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The pot calling the kettle black???

International politics are not my affair even though the convulsions they occasion often buffet the day to day affairs of “ordinary Joes” like me particularly when they affect the energy market. Hypocracy and bully are two words that spring to mind when considering the characteristics of the main players often referred to as superpowers.

There used to be two but a third is rapidly asserting itself on the far eastern horizon, a tad more organized and focussed than its erstwhile proponents, its rapidly expanding industrial base being cited as one of the root causes of the recent vicious oil price spike.

The current Georgian situation is almost surreal insofar that despite its ominous potential implications given the seismic nature of Russia’s actions it has barely registered on the world oil market when convential logic dictates that $200 dollars per barrel should have been an instant reality.

The US reaction is interesting, being unable without risk of lethal ecalation and therefore unwilling to intervene directly. Notwithstanding the absolute constraints imposed, America is obliged to show moral support for Georgia which  has been courted as a potential NATO member. It is highly questionable whether this degree of cultivation would have taken place if Georgia were not such a key player in the transhipment of petroleum products from the Caspian region. Georgia is the only route that avoids crossing either Russian or Iranian territory to access the Mediterranean or Iranian Gulf crude oil export terminals.

Russias position is equally interesting, a huge Country with vast often untapped natural resources it still seems to struggle with a market economy and full integration into free trade. Having been repeatedly invaded over centuries most recently by the Nazis in the second world war its percieved paranoia is to a degree understandable given the untold suffering inflicted on its people. The eventual collapse of communism and the subsequent loss of satelite states such as Georgia, Poland and the Baltic Republics has probably compounded  Russias sense of isolation and redeveloping ambivalence.

US style global capitalism eventually ground down Communism but has since failed to be truly magnanimous in victory. America, now visibly obsessed with the war on terror which has replaced “commies” as the global bogeyman is not exactly squeaky clean when it comes to incursions into sovereign states such as Vietnam, Iraq and Afghanistan.

John F Kennedy came close to Armageddon when he faced down Russian leader Nikita Kruschev during the Cuban missile crisis. America was justifiably outraged at the siting of Russian missiles 90 miles from the American mainland.

Nearly five decades later the boot is on the other foot as America struggles to accept Russia’s justifiable concerns over American missiles soon to be sited in Poland, now a fully paid up NATO and EEC member. History dictates that any action of this nature is guaranteed to make Russia uneasy  highlighting the present American Administrations serial inability to appreciate and think through the potential consequences of its current obsession with global terror.

From a European perspective Russia holds most of the trump cards with regard to future energy supplies and is in a position to misuse its position if it chooses to. That said the Russian economy stands to benefit hugely from stable energy sales over an extended period, hopefully the ongoing benefits of filthy lucre will eventualy tame the Bear.

DESPITE ALL THE COMPELLING REASONS WHY IT SHOULD NOT THE PRICE RETREAT CONTINUES APACE. BRENT CRUDE FINISHED THE WEEK AT $107.32 DOWN $3.42 ON THE DAY AT A LEVEL LAST SEEN IN FEBRUARY.

 How ironic that a year ago the 100 buck barrel was seen as unthinkable now a retreat back towards this benchmark is seen as a huge relief. For my money the oil price went to the very edge of the abyss and those who took it there did not like what they saw.

Dicky Opposite???

Five weeks ago this weeks events would probably have sent crude oil prices hurtling towards the $200 dollars a barrel mark. Since then there has been an orderly retreat back towards a measure of sanity. The Russian incursion into South Ossetia and Georgia is potentially very serious but given the possibility of much wider implications the episode has had remarkably little influence on the crude market.

Yesterdays small increase in price probably had more to do with slowing the markets rate of descent in reaction to US stock information than hysteria over the Georgian situation.

US gasoline stocks declined by 6.4 million barrels in the week to August the 8th due to reduced refinery throughput this was more than the forecast 2.1 barrels decline which once more highlights the ongoing inaccuracy of these forecasts.

Crude stocks fell by 400,000 barrels and distillate stocks also declined unexpectedly. This is probably attributable to the shutdown of Gulfcoast facilities due to tropical storm Edouard. 

Americans drove 4.7% fewer miles in June than they did a year ago and US oil demand overall has declined by 800,000 barrels per day year on year.

On wednesday Brent crude opened at $108.97 gaining $1.70 on the day to close at $110.67.

Fingers crossed, it’s still heading the right way.

Russia and Georgia’s clash over the South Ossetian issue has barely registered on the oil markets radar as fridays close saw Brent crude at a 3 month low. It was down a further $4.28 finishing the week at $112.26.

The earlier bombing of the pipeline from the Caspian region to the Turkish Mediterranean port of Ceyhan also failed to halt the steady oil price slide which has brought welcome relief to all consumers. Fridays Telegraph newspaper carried an article confidently predicting $70 dollar per barrel oil by the turn of the year. For my money anything below the latterly unthinkable $100 benchmark will be a good result given the recent lunacy.

While at no time in the past year have there been anthing other than temporary local infrastructure related shortages it must be remembered that any major new oil discoveries will only maintain at best current levels of production. The real issue long term is demand from emerging far eastern economies whose appetite is bound to increase.

The epicentre of the global slowdown is currently the US where demand is tangibly weaker than at this time a year ago. The slowdown has given the market a vital breathing space to adjust to the rapidly changing supply and demand situation which will dictate product prices long term.

Hopefully the slowdown will stabilise prices at an acceptable level in the short to medium term, with the speculative frenzy subsiding as the dollar rises the outlook is cautiously optimistic.

Our customers are currently like sprinters waiting for the start gun as they monitor the decreasing price in the hope the best savings possible before they have to buy. This is skewing demand to a degree but it really is good to know that they will soon be back in the market again.

The real bugbear currently is the appalling weather which is making harvesting conditions next to impossible as a series of unseasonal low pressure systems dump their rain down our necks and buffet the trees.

Wednesdays US weekly stock data report will again make interesting reading.

Its official, Regional Development Agencies (RDA’s) are failing to deliver.

My views on Quango’s (Quasi Autonomous Non Governmental Orgabnisations) are well known I have long suspected that the main beneficiaries are the compliant well connected ” Chosen Ones” who eagerly embrace the largesse that participation bestows.

They are however dangerously convienient scapegoats for civil service mandarins and politicians when, as presently , things are going horribly wrong and responsibility needs to be urgently deflected elsewhere.

Presently RDA’s are under the Whitehall microscope and the damning verdict has emerged that collectively they have failed to deliver taxpayer value (surprise, surprise). Everything was fine while the gravy train travelled across a sunlit economic landscape, the momentum of tax yields from bouyant free enterprise papering over the faultlines of incompetence fostered largely by an insane property boom.

The current almost inevitable credit crunch marked the tipping point, the golden eggs have vanished, the demise of the goose assisted by the profligacy and inertia of Quangoland. As the awful truth reverberates around Whitehall the scapegoats are like lambs penned for slaughter.

Having socially engineered a brave new world awash with “paper money” the Government allowed these awful economically debilitating organisations free rein to expand and intrude ever further into our lives and businesses. The old adage about enough rope and hangings has never summed up a situation better.

The past decade of incompetent folly and spin will hurt taxpayers and commerce for a very long time.  Hopefully long enough for all concerned to reflect at leisure on the past neglect of their democratic duty to ensure that politicians perform and deliver to the electorate in a competent transparent manner.

The South West RDA (SWERDA) is a case in point encompassing the six counties that constitute John  Prescotts fatuous vision of an homogenous”South West Region” defined by his arbitary lines drawn on a map. This artificial region was also eagerly embraced by the detested unaccountable South West Regional Assembly. This expensive waffle shop rapidly became the spiritual home of a motley collection of self seeking county councillors and camp following administrators who became deeply embedded in the system with no tangible benefit to anyone but themslves.

 From Cornwall at the tip of the peninsula. so economically deprived as to quaify for European Objective One funding, to the relatively prosperous and culturally separate Gloucestershire, Wiltshire and Dorset in the east. This non cohesive hotch potch of counties with vastly different requirements and economic conditions presented a fertile breeding ground for quangocrats who embraced their mission with relish.

Non more so than SWERDA in Cornwall with its objective one honeypot ripe for the plucking. An invasion was mounted with colonial fervour, messianic well connected high fliers such as Sir Michael Lickiss and Dr Tim Williams were parachuted in to lick (no pun intended) the “backward reactionary natives into shape”.

Dr Williams (a Blair crony) will be remembered as a particularly rich example of rootless mercenary behaviour, soon decamping to yet greener quango pastures in Wales leaving a raft of still unfinshed business in Cornwalls post industrial heartland. His legacy, ”Son of SWERDA” the Camborne Redruth Urban Regeneration Company will never enhance his CV. its lack of delivery is a legend in its own blighted lifetime.

This “vision” would be accomplished by sweeping away a timeless evolving landscape that defines Cornwalls hard raw past. The solution? an instant do it yourself “Milton Keynes” kit of endless dreary housing developments, tin sheds for retail and light industrial use, no matter that local wages would not qualify for a mortgage. This was no obstacle to these opinonated know it all’s with their instant solutions and ignorance of and contempt for Cornishr culture and heritage. The solution, sell the houses to incomers who could afford them. “Let the locals become economic migrants, they are used to that its always been that way.”

Another novel solution was to replace the gateway Maxam Power site at Pool with yet another tin shed B&Q retail outlet. No matter that at that time Cambornes total number of hotel beds totalled 22 and this would have been an ideal location to rectify that shortfall with a flagship development on this site. The sterilisation of land for future industrial reuse was accomplished with indecent haste. The unfortunate outcome being a typically bland nondescript gateway to our former industrial heartland instead of the wow factor that would have distinguished this area as a place that really meant business once more.

In fairness there have been some positve outcomes but it could have been so much better if the Irish or Spanish experience were followed. In both places real exciting benefits to infrastructure, employment, culture and lifestyle have accrued.  These advantages are far beyond what Cornwall has almost grudgingly been granted as so much of the pot of money has vanished into the bottomless coffers of SWERDA’s administrative machine. With SWERDA’S tacit complicity an army of consultants have also trousered more than their fair share of the avilable funds giving little tangible in return.. 

 We now have a fledgling university that shows great promise, agriculture has had access to funds that have in general been effective and beneficial. The remains of our fishing industry have benefitted from various initiatives most notably the Newlyn small boat pontoons but without cohesion these may yet end up as a marina for visiting yachts. This lack of cohesion has endlessly delayed the new fish market to the point where it is of questionable benefit as the fish may not be available to ensure viability because frustrated progressive  vessel owners have gone elsewhere to market their fish.

Tourism has benefitted but there is still a lack of quality hotel accomodation as so many existing ones have been converted into holiday flats for sale or “investment”. If as we are repeatedly reminded tourism is Cornwall’s future it is not good that our customers arriving by car are welcomed by regular monumental traffic chaos in the middle of Bodmin Moor or on the A38 Plymouth corridor. This also applies to our unreliable overpriced rail network which seems to stagger from one crisis to the next always at the expense of its long suffering customers.

The RDA’s failure to effectively address these basic infrastructure issues before immersing itself in a plethora of lesser schemes is an indication of its failure to effectively appreciate Cornwalls unique and ongoing disadvantages. 

The native Cornish are not inherently awkward or difficult, we seek merely to preserve and enhance what we have to the greater benefit of the majority,. We feel that our views have relevance, we do not respond well to being patronised or sidelined when the agenda has implications for our future as a uniquely distinctive corner of the British Isles. This, absolutely does not, embrace John Prescots nightmare vision of concreting over our countryside creating a rootless carpetbaggers utopia in the process.

Where do we go from here?, hopefully back to where we started ten wasted years ago, we need, even more, a locally run Cornish development agency as proposed in the beginning by Cornish Solidarity and Mebyon Kernow. This must focus on investment from within rather than the often counterproductve mantra of inward investment and becomes more logical with the imminent creation of a unitary council for Cornwall next year.

This logical step must not be allowed to morph into yet another ”Son of SWERDA” given the credentials of the incumbent majority at County Hall whose hallmark has latterly been docile compliance with SWERDA and the South West Regional Asembly’s disastrous tenure.

It is sincerely hoped for Cornwalls sake that the days of both these costly innefectual abominations are numbered and the usual suspects at County Hall recognise the error of their ways before it is too late..

It feels like a boil has been lanced! PRODUCT PRICES ARE DOWN AT LAST.

Wednesdays oil market continued to weaken, Brent crude closed at $113.96 down $1.73 on the session. The weekly US stock data report revealed a 1.7 million barrel build in crude stocks countered by a larger than expected drop in gasoline stocks. This did not halt the steady price decline as basically increasing crude equals more gasoline in the short term to replace the current heavy draws due to the driving season peaking.

 The market was actually predicting a 200,000 barrel decline in crude inventories which once more highlights the shaky mathematics that opportunistic traders have deployed latterly. It has always been felt in St Day that the feeding frenzy of speculation in the last ten months has been contrived, the only surprise being that it took so long to lose traction. Nonetheless this insane period has inflicted severe damage on an already weakening economy but it has also delivered a stark warning to consumers that the days of cheap oil are history. As previously stated it will be a reasonable result for all concernedif in the short/medium  term the oil price stabilises in the $80/$100 dollar band.

A measure of the reality check currently unfolding was the markets inability to exploit a presumed terrorist attack on a key oil pipeline in eastern Turkey. The Baku-Tbilisi- Ceyhan pipeline transports crude oil from  the Caspian Sea region to Turkeys Mediterranian port of Ceyhan where tankers load for western markets. This removes the need to transit Suez or the flashpoint Straits of Hormuz at the bottlneck entrance to the Arabian Gulf, reducing the carbon footprint of tankers in the process.

Iran continues to insist that its nuclear programme is peaceful but the western powers including Russia are jointly applying the carrot and stick diplomatic approach to the problem. Sabre rattling largely fed the speculative bubble of late, hopefully diplomacy will eventually prevail.

THE GOOD NEWS FOR US AND OUR HARD PRESSED CUSTOMERS IS THAT ACROSS THE BOARD DISTILLATE PRICES ARE 12PPL CHEAPER THAN THREE WEEKS AGO. THIS EFFECTIVELY MEANS THAT THE TYPICAL 1000 LITRE HEATING OIL ORDER IS £120 LESS TODAY!!!.

BEARS STALK THE MARKET.

Yesterdays oil market saw the recent price slide intensify and consolidate confirming that pure speculation has driven the recent oil price superspike.

Brent crude opened on monday at $124.18 shedding $2.98 to close at $121.20on news that hurricane Edouard was unlkely to damage any oil production infrastructure in its path in the US Gulf region. Further weakness was addes by US Presidential Candidate Barack Obama’s pledge to investigate the sell off of 70 million barrels of the US strategic oil reserve to lower gasoline prices. The policy statement outlined a package of measures including a limited increase in US offshore drilling, a measure which Mr Obama had previously opposed. This would create a compromise energy policy designed to foster more fuel efficient vehicles and alternative energy sources for the future.

The market also shrugged off mounting tensions between the Western powers and Iran which as recently as a month ago would have powered the market to new heights. From the St Day perspective it looks as if the despised speculators have dived for cover for the time being. It is certainly looking a little more optimistic for beleagured consumers at the moment. 

It will be interesting to see what tommorows US stock data report brings.

Why is everyone so hacked off?

Perfect storm is a phrase that is in serious danger of being overused by me, nonetheless it best describes the continual, relentless convergence of adverse events that seem to be gathering pace in our lives. We live in uncertain times where it seems increasingly difficult to plan efffectively or indeed exert any meaningful individual control over events that conspire to influence our daily lives.

Greed and incompetence in Government and Corporate circles coupled with uncontrolled consumerism by lesser mortals bankrolling their folly on the back of obscenely inflated property values has lead us  inexorably towards the financial abyss.

At Goverment level they have actively encouraged the feelgood factor engendered by the fools gold property boom. For many years this has convieniently diverted attention from their own fatal flaw, congenital incompetence on an epic scale. Additionaly the buying and selling of property has ensured a cashcade of funds into the exchequer to supplement the tax and spend lunacy that must now be accounted for and, more ominously, paid for at some future point. 

We have experienced a wasted decade where meaningful economic growth has been emasculated by taxation policies designed to redistribute wealth which in reality have had the opposite effect as a direct result of of political incompetence and ill advised tinkering.

The concept of a more equitable society is a desireable goal, however it will never be achieved merely by throwing a squillion pounds of taxpayers money at the wall. The brazen manner in which an ostensibly socialist Government has cosied up to and single mindedly nurtured the best interests of a sleazy collection of corporate crocodiles beggars belief.

Incompetent Governance has further nurtured an unproductive cumbersome beaurocracy that feeds off itself, spawning further useless financially debilitating Quango’s in the process. This is evident right down to local town hall level where Council Tax is becoming a major outrage to the average hardpressed charge payer. There is no quick fix easy solution to this monumental mess as the system is so deeply embedded that future inflation proofed pension provision for the cosseted politicians and beaurocrats will continue to escalate year on year. This heavy and escalating burden will continue to ensure that any prospect of relief or improvemet is wishful thinking on the part of ordinary council tax payers

Another sympton is seemingly out of control multi national corporate activity built on unsound debt mountains eagerly advanced by greedy banks hitherto awash with excess profits looking for a home. There is something seriously wrong when a number of major financial institutions either fail or encounter liquidity problems in short order on both sides of the Atlantic. There is something even more seriously wrong when large scale capitalist activity where risk must always be a trade off against potential reward is bailed out with taxpayers funds.

This in turn leads to a kneejerk tightening of lending criteria which simultaneously threatens to strangle inherently sound business and commerce at a lower level which, at first sight, appears detached from the mainstream problem.

Additionally this SME sector is bludgeoned with increasingly stringent regulation which eats into profits and directly threatens employment prospects. Add the unforeseen savage fuel price increases which (just for once) are not directly the fault of Government and the outlook is to say the least bleak.

Thankfully there is plenty of competence at local business level, there has to be because individual operators funds are at stake and incompetence of the type exhibited by the Government or Corporate business would be the death knell for most.

This encouraging fact does not lessen the disdain or more significantly the burning anger felt by individuals towards those who treat us with seemingly utter contempt as they cynically pick our pockets to finance their collective folly.

THEY MINED THE HILLS AND VALLEYS AND THEY MINED BENEATH THE SEA.

Intending to continue the previous Holman Legacy thread I was browsing for a particular picture of the balance bob of East Pool Whim. This massive 17 ton balance bob produced by Holmans Foundry carry’s their name prominently on the casting. East Pool was the last engine produced by Holman Brothers.

Not having much success I did however happen across two stunning paintings relevant to Cornish mining’s heyday. The first was a portrait of arguably the greatest Cornishman ever, the man in history I would most like to have met. Richard (Cap’n Dick) Trevithick was the engineering colossus who almost singlehandedly drove Cornwalls industrial revolution forward.

The other picture is one of the most beautiful and evocative paintings I have ever seen encapsulating the raw skill, ingenuity and humanity of hardrock mining’s zenith and the unforgiving iron bound Cornish Coast that has always inspired me. It depicts miners coming up to grass with the incredible Botallack decline and restive Atlantic as a backdrop in almost photographic detail. This picture is by courtesy of Manchester City Art Gallery who are fortunate to own the glorious original.

Harry Glasson’s emotive lyrics that title this piece and further state that ”Cornwalls past was mighty it was built by mighty men” do not overstate what was achieved by and given to the world by the Cornish in a hard brutal time when life was cheap and expectations low.

It is maintained by some that our mining heritage is a monument to slavery, I would dispute that because to accept it would be to demean the enduring legacy of a small race of mighty men who, at that time, knew no other way than to face adversity head on.

The one modern travesty that did come to light is the assertion by the Science museum in London that Cap’n Dick was sic. “AN ENGLISH INVENTOR” which is inaccurate, offensive and totally unacceptable. They should unreservedly acknowledge that he was an innovative “CORNISH ENGINEER” who was adept at inventing things.

 Furthermore it is to the collective ongoing shame of the Cornish that his body has been allowed to languish in a paupers grave in Dartford Kent.

US weekly stock data red herring?

The weekly US petroleum stock data report that is published on wednesday is a snapshot of stocks at a fixed point in time, to be meaningfull it needs to be monitored over a period of weeks, to do otherwise is a recipe for knejerk reactions.

Yesterdays report was a case in point revealing a surprise 3.5 million barrel drop in gasoline inventories against an expected 400,000 barrel build. Some traders interpreted this as evidence that recent price falls had got Americans driving again.

Conversley crude inventories increased by 2.4 millon barrels rather than the 1.3 million barrels expected. Distillates were predicted to build by 1.8 million barrels but actually managed 2.4 million barrels which exposes the highly paid pundits often shaky arithmetic which has latterly fuelled the markets feeding frenzy.

It would seem that recently the often desperate scrabble for excuses to hike prices has run out of road while daily the increasingly dire financial data is delivering a brutal reality check to a market that was rapidly  losing the plot.

Brent crude opened on wednesday at $122.57 sheddding $0.07 to close at $122.50 but forward prices did advance well in excess of $4 per barrel across the board.

BO-PEEP IS ON A ROLL.

This mornings announcement of BP’s humungous quarterly profit seemed to get the media into a frenzy and is guaranteed to give the majority of motorists a nervous tic. The profit is evidence that the upstream oil sector has done very nicely thankyou from the long oil price bull run. A fair proportion of this profit will however need to be reinvested in ever more difficult and costly exploration and production development projects to maintain future production momentum.

The real mess is in the less profitable downstream retail sector where there is a distinct lack of pricing transparency which borders on corruption. The price spread on retail forecourts can typically be as much as 10ppl depending on location.

Small independent retailers have been squeezed, having to pay for stock on delivery and having lower throughput volumes therefore lower profitability than larger major owned or supermarket sites. It would appear that supermarkets get up to 50 days credit on their fuel, selling for cash thats pretty good business even at razor thin margins. The resultant cash mountain on deposit would more than massage a thin margin.

The lack of pricing transparency is illustrated when fuel prices in Camborne- Redruth and Penzance are compared. Camborne-Redruth is a Tescopoly with 2 fuel sites and vitually no local opposition. In Penzance which is further from the supply terminal it would be natural if prices were slightly higher. Not so because in Penzance Tesco are head to head with an adjacent Morrisons store and prices are around 2ppl lower than where Tesco enjoys a near total supply monopoly.

Then there is the cynical con of spending a set amount in store to obtain a 5ppl discount on fuel which does not normally return a 5ppl margin, it necessarily follows that any fuel in this instance must be sold at a loss. Again probably not so because in store margins will be discretely adjusted to cover the situation, its only rarely that an average motorists will take more than 50 litres of fuel so it is easy to factor this into the overall crafty equation as the supermarkets continue to laugh all the way to the bank.

Another increasing event reported by the AA is the number of motorists they are assisting who have run out of fuel while searching for the cheapest fuel. This clearly illustrates the stupidity and shallowness of a significant sector of consumerism who unwittingly waste more than they stand to save by driving miles for the “cheapest ” fuel. I REPEAT MY OFT QUOTED MANTRA “THE MOST EXPENSIVE FUEL IS NO FUEL”

On the other hand the cruellest most cynical rip off of the lot must be those awful monopolies that operate on motorway services who when challenged cite high operating costs to justify their 5 or 6ppl over the odds prices. They are very high volume sites so even very stiff operating costs are spread thinly over tens of millions of litres per annum so pull the other one. As the motorway service areas are apparently leased from the Government is it ultimately the Governments fault???

THATS CAPITALISM FOLKS YOU PAYS YER MONEY AND TAKES YER CHOICE!

Monday saw Brent crude open at $124.56 gaining $1.28 on the day to close at $125.84 still a darned sight better than three weeks ago. The usual tired twaddle about Nigeria and Iran was peddled to justify the small increase which was probably more to do with slowing the markets recent rate of descent.

While things are looking better in the past couple of weeks anything can still (and probably will) happen.