UFO Info Week-End

The former Soviet Union Latin America and Africa all increased their output

The former Soviet Union, Latin America and Africa all increased their output. There were also some quite startling increases – in Libya by 80 per cent, albeit from quite a low base. The North Sea is in rapid decline, with Norway’s output down 7.5 per cent and the UK’s 11 per cent. The global economy grew by around 5 per cent last year but oil production rose by just 1 per cent, with all the increase coming from Opec members.In the non-Opec world, US domestic production was down over 5 per cent on 2004, and Canada and Mexico both fell by 1 to 2 per cent. In the Middle East, both Saudi Arabia and Kuwait were up a bit, but Iran and (unsurprisingly) Iraq were down. Africa and Russia were on the rise, as was the former Soviet Union as a whole.

We were still net exporters of oil but only just: production was little more than two-thirds the level of the 1999 peak.Elsewhere, the pattern was uneven. For me, the clearest message is that oil supplies will remain under great pressure and the burden of keeping the world economy supplied with energy will fall increasingly on King Coal.The figures run up to the end of last year, so this is a snapshot that is already out of date. Nevertheless, it demonstrates just how tight the world’s oil supplies have become. So the direction of energy prices matters enormously – and not just at the petrol pumps.
When experts disagree, the thing to do is go to basic facts. The latest edition of BP’s admirable annual Statistical Review of World Energy is just out and some of the data in it deserves a wider audience. The OFT had no choice about whether to act on even the merest suggestion that British Airways and others had been fixing prices.What is most interesting here, however, is that it appears to have been Virgin that tipped off the regulator. Nothing has been confirmed, but if that is the case, then it’s an extraordinary reprise of a battle between Virgin and BA that started over a decade ago, the “dirty tricks” saga.It would appear that Sir Richard Branson has a long memory But he has chosen a winner here.

Asking customers, rather than investors, to pay for the rising cost of crude was always going to be a tough story to sell. If it was done in a cartel, then that is truly unforgivable.a.townsend independent.co.uk. Stuck above $60 a barrel, liable to surge to $100, or about to fall back to $25?

The professionals have rarely disagreed more about the medium-term outlook for the oil price, but there is little disagreement that higher energy costs are beginning to feed through into higher inflation more generally. People are now talking about US interest rates going to 6 per cent to curb inflation, while the majority view here seems to be that the next move in rates,when it comes, will be up rather than down. Sir Terry responded swiftly and admirably, inviting him to present his case to relevant directors. A senior buyer then visited his farm.Nothing, though, has actually changed – though the farmer is not bitter. As he points out, Tesco will only change when its customers do.So on that point, I’m pleased to say, I’m still right – customer power remains the strongest tool we have against any perceived dominance of the supermarkets.

But the Competition Commission investigation into the sector is also the right thing to do. Suppliers need someone bigger and even more powerful fighting their corner – someone just like the commission.Virginal memoriesAt other times, investigations can appear to be a good thing from the outset. All the big organisations and trade bodies have their opinions, but some of the most interesting stuff comes from two farmers. One makes a couple of points in particular: that Tesco is now in a position to start dictating behaviour not just to suppliers but to its competitors, and that consumption of UK-produced fresh produce will continue to decline unless we accept that something needs to change.This farmer relates how, last year, he wrote directly to Sir Terry Leahy, warning that Tesco’s policies were contributing to a decline in the UK supply base.