$20 oil? You bet, says one expert

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During the Depression, desperate producers would dump barrels of oil into pits to get rid of excess inventory and bump up prices.

Modern environmental regulations makes this an unlikely solution to today's high inventory levels, but University of Calgary professor Philip Verleger says if growing stockpiles aren't dealt with soon, the world will see $20 (U.S.) a barrel oil by year's end.

“This isn't complicated – we are running out of storage space and the economic situation is not getting any better,” said Prof. Verleger, who also runs PKVerleger LLC. “By winter we'll have this stuff coming out of our ears.”

Prof. Verleger, a former energy adviser to the U.S. government, said supply is outpacing demand by about two million barrels a day. Still, prices have increased almost 90 per cent from December lows as speculators fill reserve tanks in hopes of an economic recovery.

China alone has stashed more than 100 million barrels this year, after completing the first stage of an energy storage program. It will soon build a second facility to hold another 170 million barrels, with a third expected in the future. Its goal is to build a 90-day reserve, similar to that of the United States.

While Prof. Verleger said it's impossible to know how much global storage capacity exists, global crude and product inventory levels are near highs set in 1997, even after adjusting for demand growth.

“The inventory build must stop soon,” he said in an interview. “It will cease because global consumption increases or global supply declines. My guess is it will be production that falls.”

Crude oil was last at $20 a barrel in February, 2002. Yesterday, crude for August delivery closed at $62.02 on the New York Mercantile Exchange. And while the Organization of Petroleum Exporting Countries has been cutting production, Mr. Verleger said further cuts of about two million barrels a day would be needed to keep prices at current levels.

Lower oil prices have also driven down profits at refineries, which process crude into products such as gasoline and diesel. The lower that prices creep, the more likely it becomes that refineries will reduce their output – putting further strains on an already stressed storage market.

Yesterday, European refiner Total SA said margins at its European facilities fell by 69 per cent in the last quarter as it announced a plan to lower its gasoline output by 60 per cent. Royal Dutch Shell PLC said last week that it might close or sell its Montreal refinery, which can process 130,000 barrels of oil a day.

“Oil producers will find themselves in the same predicament as natural gas producers,” Prof. Verleger said. “In the case of gas, output is shut in because there are no buyers. Some oil producers will be forced to cut production because they simply cannot find buyers.”

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Houston, We Erased The Apollo 11 Tapes

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An exhaustive, three-year search for some tapes that contained the original footage of the Apollo 11 moonwalk has concluded that they were probably destroyed during a period when NASA was erasing old magnetic tapes and reusing them to record satellite data.

"We're all saddened that they're not there. We all wish we had 20-20 hindsight," says Dick Nafzger, a TV specialist at NASA's Goddard Space Flight Center in Maryland, who helped lead the search team.

"I don't think anyone in the NASA organization did anything wrong," Nafzger says. "I think it slipped through the cracks, and nobody's happy about it."

NASA has, however, offered up a consolation prize for the 40th anniversary of the Apollo 11 mission — the agency has taken the best available broadcast television footage and contracted with a digital restoration firm to enhance it, so that the public can see the first moonwalk in more detail than ever before.

But the lost tapes mean that the world will probably never again see the original images beamed back to Earth by the lunar camera that is now resting on the moon's dusty Sea of Tranquility, right where Neil Armstrong and Buzz Aldrin left it.

Lunar Camera Tapes Were Higher Quality

That special lunar camera recorded in an odd format that was incompatible with the format used for broadcast TV. So when the footage was received on Earth back in July of 1969, it had to be converted for the live television broadcast.

The conversion degraded the images, and hundreds of millions of TV viewers saw dark, murky pictures.

Those pictures were still thrilling — after all, it was "Live from the Moon!" and a human was walking on another celestial body for the very first time — but some experts knew that the lunar camera was capable of doing better.

"It was better. We knew it was better," says Stan Lebar, who worked at the Westinghouse Electric Corporation and led the team that designed and built the lunar camera.

He knew that engineers on the ground did preserve the lunar camera's odd-format footage by recording it onto tapes. So a few years ago, Lebar and some colleagues decided to go back and look at those tapes, to see if today's digital technology could use them to produce a higher-quality video.

"The whole thing started with the idea that this is the one piece of television footage that's going to be played for the next 50 or 100 or 300 years," says Lebar. "Those that follow us deserve better than what we had."

The Search

But, as NPR first reported back in 2006, the tapes were missing — no one had any idea where they were stored. That report helped trigger a massive search by NASA.

"We had hundreds and hundreds of leads coming to us during this period," says Lebar. "Every one of them was investigated."

Lebar and others spent hours and hours in a vast government storage facility known as the Washington National Records Center, a place that Lebar compares to the giant warehouse at the end of the movie Raiders of the Lost Ark.

The search team combed through "racks of documents, tapes, all kinds of things from NASA and other agencies," says Nafzger.

The search wasn't limited to that one place — the searchers went everywhere from storage businesses to private homes. They pored over logbooks, memos and all kinds of 40-year-old handwritten records.

"We went through old file cabinets that would have little record cards and give you an idea if a shipment went in with the name Apollo on it, and did it have 'Apollo' or 'tape'?" Nafzger says. Or did it have anything on there that could be a tape? So it went to the point of being able to look at anything Apollo-related or tape-related that wasn't distinctly not a possibility."

An Unsettling Discovery

They returned again and again to that vast government warehouse. But then they discovered something disturbing.

Over the years, NASA had removed massive numbers of magnetic tapes from the shelves. In the early 1980s alone, tens of thousands of boxes were withdrawn.

It turns out that new satellites had gone up and were producing a lot of data that needed to be recorded. "These satellites were suddenly using tapes seven days a week, 24 hours a day," says Lebar.

And the agency was experiencing a critical shortage of magnetic tapes. So NASA started erasing old ones and reusing them.

That's probably what happened to the original footage from the moon that the astronauts captured with their lunar camera, says Lebar. It was stored on telemetry tapes, and old tapes with telemetry data were being recycled.

"So I don't believe that the tapes exist today at all," says Lebar. "It was a hard thing to accept. But there was just an overwhelming amount of evidence that led us to believe that they just don't exist anymore. And you have to accept reality."

Still, Nafzger says, they didn't want to give up completely on their mission. "Our goal was to provide to the world the best possible video of a historic event we could for the future," he says.

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In The Shadow of The Moon

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In The Shadow of The Moon Part 1 of 8

Foreign demand for US financial assets down in May

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Foreign demand for long-term US financial assets fell sharply in May, but China bought more

WASHINGTON (AP) -- Foreign demand for long-term U.S. financial assets dropped by the largest amount in four months in May, as Japan and Russia trimmed their holdings of Treasury securities.

The Treasury Department said Thursday that foreigners actually sold $19.8 billion more long-term U.S. securities than they purchased in May. That compared with net purchases of $11.5 billion in April.

China, the largest foreign holder of U.S. Treasury securities, bucked that trend. Its holdings rose to $801.5 billion, an increase of 5 percent from $763.5 billion in April.

China's holdings are a direct result of the huge trade deficits the U.S. runs with the emerging Asian power. The Chinese take the dollars Americans pay for Chinese products and invest them in Treasury securities.

American manufacturers argue that gives China unfair trade advantages by keeping the dollar overvalued against the Chinese currency, which makes U.S. goods more expensive for Chinese consumers and Chinese products cheaper here.

Both the Bush and Obama administrations have argued that China should allow its currency to rise faster in value against the dollar but the yuan has stopped appreciating against the dollar in recent months.

Foreigners last sold more long-term U.S. securities than they purchased, $36.8 billion worth, in January.

Japan, the second largest foreign owner of Treasury securities, trimmed its holdings 1.3 percent to $677.2 billion in May, from $685.9 billion in April.

Russia cut holdings even more sharply, reducing them 9.1 percent to $124.5 billion in May from April.

Oil exporting countries, another large holder of Treasury securities, boosted their holdings by 1.8 percent to $192.9 billion.

Treasury Secretary Timothy Geithner traveled to Saudi Arabia and the United Arab Emirates this week to assure those governments that the administration is committed to getting its soaring budget deficits under control once the current recession and financial crisis have been contained. Geithner delivered a similar message to the Chinese in a trip to Beijing a month ago.

In Paris on Thursday, his last stop before returning to Washington, Geithner said financial leaders need to avoid the mistakes the U.S. made during the Great Depression when the government stopped providing economic stimulus before a sustained recovery was under way.

"Probably why I'm doing this (tour) is to make sure we keep working with governments around the world to continue to provide enough support to lift this global economy back to a sustained pattern of growth," he told reporters in Paris.