Is the world not running out of Oil?

Oil is a precious commodity, as suggested by its consistently rising prices. And it's not just the demand factor reflecting in price. The oil prices, more than the demand supply logic, follow speculations that are often inflationary in nature, leading to a price premium that pure economics fails to justify.

Oil being the key source of global energy needs has been a subject of major studies and theories. Peak oil theory is one such famous and interesting theory. Also a scary one. It suggests that there will be a time when oil wells will be producing oil at their maximum potential and will then signal a progressive decline leading to the supply of oil falling short of demand. Infact, some have suggested that we have already reached that peak point. But if a recent industry report is to be believed, the theory seems to be falling apart. As per the report, the offshore discoveries are likely to keep oil flowing. The companies across the globe plan to drill a total of 301 offshore wells in 2013 itself. We all know that drilling wells is one thing and discovering oil another. So keeping the margin of safety, a success rate of just 25% implies an extra supply of 23 billion barrel of oil equivalent. This is around 28% higher than the average annual production in new offshore discoveries in last 12 years.

While this eases the concerns oil availability, what is also crucial here is its impact on prices.

And we wonder if these discoveries will also lead to softening in oil prices. One must not forget that drilling costs are on the rise. Also, with increasing thrust on environmental protection, the exploration may take longer or may even turn out to be cost prohibitive. Under such circumstances, the oil companies will be interested to drill only if oil prices remain high- either for fundamental or speculative reasons. But then, there are other factors that may come into play such as availability, usage and cost of alternative sources of energy. We don't know the future. But what is certain is that crude oil with all its vagaries will continue to be an interesting topic among investors.

Refrence: http://in.finance.yahoo.com

India's deficit-cutting plan faltering as clock ticks

Finance Minister P. Chidambaram has banned government officials from holding conferences at five-star hotels, restricted travel and ordered a freeze on hiring to fill vacant posts.

A single-minded political veteran who commands both fear and respect in officialdom, Chidambaram is squeezing government ministries hard to cut spending wherever they can, and quickly, to help rein in a widening fiscal deficit.

He is a man under pressure and with an eye on the clock.
Four weeks ago to the day, he set himself an ambitious target: to hold the government's fiscal deficit for 2012/2013 to 5.3 percent of gross domestic product, even as sceptical private economists forecast a deficit closer to 6 percent.

But a series of revenue-raising setbacks since October 29 now means it will be almost impossible for the government to meet that target, economists say, and some finance ministry officials privately agree. That increases the risk that credit rating agencies could downgrade India to junk in the coming months.
"This has taken on a very great sense of urgency," said Rajiv Biswas, chief Asia economist at market information and analytics company IHS, as he called on Chidambaram to draw up a credible medium-term road-map for cutting the deficit.

GRAPHIC:

Rates, inflation, http://link.reuters.com/saq26s
The deficit reduction plan unveiled by Chidambaram last month was panned by economists for being short on specifics and putting a firewall around fuel subsidies and expensive social welfare programmes for the country's millions of poor.

A month earlier a deficit reduction panel appointed by Chidambaram had urged the government to cut such spending. Their language was dramatic: India was on the edge of a "fiscal precipice" and the economy was "flashing red lights", they said.
"BAND-AID APPROACH"

The government is pursuing a "band-aid approach" to deficit reduction, favouring quick fixes instead of implementing structural reforms to slash the deficit, said economist Rajeev Malik of CLSA in Singapore, who is sticking to a deficit forecast of 6 percent of GDP.
Financial markets are already expecting the government to overshoot its target and hit around 5.6 percent of GDP, which helped push benchmark 10-year bond yields to the highest in nearly three months late last week.
Refrence: http://www.moneycontrol.com

Sebi suspends registration certificate of Knack Corporate

Market regulator Sebi has suspended the registration certificate of Knack Corporate Services Pvt Ltd for a period of three months for alleged lapses in its functioning as a Registrar to an Issue (RTI) and Share Transfer Agent (STA). In addition, Sebi alleged Knack Corporate Services of major non-compliances regarding the rights issue of Ram Kaashyap Investments Ltd. RTI/STA work as documentation and payment processing agencies.

In its order dated November 8, Sebi said that it is suspending the certificate of registration "granted to Knack Corporate Services Private Limited, as a registrar to an issue and share transfer agent, for a period of three months". Further Sebi directed Knack Corporate Services to write to all its clients to make alternate arrangements for their registry and share transfer work during the suspension period.

Moreover, the entity would have to hand over all thephysical and the demat records of shareholders of its clients along with the database, after certifying their correctness, to the RTI and STA arranged by respective clients, under intimation to Sebi. The entity has to notify the concerned depositories about the transfer of records, Sebi said.

Reference: http://www.moneycontrol.com/

Full names of top 5 companies

DHL
DHL provides international express, air and ocean freight, road and rail transportation, contract logistics and international mail services to its customers. The company’s name DHL is derived from the last names of the then three budding entrepreneurs, Adrian Dalsey, Larry Hillblom and Robert Lynn who founded the company.

IBM
IBM’s full company name is International Business Machines Corporation. It is a multinational technology and consulting corporation. The company was founded in 1911 and headquartered in the United States.
TLC
The specialty cable channel TLC is the initials for The Learning Channel. The company also operates the Discovery Channel, Animal Planet and The Science Channel, as well as other learning-themed networks.
FIAT
The full company name of FIAT is Fabbrica Italiana Automobili Torino meaning Italian Automobile Factory of Turin. This company is an Italian automobile manufacturer which was founded in 1899. 
HMV
The British global entertainment retail chain, HMV’s full company name is His Master's Voice. Apart from being listed on the London Stock Exchange, the company also operates in Hong Kong and Singapore.

Has the credit crisis returned to Europe

NEW YORK: The credit crisis, which made it difficult if not impossible for companies and individuals to borrow during the worldwide recession, appears to have returned to Europe.

In the euro area as a whole, the amount of credit outstanding has fallen to levels lower than they were a year ago, according to figures released last week by the European Central Bank. In some countries within the eurozone, including Italy and Spain, credit is falling at a faster rate now than it did during the first crisis.

The difficulty in obtaining credit seems likely to make it even harder for the countries that have been hurt the most to recover and begin to grow again. While the ECB has relieved the immediate financial pressures on both governments and banks by making it easy for them to borrow, it has not managed to extend that easy credit to those who need money the most.

In the middle of the last decade, loans were growing rapidly in many countries. Interest rates had fallen sharply as markets concluded there was no good reason for rates to be much higher in one eurozone country than another. After all, the currency risk was identical in all the countries.

In Ireland and Spain, the easy credit helped to finance large housing bubbles, which then burst during the crisis. In both of those countries, the amount of outstanding loans rose at a pace above 30 percent a year at the peak of the cycle.

A falling total of loans means that on a net basis, no new loans are being issued, although banks might be relending some of the money being repaid on old loans. In some cases, particularly in Ireland, the amount of loans outstanding has plunged not because loans are being repaid but because they are being written off.

Some countries seem unaffected. In Finland, which has been among the most vocal in demanding austerity in the troubled countries, the amount of loans outstanding continues to grow at a rate of more than 5 percent a year. In Austria and Germany, loan volume is also rising, although at a slower rate.

But in Portugal, the amount of corporate loans outstanding is now lower than it was in spring 2008, before the collapse of Lehman Brothers sent world credit markets tumbling. In Ireland, loan totals to both companies and households have fallen to 2005 levels.

Reference: http://economictimes.indiatimes.com