to change the

crude-export rules that the U.S. has right now when the country is still importing 8 million barrels a day of oil?"

Forestalling Glut

At least one member of the Obama administration has begun making the case that the U.S. is building toward a crippling surplus. Adam Sieminski, head of the U.S. Energy Information Administration, the statistical arm of the Energy Department, said limited transactions with other countries may help forestall excess supplies that could undermine prices and hobble the industry.

"That's going to be a policy decision of the Congress and the administration," Sieminski said. "It's just a question of what the economics are."

The surge in oil output, coupled with record natural gas production, allowed the U.S. to meet 83 percent of its own energy needs in the first eight months of 2012, on track to be the highest since 1991, Energy Department data show. The last time self-sufficiency was achieved was in 1952. While the U.S. still imported some petroleum then, exports such as coal more than offset foreign cargoes.

Overseas Shocks

That interconnectedness means U.S. consumers will still be vulnerable to supply shocks overseas, Sieminski said. An Energy Department forecast shows the country will import 10 percent of its needs in 2035. That doesn't account for slowdowns because of new regulations, which may tighten because drilling has been linked to groundwater pollution and earthquakes, he said.

Then there's the problem of how burning all these fossil fuels may contribute to climate change, said Anthony Swift, an attorney with the Natural Resources Defense Council in Washington.

"There's a real environmental cost to investing billions of dollars in new sources of carbon-intensive fuels when we know we really need to be investing in clean energy," Swift said. "It's better for our environment, better for our economy and better for energy security."

Tightened automobile-mileage requirements helped reduce consumption of petroleum products by 16 percent through September since peaking in August 2005, a drop of 3.5 million barrels a day, Energy Department data show.

Dakota Boom

The U.S. oil boom began in 2004 with a North Dakota well completed by Continental Resources Inc., which confirmed that a combination of two technologies could unlock profitable amounts of crude in pockets deep underground.

Continental paired horizontal drilling, in which the well is bored at an angle to run lengthwise along the richest slice of rock, with hydraulic fracturing. Better known as fracking, the process forces a high-pressure stream of sand, water and chemicals underground to crack apart the rock and free the crude. Since then, North Dakota's oil production has increased to 728,000 barrels a day, surpassing Ecuador, an OPEC member.

Harold Hamm, Continental's founder and chief executive officer, has called for expanding U.S. production. The company estimates the Bakken and other formations under North Dakota contain the equivalent of 27 billion

to 45 billion recoverable barrels of oil. By comparison, Nigeria has an estimated 37.2 billion barrels of proven reserves, according to OPEC.

Wildcatters Compete

Hamm's success set in motion an oil rush that spread across the U.S. as wildcatters competed to be first to new prospects. Chesapeake Energy Corp. made a deal in early 2007 to buy a million acres of Wyoming's Powder River Basin, near the Teapot Dome formation that gave its name to the notorious bribery scandal of the 1920s.

Exploration intensified in Oklahoma's Mississippi Lime, the Eagle Ford Shale in Texas, Ohio's Utica formation, Louisiana's Tuscaloosa Marine shale and New Mexico's Bone Springs.

Competition grew heated as oil prices above $75 encouraged more drilling. In one Wyoming courthouse, the county clerk brandished a cattle whip to keep order among the crowds of landmen packing in to research mineral rights. Joe Thames, a Denver-based contract lease buyer who has worked for companies such as Chesapeake, said rivals once followed his best landman from his motel to try and find out where he was buying.

'Big Gamble'

When results of EOG Resources Inc. (EOG) 2009 Jake well in northeastern Colorado leaked, lease prices quintupled in less than two months, said Bob Coskey, a Denver geologist. That play, called the Niobrara, turned out to be smaller than people thought, Coskey said. Overnight, acreage outside the best zones became almost worthless.

Hanging over this activity is the specter of past busts. The last boom in the late-1970s came crashing to a halt in 1985 when Saudi Arabia, in an effort to regain declining market share, flooded the world with crude and sent prices to $10 a barrel in 1986. U.S. production fell for 21 of the next 22 years.

"It's a big gamble," said Mike McDonald, an Oklahoma wildcatter and president and co-owner of Triad Energy Inc. "Everyone thinks it's Beverly Hillbillies: You shoot a gun and oil comes out. It's not."

It was unclear until this year whether producers would be able to replicate Hamm's results outside of the Bakken. The answer is yes. Texas pumped the most oil since 1988. Output from Wyoming grew 7 percent, the biggest jump in records going back to 1981, Energy Department figures show. New Mexico's increased by 13 percent, and Oklahoma's by 18 percent.

Morse, whose bullish predictions of U.S. energy self- sufficiency early this year met with skepticism, said North America will be able to meet its own needs by 2020. The pace of growth and the potential for worldwide gains driven by ever- improving technology toppled the theory that the world supply of oil had had peaked and begun an inexorable decline, he said.

"Peak oil is dead," Morse said. [Back to Top] ------

14. GREEN CALIFORNIA TO VIE WITH TEXAS AS U.S. OIL HEARTLAND: ENERGY

The catalyst is the U.S. Bureau of Land Management's sale last week of 15 leases covering about 18,000 acres of the Monterey Shale, a geologic formation whose sweet spots stretch from east of San Francisco more than 200 miles south to Monterey County. The auction was dominated by Los Angeles-based Occidental Petroleum Corp. (OXY) and smaller companies betting on a coming boom. Yesterday California regulators issued a draft of new rules to sharpen their oversight of the surge in fracking.

While shale developments have been most associated with natural gas, the ribbed-shaped Monterey could hold 15.4 billion barrels of oil, according to the federal Energy Information Administration. That amounts to 64 percent of all estimated U.S. shale oil reserves and double the combined reserves of North Dakota's Bakken Shale and Texas' Eagle Ford Shale, where energy companies are spending billions to ramp up output.

The leap in technology known as hydraulic fracturing, or fracking, has already found trillions of cubic feet of gas and billions of barrels of oil around the nation. The Monterey's prospects coupled with a favorable oil price means "that renaissance is coming to California," says Phil McPherson, a former energy analyst who is now chief financial officer of Citadel Exploration Inc. (COIL), a California-focused oil company.

Occidental declined to comment about its interests in the Monterey shale.

Chevron's Birthplace

The economic lure is obvious. The Golden State's unemployment rate sits at 10.1 percent, third highest in the nation. It faces enormous underfunded public employee pension obligations and has racked up state budget shortfalls of $500 billion in the past four years.

It also has history on its side. California, where oil was first drilled in 1865, was once an oil and gas powerhouse and its largest oil company,Chevron Corp. (CVX), was carved out of the 1911 breakup of John D. Rockefeller's Standard Oil. California is still the nation's No. 3 ranked oil producer though production has declined steadily since peaking in 1985.

Yet California also has a strong environmental lobby that tends to view oil and gas development with suspicion amid the state's recent efforts to reshape itself into a green energy leader. The state has adopted its own low- carbon fuel standards and laid out a program to have renewables -- wind, solar, hydroelectric and geothermal power -- provide a third of the state's energy needs by 2020. Last month it started the nation's largest cap- and-trade program when it auctioned its first emission allowances for greenhouse gases.

Environmental Pushback

"There's a strident environmental community that's always very concerned about the possibility of ecological damage," says Amy Myers Jaffe,executive director for energy and sustainability at the University of California- Davis. "It's going to be a much more intense operating environment" for companies drilling in sensitive areas.

The pushback has already begun. In August, the Center for Biological Diversity notified the Bureau of Land Management by letter, as required by federal law, that it intends to sue under the federal Endangered Species act to stop further lease sales unless BLM agrees to consult with federal wildlife managers on potential fracking impacts.

The Tucson, Arizona-based environmental group argues that BLM isn't taking into account how the evolution of newer fracking methods pose threats to species such as the California condor and the San Joaquin kit fox.

Long History

"A fracking boom could push some of California's most beloved endangered species over the edge," Brendan Cummings, the Center's public lands director said in a statement at the time.

BLM, in a letter to the Center in October, said consultation isn't necessary because fracking has been "occurring under existing regulations on public lands in California for decades" and impacts to endangered species "are lower in California than in other areas of the country."

A form of fracking has been used in California for 60 years with no allegations of fouled water or environmental harm, said Tupper Hull, spokesman for the Western States Petroleum Association, an industry trade group.

"The potential economic benefits are enormous," he said. "If you look at what has happened nationally, it is one of the most encouraging trends that we've seen of late."

Fertile Region

The recently leased acreage also cuts through scenic southern Monterey County and across lands in San Benito and Fresno counties that hold vineyards and fertile vegetable farms. Monterey County alone grows $8 billion in produce annually.

Fracking, which mixes small amounts of chemical lubricants and biocides into a high-pressure water stream to break apart dense rock, has been linked to ground water contamination in some states. It is also a water- intensive process that can consume up to 6 million gallons per completed well. Both issues worry landowners and environmentalists in a state where water resources are jealously coveted.

"We're concerned that not enough regulation is in place to provide for the security of our water supply," said Paula Getzelman, whose family owns Tre Gatti Vineyards in southern Monterey County. Beyond fears of fouling the water, landowners are concerned about how fracking might deplete water needed for irrigation. Getzelman said she wants to ensure the safety of the region's water, "whatever that requires."

Geologic Sensitivities

Another issue is the formation's complex geology, which oil analysts say will challenge drillers because it isn't as homogeneous as the Bakken or the Eagle Ford.

"The ground moves around a lot, unlike in South Texas or North Dakota," says Jaffe. "So you have these breaks in the geology that make it harder to drill" while raising costs.

Also resonant in California is the issue of whether deep underground wells used by the industry to dispose of fracking waste water leads to earthquakes. Some scientists believe swarms of small tremors in Ohio, Texas and elsewhere are linked to waste-water fracking activities, including 12 earthquakes centered within a mile (1.6 kilometers) of an injection well in Youngstown, Ohio, according to a state report that prompted new regulations.

Tremor Troubles

A report this year from the National Research Council concluded that "fracturing has a low risk for inducing earthquakes that can be felt by people, but underground injection of wastewater produced by hydraulic fracturing and other energy technologies has a higher risk of causing such earthquakes." California is among the nation's most seismically active states. San Francisco was struck by a destructive earthquake in 1989 and Los Angeles suffered one five years later.

To address some of these concerns, California regulators yesterday released a draft of new fracking regulations that require producers to disclose their plans for drilling, post information about chemicals used and regularly test wells for safety compliance. The approval process for the regulations will continue in 2013.

While the Monterey's economic lift to California will ultimately depend on what oil and gas companies find and produce, a look at the experience of North Dakota's development of the Bakken Shale is indicative. In 2005, North Dakota produced about 3,000 barrels of oil a day. Since drilling in the Bakken began in 2007 that has climbed to more than 728,000 barrels a day, moving North Dakota ahead of California andAlaska as the No. 2 producer in the U.S. (Texas is first.) Unemployment at 3.1 percent is the lowest in the nation.

Revenue Potential

The Bakken boom has created 18,000 direct jobs and 46,000 indirect jobs in the oil and gas support industry, according to the North Dakota Energy Forum, an industry-sponsored tracking group. Petroleum production and extraction revenues exceed $750 million a year and have given the state treasury a $1 billion surplus.

California doesn't have an oil and gas severance tax, though for years it has contemplated a 10 percent levy. With state output of about 535,000 barrels a day, and based on historical average oil prices, such a tax would raise about $1.4 billion in annual revenues according to the Center for Labor Research and Education at the University of California-Berkeley. A huge find in the Monterey could boost that number significantly.

Jobs Engine

As has been demonstrated by North Dakota, where the average oil worker earns about $90,000 a year, the jobs engine is undeniable.

"The number one way to create jobs in the United States is in the oil industry," says McPherson. "That applies to California the same as anywhere else."

California has another imperative. No out-of-state pipelines serve the state, making it critical that it produce enough oil to feed the 14 refineries that blend the state's mandated lower-emission gasoline.

As a result, California is uniquely vulnerable to high gasoline prices, and more security of supply may provide Californians with some relief, according to Severin Borenstein, Director of the Energy Institute at the

University of California-Berkeley's Haas School of Business. State prices reached an all-time peak of $4.67 a gallon on October 9, according to data from AAA, after a refinery fire and other outages pushed prices up.

Slowing Production

In years past, oil and gas companies operating in California have complained of regulatory foot-dragging that they said was aimed at slowing fossil-fuel production.

In perhaps a sign of the economic times, Gov. Jerry Brown, a Democrat, dismissed the state's top two oil regulators last year after permits for new drilling and wastewater wells had slowed to a trickle. Producers including Occidental say approvals have quickened, allowing them to continue their drilling programs after a slowdown. Also buoying the Monterey's prospects: a bill in the California legislature that would have put a moratorium on fracking failed to gain traction this year.

"You certainly won't see enthusiasm in Napa and Sonoma, some of the bluer parts of the state," says Berkeley's Borenstein. "But many areas have been more depressed economically, so I think many people would welcome it." [Back to Top] ------

15. MARKEY 'DISAPPOINTED' WITH LNG STUDY

Markey, ranking member of the House Natural Resources Committee, said a report submitted to the U.S. Department of Energy on gas exports was outdated and contained "key missteps."

NERA Economic Consulting produced a report under a commission from the Energy Department. The report stated that potential exports of liquefied natural gas could have "net economic benefits" for the United States but not affect the country's overall employment picture.

"I was disappointed to find fundamental flaws with the study that I fear may have led to conclusions that severely underestimate the negative impacts of large-scale natural gas exporting," Markey said in a letter to U.S. Energy Secretary Steven Chu.

When the report was released, Markey said it was clear that the industry would benefit and the consumer would pay for LNG exports.

Markey, in his letter to the energy secretary, called for a re-evaluation of the report's findings.

Rep. Fred Upton, R-Mich., chairmen of the Natural Resources Committee, welcomed the report, describing the U.S. natural gas sector as the "bright spot" in the U.S. economy. [Back to Top] ------

16. EURO ZONE RESCUER DRAGHI FACES DAUNTING 2013

The ECB's own forecasts suggest the euro zone economy will shrink 0.3 percent next year and markets remain skeptical that the bloc's weaker members, such as Spain and Italy, can fund ballooning government deficits without formal aid programs.

Progress towards closer economic and fiscal union -- deemed essential by policymakers to solve the euro zone crisis -- is likely to be painfully slow in 2013 because two of the bloc's top three economies, Germany and Italy, hold elections.

Draghi's inbox will fill up quickly.

"There will be a lot of focus on preparation for the ECB as the new single supervisor," said Nick Matthews, economist at Nomura, referring to new plans for the ECB to take over supervision of the bloc's biggest banks.

"The other big challenge is the performance of the real economy - does confidence return as the ECB is expecting?"

Draghi had only been in office eight months when he pulled the euro zone back from the brink of break-up by saying in July: "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."

Although he began 2012 relatively untried at the European level, with Berlin suspicious, the new ECB president won support from German Chancellor Angela Merkel and her nominee on the ECB board, Joerg Asmussen, for his bold plan to save the euro.

That involved the ECB standing ready to buy government bonds in secondary markets to bring down borrowing costs for stricken countries, provided they signed up to a tough program of economic targets.

Draghi's stroke of genius - or luck - was that during 2012 the mere threat of ECB action sufficed to push borrowing costs down by a critical two percentage points for Spain and Italy, without the need to actually intervene.

This was just as well, since the most influential single ECB council member - Germany's Jens Weidmann - opposed the plan.

Clemens Fuest, research director at Oxford University's Said Business Schooland an adviser to the German Finance Ministry, explained that Draghi's vow to "do whatever it takes" to save the euro and the development of his plan came at a time when Berlin was under intense pressure to hold the bloc together.

"They didn't like (being pushed to do more) and they knew this would take the pressures away from that area," he added.

For a man who likes to say "the proof is in the eyes of the beholder", Draghi will need to deliver on his pledge next year but without triggering another ECB internal schism that would blow the market confidence he has restored.

The first test is already looming. In Draghi's native Italy, the reforming government of technocrat Mario Monti has collapsed and there is no guarantee that elections early next year will deliver a strong government committed to economic reform.

This threatens to take the three-year-old crisis to a new level and further test Draghi's ability to get a convincing policy response from a fractured ECB Governing Council.

The ECB will likely need to activate its new bond-purchase program - dubbed Outright Monetary Transactions (OMT) - in 2013 to ease Spain's borrowing costs. Any intervention will have to be strong enough to show Draghi's pledge is credible.

Bundesbank chief Weidmann would rather not use the OMT at all. Others at the ECB would, and sooner rather than later.

"We would prefer them to apply," one member of the policymaking Governing Council, speaking on condition of anonymity, said with reference to the request for aid from Europe's bailout fund Madrid must make before the ECB can act.

If juggling these pressures is not enough, Draghi also faces the managerial challenge of building up a banking supervisory body at the ECB next year that is both credible but separate from the bank's main business of setting interest rates.

BANKING BEHEMOTH

The ECB's new supervisory role is part of a vision for a more integrated euro zone that Draghi has pushed for since he succeeded Frenchman Jean-Claude Trichet as ECB president in November, 2011.

Under a landmark deal last week, the ECB will have new powers from 2014 that will give it automatic oversight of around 150 of the euro zone's 6,000-odd banks, and the authority to intervene in smaller banks if there are signs of trouble.

The establishment of this single supervisory mechanism is a first step towards a banking union that will lay a cornerstone for closer economic integration.

The Governing Council member, speaking on condition of anonymity, described the banking union as being of "existential importance for the euro zone". It will later include a fund to wind down problem banks and a deposit guarantee scheme,

But he and others at the ECB still worry about how the central bank will handle its new supervisory role without compromising its independence on setting interest rates - for instance by keeping rates low to keep banks alive.

"This institution is starting to be overburdened," said the Council member, who wanted tight rules to delineate the bank's new supervisory role and to separate it from monetary policy.

Draghi's challenge here is two-fold: he needs to put the right structures and people in place to ensure the supervisor operates effectively. But he must also separate it from ECB monetary policy business or risk losing the bank's independence.

Draghi's solution is to keep himself out of the supervision business - a strategy that poses a risk of its own as the ECB must make the new body credible without the authority he brings.

"It's not going to be me who is going to take care of this," he told European lawmakers on Monday. "We have to make sure that monetary policy and supervision are rigorously separated."

TIGHTROPE WALK

One tightrope walk Draghi cannot opt out of its monetary policy: in the past this was mainly the business of setting interest rates to keep inflation in check. This year, Draghi took ECB's monetary policy to a new level with his OMT plan.

In Germany, however, the OMT plan has led to worries that Draghi is moving the ECB away from the Bundesbank model of fierce independence. Before the ECB can intervene under the program, a country must seek help from Europe's bailout fund.

"This means the ECB becomes dependent on fiscal policy decisions, and gives up its independence to a degree," said Fuest, who in March takes over as head of German think tank ZEW.

These concerns echo the views of Weidmann. The resignations last year of his predecessor, Axel Weber, and German chief economist Juergen Stark in protest at the ECB's previous bond-buying plan rocked the young central bank.

While Weidmann has indicated he will not resign, 65-year-old Draghi was only able to secure his OMT plan by isolating the Bundesbank chief. Draghi needs to keep him in a minority of one, or else risk his signature policy plan losing value.

This means Draghi may have to forgo the interest rate cut some at the ECB would like in 2013 to help the euro zone's recession-hit southern economies, just to avoid other hardliners - or hawks - joining Weidmann in opposing use of the OMT.

Euro zone rates are currently at 0.75 percent, higher than Britain's 0.5 percent and the Fed's rate of close to zero.

"Draghi's key task for 2013 is keeping the sharpest weapon the ECB has - the OMT - as sharp as possible by keeping as many of the Governing Council hawks on his side as possible," said Christian Schulz at Berenberg Bank, a former ECB economist.

"If there is a gradual recovery, as expected, his chances are good because another rate cut, which the hawks would not like, would not be needed." [Back to Top] ------

17. DUTCH GOVERNMENT'S THINK-TANK IN RECESSION CALL

The Central Planning Bureau said Wednesday the Dutch economy would shrink 0.5 percent, in contrast to its previous forecast of 0.75 percent growth. Last week the central bank predicted a 0.6 percent contraction, reversing its previous forecast of a 0.6 percent expansion.

If the Dutch economy shrinks again in the fourth quarter following the 1.1 percent quarterly contraction recorded in the third quarter, it will be in recession, officially defined as two straight quarters of negative growth.

Because the recession will likely dent tax revenues and increase welfare payments, both forecasters are predicting that the country's budget deficit will be slightly above the 3 percent of GDP limit mandated by European rules.

Finance Minister Jeroen Dijsselbloem said Tuesday he was aware of the worsening projections but that he has no plans to alter the budget struck last month.

The new centrist government is bent on austerity via a mix of spending cuts to please Prime Minister Mark Rutte's ruling conservative VVD party, and tax increases for the wealthy, a goal of the other coalition partner, Dijsselbloem's left-leaning Labor Party.

The Dutch economy is regarded as one of the most robust in Europe, with a tradition as a haven for free trade, as well as a center of engineering expertise. It has a host of international companies and strong transport links such as the Port of Rotterdam and Schiphol Airport in Amsterdam.

However, it has seen its fortunes wane recently as trade was hit by the anemic growth across the 17 EU countries that use the euro and an aggressive government cost-cutting program. Attempts to reform the MORTGAGE system have hit house prices and caused dislocation in the construction sector.

Unemployment, currently at 6.25 percent, is forecast to peak next year at 7 percent.

Despite its current problems, the Netherlands continues to have a triple A CREDIT RATING from the three main agencies, though Standard & Poor's recently put the country on notice that it may suffer a downgrade.

Dijsselbloem, with less than two months on the job as a top government executive, has become a surprise favorite to replace Jean-Claude Juncker as head of the Eurogroup, the body that encompasses the finance ministers of the 17 euro countries.

On Friday, Dijsselbloem said he would consider taking the position if it were offered him, but he downplayed chances - even as he visited Berlin. Germany has insisted Juncker's replacement must come from a triple A- rated country. [Back to Top] ------

18. THE NEED FOR CROWDSOURCING ENERGY DATA

The effort to get a better grip on peak oil runs into the problem of data availability, data accessibility and data quality. As most TOD readers will recognise, there seems to be data asymmetry between the oil producers (NOCs and IOCs), international energy agencies, and the general public. Some transparency has been achieved by streamlining and organising data collection, e.g. through the JODI initiative. However, this encompasses top-down data collection that runs the risk of being polluted by non-data-driven incentives (the political need to over- or under-report, for example).

There have been a lot of bottom-up attempts to collect and combine data, many of which have been reported in TOD. This high-quality information is often represented in such a way, that does not allow others to build upon the work. Excellent collective efforts like the megaprojects taskforce on Wikipedia seem to have died. One of the reasons for this demise could be the lack of analytical power the current setup of Wikipedia allows: timeline data, conflicting sources, and large sets of relatively unworthy facts (e.g. location of wellheads) are not handled well. But also the Wikipedia community may not be aware of the notability of energy data.

This article is an attempt to re-ignite the spark of combined cognitive efforts in the TOD community, to spend some of your mental surplus on checking and updating facts and figures on oil projects and production, a topic you are passionate about to begin with. Why do it? Because credible data underpins a well-informed debate. Even commercial databases that cost loads of money and are inaccessible to the general public face the problem that they are full of mistakes, because the time and effort required to update them is enormous. Many of the contributors to TOD discussions have access to excellent data and spend time analysing it. A combined effort is possible (as projects in other domains have demonstrated) and arguably leads to better curated information.

Quality control of crowdsourced data

Quality control is naturally an important issue. Who do you trust: Encyclopaedia Britannica or Wikipedia? One could argue that only paid experts provide the necessary comprehensiveness, accuracy and oversight. However, paid experts' time is limited and possibly biased. TOD community has ample well-informed members who can check facts & figures. That' s what TOD is all about to begin with! There is a lot of collective cognitive energy being spent on TOD, and it would be beneficial if we could channel this more effectively so that we can leverage each other's efforts instead of repeating them. We also notice that the cognitive energy of experts is often wasted, as they find it easy to point out problems, but there are not always systems in place that permit them to contribute their knowledge to improving the data.

There are several ways in which data quality can be managed, based on the type of systems that are used. For example, wiki systems employ a revision control system that records who did what when, meaning that every edit is logged, and mistakes can easily be reverted. This means that it is harder to vandalize a page than to fix it. Without this functionality, Wikipedia would have failed a long time ago. There are also systems in place like ScraperWiki , which allow people to write scripts that gather and clean up data from across the web (example from oil megaprojects) and then create different views that enable people to visualize the contents of the data. Having different means of visualizing and interacting with the data is key in order to expose errors in the data. Some issue may be spotted using a map or table, while for others, a more in-depth statistical analysis may be needed. Overall, this is about collectively building the modules that allow different people to contribute different steps in a process of gathering, analyzing and improving data.

Enipedia, an example of a crowdsourcing data platform

Of course this is no easy task. We argue, however, that a relatively large group of motivated individuals can curate data more effectively than one or two paid professionals who have to wade through tens of thousands of data points. To show some interesting examples of what can be done with open data, in particular OpenStreetMap, ScraperWiki, and Wikipedia, we have set up a portal on our own Delft University of Technology site Enipedia.

The project uses open source semantic software that is readily available. However, to our knowledge it has not been used in an online attempt to gather, curate, and display scientific data on energy infrastructures. It opens up possibilities to a community of interest that was until now unavailable in a dynamic fashion: to contribute to each others' work and to critique and improve the available information.

Why did we not focus more specifically on e.g. nuclear power plants in Germany? First of all because such a limited set can still be handled by single (research) organisations. Because more is different: no one entity could seriously claim to know all the details or have the manpower to find out all the required details. Because we don't know where the interest of the community lies: our largest non-colleague contributor seems to be French; (s)he may not have participated if the project were about Germany. Because we think people need this broad information to make useful policy decisions.

We most actively work on information on power plants, combining e.g. the Carma.org, eGrid, E-PRTR databases that each have (limited) information on these infrastructures. For a list of all the data sets we used, see Energy and Industry Data Sets Figure 1 - Power Plant map of Europe from Enipedia

To provide an example, overviews and insightful maps such as the one above can be generated, which depicts all power plants for France. This is a picture taken from our interactive map where you can obtain an overview of country by country power plants in existence. For some more examples, check out http://enipedia.tudelft.nl

The tools for more productive cooperation are available. There is a large and perpetual need for people to check and update the information regularly. The more computer savvy enthusiasts can design new analyses. [Back to Top] ------

19. TOO BIG TO FLOOD? MEGACITIES FACE FUTURE OF MAJOR STORM RISK

By the middle of the century, the scores of billions it cost to compensate the greater New York City area for being unprepared for superstorm Sandy may seem like a bargain. Without major adaptation measures to increase the level of storm protection beyond a 1-in-100-year event, the value of the city’s buildings, transportation, and utilities utility infrastructures currently at risk from storm surges and flooding — an estimated $320 billion — will be worth $2 trillion by 2070, according to continuing studies by the Organization for Economic Cooperation and Development (OECD).

By then, the OECD says, the metropolitan area will rank behind only Miami and Guangzhou, China, at the head of a list of the world’s megacities with the most flood-vulnerable assets. In all these cities, sea level rise will

meet a tide of urbanization in the coming decades and set the scene for storms with ever-more catastrophic consequences.

Saeed Khan/AFP/Getty Images: The flooding in Bangkok in 2011 was the worst in 50 years.

Just as banks grew “too big to fail,” over the next half-century these coastal megacities may grow “too big to flood.” But flood they will unless they dramatically revise their growth strategies and undertake major infrastructure projects designed to protect them from the dual threat of rising sea levels and intensifying storms, experts say.

Based on the conservative assumption that sea levels will rise by only 18 inches by 2070, the OECD finds that total assets vulnerable to flooding and storm surges of just 10 of these cities could account for some 9 percent of the world’s GDP. But many climate scientists and coastal experts note that sea level rise forecasts by groups such as the Intergovernmental Panel on Climate Change did not factor in the melting of the Greenland and Antarctic ice sheets. When they are taken into account, these experts say that global sea levels could well rise 3 to 6 feet this century, leaving scores of cities and massive amounts of economic infrastructure dangerously exposed.

“Even assuming that protection levels will be high in the future,” the study states, “the large exposure in terms of population and assets is likely to translate into regular city-scale disasters at a global scale.”

Guangzhou, for instance, now with at-risk assets of only $84 billion will, by 2070, have more than $3 trillion worth of exposure, only slightly less than that of an increasingly at-risk Miami, the study predicts. As these cities’ rapidly growing economies attract more migrants, many people will be forced to settle in surrounding low-lying lands at or even below sea level. Over the next 60 years, the flood-vulnerable population of Calcutta will grow from 1.9 to 14 million, of Guangzhou from 2.7 to 10.3 million, according to the OECD. Ho Chi Minh City’s storm-vulnerable population is projected to grow from 1.9 to 9.2 million, Miami’s from 2 to 4.8 million, and New York/Newark’s from 1.5 to 2.9 million.

Robert Nicholls, the coastal expert who was lead author of the 2007 OECD report and a recent update, says that while he was impressed with New York’s ability to recover from the recent superstorm, he believes the city still faces the same question as these other coastal megacities: With sea level steadily rising, how much longer can they leave their growing populations and increasingly valuable infrastructures with so little protection. He points out that New York City, protected to only a 1-in-100-year flood event, has a larger GDP than London, Shanghai, or Amsterdam, all of which are protected to a greater than 1-in-1,000 year flood. Flood gates and levees protect Shanghai, while a storm surge barrier in the Thames protects London. Huge tidal barriers are designed to protect Amsterdam and Rotterdam from 1-in-10,000-year floods.

Many of the fastest-growing coastal cities have little or no protection. And in many of these cities higher sea levels will be exacerbated by sinking coastlines — a geological process accelerated by pumping of groundwater from coastal aquifers.

Mike Hewitt/Getty Images: A storm surge barrier in the Thames has protected London since 1982.

“If you’re going to live in these places you’re going to spend significant resources protecting your people and your assets,” says Nicholls, co-leader of the Cities and Coasts Research Program at the UK’s Tyndall Centre for Climate Change Research. “How long can you depend upon having the capacity to bounce back?”

Going beyond Nicholls’s projections, a 2011 report by the Asian Development Bank, World Bank, and the Japan International Cooperation Agency focused on the growing Asian coastal megacities and found that by mid-century, sea level rise, subsidence, and increased frequency and intensity of extreme weather events will pose “enormous adaptation challenges” to these already flood-prone cities.

A case in point: Ho Chi Minh City, a city of 8 million that now accounts for 23 percent of Vietnam’s GDP, will continue to attract industry and migrants. By 2050 its population could reach 20 million. As the city grows, its surrounding agricultural and forest land will decline, while its industrial zones expand. At the same time “warmer temperatures in the South China Sea are expected to increase the frequency of tropical storms and typhoons,” which will bring heavy rains and high storm surges, according to the Asian Development Bank (ADB) report.

By 2050, Ho Chi Minh City will see floods “increase in both depth and duration,” the ADB report stated, with 67 percent of the city’s industrial areas underwater during these extreme events, as well as much of the city’s transportation network. A flood that would today affect some 26 percent of the city’s population will, by 2050, affect 62 percent, the ADB report said.

“The landscape of vulnerability has changed spectacularly,” Vinod Thomas, director general of the Asian Development Bank, said in an interview. In the last 30 years, he said, the number of major floods in the region has nearly quadrupled. Over this time, the ADB says, the Asia-Pacific region generated almost about 25 percent of the world’s gross domestic product, but also accounted for 38 percent of global economic losses due to natural disasters. Most of the large cities in the world classified as having extreme risks of climate vulnerability are in Asia, and by midcentury the region will face annual disaster losses in excess of $19 billion, the ADB says.

“The population exposure in urban centers will be breathtaking,” says Thomas.

Last year’s severe monsoon flooding in Bangkok was a stark demonstration of the economic assets that are increasingly at risk across the globe, and especially in Asia. In recent years, major industrial complexes have sprung up around Bangkok, producing everything from automobile parts to electronics; Thailand, for example, produces roughly a quarter of the world’s computer hard drives. Those industrial parks stand on what used to be rice paddies and wetlands, where floods, while they may have ruined a season’s crop, also fertilized the land.

Last year’s flooding, the heaviest in 50 years, put many of those industrial parks underwater, as fearful city Bangkok officials redirected floodwaters through canals around the capital and inundated populations and industrial zones surrounding the city. Chemicals, oil, and waste polluted the land and water. The flood, which cost the city some $4.65 billion and Thailand $45 billion, disrupted the global computer and automotive industries, especially the Japanese car sector, which had moved some of its operations to Japan following the Tohoku earthquake. Toyota, for instance, was forced to cancel overtime at its Japanese plants. The floods affected factories in Indonesia, Vietnam, and the Philippines.

Experts say the global ripples of the Thailand destruction are a sign of things to come if cities and nations do not begin planning for sea level rise and more powerful storm surges.

For example, in Manila, where 2009 floodwaters from tropical storm Ketsana rose up to 21 feet and inundated more than 80 percent of the city, the seasonal precipitation may increase as much as 4 percent by 2050. The result in economic terms? In Manila, the ADB report says, “the additional costs of sea level rise from a 1-in-30- year flood would be approximately... 6 percent of GDP” the ADB report says.

This, says Thomas, is the “great revelation” of worsening natural disasters: In these growing megacities, “storms are no longer an interruption to business as usual that you get over and move on from, but are a systemic risk to economic development.”

That these cities are becoming an increasingly important part of Asia’s and the world’s economies will only compound the effects of major floods. “What would happen if you had three Bangkoks in the same year?” Thomas asks. “How would it affect the supply chain, and how would it be dealt with?”

Flooded roads and infrastructure such as ports and airports, says Thomas, will have greater impacts as the economic links among these coastal cities become more complex. Thomas says a major paradox of this century is that we are concentrating more of the world’s wealth and population in vulnerable coastal areas, just as sea level rise and more powerful storms put them at greater risk.

Thomas points out that Asian Development Bank investments of some $10 billion over the last 15 years have produced important early storm warning systems in Bangladesh and extensive flood control projects in

Pakistan and Indonesia that have saved thousands of lives. At the same time, the ADB recommends that Asian cities emphasize ecosystem solutions, such as preserving urban wetlands and mangroves.

Thomas hopes that as a result of its recent studies of sea level risks, the Asian Development Bank will invest more in structural and environmental mitigation so that Asia’s future storm response and rehabilitation costs will decline. ADB estimates, for instance, that $1 billion in proposed adaptation measures for Bangkok, including improving waterways and pumping capacity, could reduce the extent of flooded areas by some 50 percent.

“The UN’s International Strategy for Disaster Reduction estimates every dollar spent for disaster prevention saves $4 in recovery costs,” says Thomas, noting that Japan now spends roughly 5 percent of its annual budget on disaster and risk management.

The OECD projects that some $35 trillion of the world’s assets will be at stake in these coastal cities by 2070, and the ADB warns that natural disasters that can derail economic growth and development are “becoming increasingly endemic.” And yet, says Nicholls, he’s found “a surprising resistance to looking at what can be done,” even among those most familiar with the problems.

“Society reacts to events,” he says. “Studies don’t trigger action. Floods trigger action.” [Back to Top] ------

20. PIKE RESEARCH MAKES 10 ELECTRIC VEHICLE PREDICTIONS FOR 2013

More broadly, Pike envisions PEV sales in California-the leading market for such in the US-expanding into smaller urban and suburban regions with more dealers beginning to offer the vehicles. Pike also anticipates forward momentum with PEVs in China. The research company also projects that several startup electric vehicle (EV) companies are likely to be absorbed or discontinue operations during the year. Within that context of accelerating sales growth, the 10 specific predictions are:

Capital veers from vehicles to battery components. Private funding for EV companies looking to start a business or expand in 2013 has largely dried up, Pike notes. The lack of funding opportunities will force some companies to exit the market or be acquired on less than generous terms.

During 2013, investment will shift toward companies developing battery components, rather than companies that develop complete packs. For 2013, chemical conglomerates, such as Dow Energy Materials and BASF, will continue to invest heavily in anode, cathode, and electrolyte material research and development (R&D). Established players will face increasing competition from smaller companies and the recent startups.

The EV battery industry continues to await commercially viable breakthroughs in energy and power density that could lead to a new level of performance. Nano-scale components and activated carbon will be among the more popular technologies in 2013, and will be used to raise additional funding and tout new plateaus of performance.

E-bikes surge. Sales of e-bikes in North America will grow by more than 50% in 2013 to more than 158,000 bikes, Pike forecasts. Globally, the e-bike market will grow by 10% to more than 33.6 million units during that year.

48-Volt batteries. Several battery manufacturers including AllCell Technologies, Balqon, and Saft are stepping up with 48-volt lead-acid and Li-ion offerings for increasingly power-hungry vehicles with Stop-Start systems. These higher power batteries will last longer and allow the hotel load systems, such as heating and cooling, to continue to operate when the engine is off without causing the all-too-familiar phenomenon of the headlights dimming due to insufficient power. These higher power batteries are also being introduced in electric bicycles, which should enable battery manufacturers to reduce manufacturing costs by producing in greater volumes.

Noting that higher voltage (42V) batteries were tried-and failed-more than a decade ago, Pike said that at that time, converting all onboard electronics to the higher voltage was viewed as impractical, and the cost of DC- to-DC converters was prohibitive. Since then, the cost has come down and reliability of converters has improved. Pike Research expects several automakers to design vehicles to take advantage of 48-volt batteries.

More than 3,400 Fuel Cell Vehicles on the road. The minority of automakers that have been investing more in fuel cell than in plug-in technology have responded to slower than anticipated PEV sales by reaffirming their commitment to commercializing fuel cell vehicles (FCVs), Pike says. Pike Research projects that 3,442 FCVs will ship in 2013 from vendors that include Toyota, Daimler, Hyundai, and Honda.

The majority of these vehicles will not reach consumers' hands, but will be deployed through agreements with fleets and made available to qualified participants in public trials.

Battery swapping gives way to battery financing. Battery swapping pioneer Better Place, which saw key executives leave in 2012, has failed to capture the expected number of subscribers to its EV service in the initial launch market of Israel and borrowed money to continue the expensive build-out of battery swap stations in Denmark. So far, only Renault has designed its vehicle to be compatible with Better Place's battery swapping technology.

The concept of battery swapping "will fade further into the rearview mirror in 2013," Pike predicts.

More companies are likely to follow the lead of Renault and lease the batteries separately, Pike suggests. A lease option reduces the upfront cost of the vehicle, while also reducing the uncertainty of real-world battery performance. Corporations are much better equipped to repurpose end-of-life EV batteries than individuals and will be able to sell into the growing market for grid energy storage. Battery leasing has also been adopted by Mia Electric and Daimler in Europe, and will begin to spread to Asia Pacific and North America by the end of 2013.

Germany leads Europe's PEV growth. Like other regions of the world, the European PEV market has developed more slowly than expected, Pike acknowledges. But in 2013, the largest German automakers will come to market with at least seven models that will energize sales throughout the continent.

Volkswagen will offer two VW-branded plug-in hybrid EVs (PHEVs) and two BEVs, while the company's Audi division will launch two e-tron PHEVs. BMW will begin to sell its long awaited BEV (the i3). The arrival of these vehicles will help the German PEV market more than double in 2013 to reach nearly 14,000 vehicles. Overall, Western Europe's PEV market will grow at a similar rate to reach nearly 70,000 vehicles, with Germany representing the largest single market.

Coasting technology pushes internal combustion engine vehicles closer to hybrids.Stop-start technology enables an ICE vehicle's engine to turn off when the brake is depressed and the car slows to a stop. That same concept is extending to enable an engine to be shut off when going downhill or at other times when the driver's foot comes off the accelerator, and then restarted as necessary-i.e., coasting technology.

According to early results from companies including Audi and BMW, coasting technology can reduce fuel consumption by as much as 10%. Coasting can be integrated with cruise control systems to further optimize fuel usage. Similar to stop-start systems upon which the technology builds, a more powerful starter-motor and battery pack are required, but the substantial fuel savings will more than justify the added cost, Pike suggests.

Despite some challenges and liability issues, this technology will be the center of frequent discussion during 2013, Pike predicts.

Slow versus fast charging debate intensifies. 2013 will see a greater diversity of charging rates as the lines between fast and slow charging begin to blur and more host sites opt for less expensive Level 1 charging equipment, Pike predicts.

Workplace and home charging will likely deem Level 1 charging fully adequate. During 2013, the mid-range of charging speeds (between 7 kW and 50 kW) will become occupied in the United States by faster Level 2 chargers that can produce AC power at up to 18 kW (where the infrastructure supports higher power) and with lower power DC chargers. In Europe, 22.7 kW chargers are already growing in popularity, and Renault is pushing 43 kW charging.

Despite the evolution of charging equipment, some EV enthusiasts will continue to argue that EVs will only grow in demand if supported by large networks of fast DC chargers, and a few new fast-charging networks, such as Tesla Motor's Superchargers, will dot the landscape in 2013, Pike forecasts. However, that viewpoint will be increasingly hard to validate as more PEV drivers learn to depend on slower charging.

Europe enables driving without borders. Enabling PEV owners to reach their destination without worrying about being stranded far from a convenient location to charge requires not only a network of AC and DC charging stations at strategic locations to enable mobility, but also a communications infrastructure that guides drivers to charging locations and a seamless payment system for charging services (i.e., roaming).

Europe will show the greatest progress in simplifying PEV driving in 2013; if the European e-Mobility model proves successful in promoting the adoption and use of PEVs, their American counterparts are likely to at least begin the conversation about a national system later in the year.

The natural gas glut will tamper interest in plug-in electric trucks. Due to extensive discoveries of shale natural gas reserves across the globe during the past few years, the price of natural gas has dipped, while fuel production has expanded rapidly. This has resulted in increasing interest in manufacturing and purchasing natural gas trucks, which will deter interest in purchasing plug-in electric trucks or in manufacturers launching new models in 2013.

Sales of natural gas trucks will grow to more than 47,000 vehicles sold in 2013. [Back to Top]

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