Daily Sources 9/29

1. Carl Hulse and David M. Herszenhorn at the New York Times report that the bailout bill failed in the House by a vote of 228-205. The bailout plan, which originally called for no oversight, was significantly modified (from a three page plan to 106 pages), but most economists still seemed to think the plan was not in the interests of tax payers and in the interests of the bankers. House Republicans led the opposition to the bill.

2. James Politi, Krishna Guha, Daniel Dombey and Harvey Morris at the Financial Times report that central banks announced today that they will redouble their efforts at coordinating a response to the crisis, with the Fed more than doubling swap lines with the European Central Bank [ECB] and others from $290 billion just this Friday to $620 billion today. The key central banks involved are the ECB, the Bank of Japan, the Bank of England, the Reserve Bank of Australia, the Bank of Canada, the Bank of Sweden, the National Bank of Denmark, the Bank of Norway, and the Swiss National Bank.

3. Reuters reports that Iran's Central Bank Governor, Mahmoud Bahmani, announced today that he would inject $15 billion from Iran's Oil Stabilization Fund into the banking system in order to give a boost to the economy. Even though sanctions have more or less isolated Iran's banking system from the developed world, the notion that the move might be a reaction to the ongoing financial crisis is plausible.

4. Lars Borchert at Platts reported that the head of the IEA, Nobuo Tanaka, predicted that, given stable output from OPEC, prices will fall as demand continues to drop.

"Demand in Europe and the US is going down because of the high price, so the price situation is going to get better until the end of the year, if OPEC continues producing as they have done in the last month. ... Demand is going to expand by 1.2% because of India and China and their necessity for oil, but since the US and Europe are buying less because of high prices, prices are going to go down."

In the medium and long term, however, Tanaka expects prices to rise as demand continues to grow rapidly in the emerging economies. "The low-price age is over," he said.

5. Eric Watkins at the Oil & Gas Journal has more details on Russian Energy Minister Sergei Shmatko's remarks on how Moscow viewed its international energy strategy going forward:

"A Russian delegation attended the recent OPEC meeting, and I want to tell you what many of those in our delegation were saying: Russia needs to take a more active position concerning the current market price for oil." ...
"There needs to be a Russian factor." ...
"We have always told OPEC, which tries to regulate it, that there are other factors: financial speculation, US inventories, etc. From our standpoint, we occupy such an important place in oil 'high society' we should be our own, Russian factor, perhaps not just one." ...
"In any case, the [Russian] energy ministry has set that goal for itself. We will be preparing if not proposals then at least approaches. We haven't done this before; We want to formulate these approaches. And in that sense the decisions might be most unexpected. Why not, for example, revise oil production forecasts?" ...
"We believe we should more actively engage with the markets. Technological considerations prevent us from simply turning off the tap. We can't simply shut down a field and then open it up again at any time. We have different climatic conditions. In my view we can give our opinion from the point of view of forecasts, perhaps even engage in that in actuality." ...
"The idea of reserving potential fields is very interesting in my view. Instead of discovering a field tomorrow and then proceeding [with development], we prepare a field from the point of view that it won't be touched for the time being, but there will be the ability to start it up in a fairly clearly defined term." ...
"We are absolutely convinced, given those 'American bumps' oil prices have experienced in recent times, that we, a big, important oil power, need to formulate our relation to that—the Russian factor." ...
"We are going to the next OPEC meeting in December, and I think we will have something before then." ...
"This is not a joint effort with OPEC."

6. Alonso Soto at Reuters reports that the Ecuadorian President, Rafaela Correa, has ruled out the nationalization of oil companies operating in Ecuador, which recently rejoined OPEC. Ecuador has adopted a moderate voice in terms of OPEC pricing despite its close ties to Venezuela's Chavez Administration.

7. Dorothy Kosich at Mineweb has the very interesting story that the conservative party of Canada has pledged to ban the export of raw bitumen to countries with bitumen processing methods which do not meet Canada's environmental standards. Evidently the only country that imports raw bitumen that meets those standards is the United States. China, the other major raw bitumen importer, does not. (Bitumen is what is extracted from the "oil sands." It is an extremely heavy carbon resource, or very heavy, unconventional oil. It can be processed into a synthetic crude oil, which can then be refined into oil products like gasoline, diesel, plastics, etc. Bitumen is the basis of the Canada has more oil than Saudi Arabia narrative you've heard before.