In another reminder that oil markets have little relief on the supply side, Brazil faces a five-day period with 300,000 barrels per day reduced production due to oil workers striking over working conditions. I mentioned a few posts back that Nigerian production regularly faces similar reductions due to pipeline sabotage and strikes. The problem is we rely on Brazil to grow production to help soften prices. But this projected 1.5 million barrel reduction over the next five days represents .2% of their annual production, a sizable chunk in today’s tight market.
Another sign of demand destruction was announced today as Midwest Airline reported they are cutting their fleet by 12 MD-80 planes and reducing their staff by 40%.
In coal news, US prices climbed to records again this past week. Central Appalachian coal jumped 14.4% to $134.55 per ton, Northern Appalachian rose 6.2% to $138, and Uinta rose 3.7% to $56. Stockpiles of coal were still above average in early 2008, but we’ll see what effect increased exports has on them over the course of the year.
The message seems clear that depending on fossil fuels going forward is a risky business. And SET is ready to help people diversify their energy supply with solar, wind, and the negawatts of increased efficiency.