News round-up: oil, rice and clothes

Sorry if you're here looking for stuff about our wood - I promise there'll be a post over the weekend, after we've been up there...

In the meantime...

The strike at Grangemouth refinery is all set for next week now, the talks broke down last night, as reported by the BBC. What amazes me is how it is not front page news - you have to dig down a bit to find it. I get the distinct feeling the media is under instructions/pressure to keep things quiet! Anyway, what certainly hasn't been reported in the UK media is the wider impact on oil supply: the Forties pipeline brings 700,000 barrels of oil a day (a little under 1% of global supply) in from the North Sea, and it needs services from Grangemouth to keep running. The same applies to a gas pipeline too. So when Grangemouth shuts, it's not just the 200,000 barrels a day it processes that is missing - it's much more! Full details on the expected closure of the Forties pipeline here. If you want more technical background, you can find it at TOD.

And in the world of food, rice prices hit another all-time high yesterday, and Wal-Mart has started rationing customers to four bags per visit after people started rushing to stock up. UPDATE: Happening in the UK too, apparently.

Finally, the price rises we've seen in food over the last year or two are now spreading into clothes, due to high cotton prices: The end of cheap clothes is near.

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Oil and refineries

In case you missed it in the news, Grangemouth refinery in Scotland is in the process of shutting down in preparation for a 2-day strike by its workers over pensions. They have to shut the whole plant down because it would be unsafe to leave it running with no operators, and it takes a week to close. I guess it will probably take a week or more to restart as well.

The workers seem to have a legitimate case, and the company, Ineos, is making a big fuss, warning about how fuel supplies will run out in Scotland and Northern England. They are being accused of scaremongering.

Of course this is one of those self-fulfilling prophecies, as as soon as shortages are seen to be a risk, anyone with any sense will realise that although there wouldn't be a problem if nobody panicked, the fact is that some people will, therefore it is in your own best interests to stock up with fuel. I know I would (well, in fact I already have, though hopefully the shortages won't make it as far as Rye...).

It'll be interesting to see how it all turns out, I can imagine some frenetic activity between the company, the union and the government in the next few days!

The main thing I hope for is that it will continue to draw attention to the problem of Peak Oil, especially if we get some real shortages. The fact that the refinery normally processes 200,000 barrels of crude oil a day from the North Sea is already having an impact on oil prices, which hit a new record this morning of $117.40. Many people reckon it will hit $120 within a week or two. Expect some higher petrol and diesel prices on the way....

Here's some links:
The news on the refinery
The topic being discussed on The Oil Drum

Mike

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