Podcast: Play in new window | Download
Download Audio Script PDF
Hi everyone. Skip Montreux here with two short pre show announcements
First, Dez and I are sorry for being away for such a long but as you can imagine things here in Japan have been somewhat unsettling since the Earthquake on March 11.
At the time of the quake Down to Business English had a several episodes in the production pipeline and today’s episode is one of them. I apologize if today’s topic seems a little bit out of date. The other shows will be released in short order and Dez and I should be back on track with current business stories very soon.
The second announcement I’d like to make is in regard to the Year in Review 2010 eZine. You will hear Dez & I talking about it later in the show and I just wanted to announce that 25% of proceeds of the Year in Review will be donated to Japanese Red Cross Earthquake Donation Fund.
Thank you for your support
Skip: This is Skip Montreux in Tokyo, Japan
Dez: And my name is Dez Morgan reporting to you from Abu Dhabi in The United Arab Emirates.
Skip: And you have downloaded Down to Business English.
Skip: So happy to be back regularly online with you Dez. How’s life treating you over there in the UAE?
Dez: I can’t complain Skip. This is a very affordable city if you shop carefully although it can be horrendously expensive if you don’t.
Skip: A bit like Tokyo in that respect I guess, where eating out can be either very reasonable or as you say horrendously expensive.
Dez: Do you want to know what’s a real bargain here though?
Skip: I know. Probably camels?
Dez: Actually not so. The Arabs pay millions for a good racing camel. Come on I’ll give you a hint British speakers call it by a word that starts with ‘p’ and Americans and Canadians call it by a different word that starts with ‘g’.
Skip: Okay, let me think about this. ‘P’ and ‘G’ ? No….
Dez: Okay, I’ll give you another hint. It’s what drives the world economy and the stress in that sentence is on DRIVES.
Skip: Oh, okay. You are talking about oil or petrol for cars as you British call it or gasoline as we North Americans call it.
Dez: That’s right.
Skip: So gasoline is a bargain in the UAE. Go on tell me what does a liter of gas cost.
Dez: Are you sure you want to know?
Skip: Yes, spoil my day.
Dez: About 30 U.S. cents a litre.
Skip: Wow that is amazingly cheap. Between 70-80% cheaper than here in Japan.
Dez: Have a guess who is Abu Dhabi’s main customer for oil exports?
Skip: I would go with China, I know that they have a growing appetite for the stuff.
Dez: Well, not far off actually, it’s Japan your adopted country.
Skip: Is that right. So there is something other than D2B that ties these two nations together. Of less importance of course.
Dez: Absolutely Skip.
Skip: So at those prices are you going to go out and get yourself a really big gas guzzler then?
Dez: I have thought about a car but to be honest the driving here is pretty scary and taxis are plentiful and inexpensive.
Skip: Yes I don’t want to lose my co-host in an accident. But a Chevy Camaro or Dodge Charger maybe in black with a silver stripe or a truck with some of those big off road wheels that, that would be really fun out in the dessert….
Dez: Yes it would. We are talking about business though remember.
Skip: Oh yes. Sorry. Well, getting back to business. I know that the rise in oil prices has got the Japanese government pretty worried at the moment. Recently, Prime Minister Naoto Kan held an emergency cabinet meeting to discuss the effects that the trouble in Libya will have on the price of oil. He called the situation there very troublesome and expressed concern for Japanese nationals in the country.
Dez: I know that many people were able to get out on ships sent by foreign navies. A friend of mine was relieved when his parents got out on a British ship the HMS Cumberland.
Skip: A very worrying time for the Libyan people and anyone with friends and relatives in the country. It is also a worrying time for world economies as the price of oil is going through the roof. Prior to the meeting with Prime Minister Kan, Banri Kaieda Minister of Economy, Trade and Industry stated that rising oil prices posed a major risk to the Japanese economy.
Dez: A risk to almost all economies I should think and with the problems across the Middle East the world’s supply of oil looks pretty shaky.
Skip: It is all quite worrying, isn’t it. Oil seems to be getting closer and closer to the high made back in 2008 of $150 a barrel
Dez: You know, that is significantly more than the price a dozen years ago.
SKip: Where was it sitting at that time?
Dez: Would you believe 12 dollars a barrel?
Skip: Wow an almost 15 fold increase!
Dez: So if there were no political problems in Bahrain, Libya and Egypt, if there weren’t pirates in Somalia or problems in Nigeria then the price would go way back down again. Wouldn’t it?
Skip: I’m not quite sure about that. Those are a lot of ‘ifs’ and all of them are political issues. There is a much bigger and more revolutionary issue looming on the horizon and that is the effect of what is known as Peak Oil.
Dez: That is the topic of our show today, Peak Oil and the economic effects that it will have on the world in the future.
Skip: So let’s do it. Let’s get D2B…Down to Business with Peak Oil and its affect on the world economies.
Dez: So what does that mean ‘Peak Oil’?
Skip: Peak Oil is, and we want to be very clear about this, the point in time of maximum oil production, after which production will fall and prices will rise.
Dez: Does that mean we are running out of oil then?
Skip: No, not necessarily. Again I want to be very clear about this- it only means that we are running out of conventional oil supply.
Dez: So does that mean that the Abu Dhabi is running out of oil? I am going to lose my job and be back job hunting in the UK again?
Skip: Calm down Dez, I think Abu Dhabi has a lot of supply left. However, we do know that the mainland U.S. passed its peak over 10 years ago and the North Sea fields shared, between the UK and Norway have also peaked as have the oilfields in Alaska.
Dez: Really but they are not the biggest producers of oil. What about production in Saudi Arabia?
Skip: Unfortunately it is difficult to know the condition of the Saudi oil reserves because it is in the Saudis government’s interest to report higher oil reserve levels. There hasn’t been a major oil discovery in Saudi Arabia since 1967 and oil experts have recently noticed that intense water injection techniques are now being employed. These techniques are often indications that the field is near the end of its life.
Dez: There was that recent Wikileaks story as well.
Skip: That’s correct. Wikileaks quoted a U.S. Diplomat as saying that he was convinced Saudi Arabia had overstated its oil reserves by as much as 40%.
Dez: So the Saudis are exaggerating their oil reserves for political reasons?
Skip: It is a distinct possibility but nobody knows for sure as Saudi Aramco, the government owned oil company, is not open to outside scrutiny.
Dez: I see and what was that water technique that you mentioned?
Skip: That technique is called Intense Water Injection. When an oil field is young, there is enough natural pressure to bring the oil to the surface with relative ease. As the field is depleted, the pressure drops. By using highly pressurized water, oil can be extracted or taken out from aging fields.
Dez: Okay I can understand that maybe production in Saudi Arabia could decline but what about unconventional oil fields like, for example, the tar sands in Canada?
Skip: Yes, there is a great deal of oil in the tar sands of the Canadian provinces of Alberta and Saskatchewan but it is extremely expensive to extract and refine. Remember, Peak Oil does not mean the end of oil, it means the end of inexpensive, easily pumped oil.
Dez: Well the end of cheaply produced oil will have a devastating effect on the world economy.
Skip: That doesn’t sound very positive. What areas do you see being affected?
Dez: Everyone can imagine the more obvious effects, gasoline prices rise, goods in the shops become more expensive, it costs more to heat or cool your home but there will be some other effects that maybe people haven’t considered.
Skip: For example?
Dez: Well modern farming is of course greatly mechanized but also most fertilizers are made from oil products. That means that although the world’s population is still expanding we can expect crop yields to fall and a return to the days of fruit and vegetables only being available in the season that they can be grown locally. We’re already seeing the effects that rising food prices are having on developing nations.
Skip: We are. And a country like Japan which imports a great deal of food would also face a lot of hardships.
Dez: Yes, and other than transportation which is a fairly obvious ramification of peak oil we also need to consider all of the goods and products that are made from oil based materials.
Skip: That is something people don’t give much thought to. Oil is such a fundamental component of all plastics. Just looking around the studio. I can see so many items that I take for granted that would become noticeably more expensive if oil prices continue to rise.
Dez: That’s true and all of these products made from oil need to be transported to our shops and homes using yet more oil which will have a compounding effect on the price.
Skip: Well all countries will face problems with the cost of shipping food and products. But Japan and Continental Europe might fare a little better than North America because of their existing infrastructure and investment in high speed trains.
Dez: That’s certainly true. I was in Los Angeles a few years ago and without a car that is a very difficult, if not impossible city to get around.
Skip: Living here in Tokyo, I often forget how dependent people in North America are on their cars and trucks. It is completely possible to get around this country without a vehicle of any kind.
Dez: That’s true in fact a car is difficult and expensive to park in Tokyo and most people find it far more convenient to take public transport. However the planning of many American cities is fundamentally different with many residents choosing to live in suburbs shopping at huge malls and built on land outside the cities both of which require a family to have one, or in most cases, two cars.
Skip: Is that typical in the UK as well for a family to have two vehicles?
Dez: It depends, in the cities probably not but outside of the major cities as both partners in most couples work then they would need to have two cars. However cars in the UK are generally pretty small and the distances that people travel aren’t that great so the average person in the UK probably doesn’t use that much fuel on a regular basis.
Skip: And how about in Abu Dhabi?
Dez: Well, here I think they have two each, but I definitely see that Peak Oil is going to be a growing problem going forward.
Skip: It certainly is and it’s easy to see that everyone from multinational corporations to the private citizen, will all need to conserve the oil that we have and invest in alternative energy forms.
Dez: Alternative energy, especially how it relates to international business, is definitely a topic we will be returning to in future episodes of D2B.
Skip: But now let’s move on and look at some of the vocabulary that we used.
Dez: Yes, lets get D2V…Down to Vocabulary.
Skip: We are going to start today’s D2V section with 2 phrases that we used in the opening of the show. The first phrase is to have a growing appetite. Appetite is a measurement of how hungry a person is. If you have an appetite, it is the same as saying that you are hungry. If you don’t have an appetite, it means you don’t feel like eating right now. As an idiom, to have a growing appetite communicates that you have an increasing desire or need for something.
Dez: That’s right. In the story you said that China has a growing appetite for oil. I could also say that the people of Northern Africa and the Middle East have a growing appetite for Democracy.
Skip: Absolutely. In a business context, here in Japan, Fast Retailing the parent company of Uniqlo, is trying to meet the growing appetite people have for inexpensive, fashionable clothing.
Dez: Very good. Next I’d like to talk about the phrase looming on the horizon. In the story I said that the problem of Peak Oil was looming on the horizon which means that even though it still might be quite far away it’s definitely in sight, just like the horizon, which is the boundary we can see between the sky and the earth. Could you give us a further example, Skip?
Skip: Sure, well the word looming has a negative connotation so when you add that to the phrase it is always used to show a negative event in the future. The United States government is in serious financial debt at the moment. So much so that unless it takes immediate steps to reduce its budget deficit, financial ruin is looming on the horizon for the country.
Dez: Excellent example. And how about personally do you have any problems looming on the horizon?
Skip: Yes, actually I do. My new University writing class that starts in the Spring has over 40 students in it. I see a lot of work marking papers looming on the horizon. I love teaching, but correcting a pile of essays is not the most enjoyable activity.
Dez: Well good luck with that. Following on, what is our next word or phrase?
Skip: Next is the verb to exaggerate. When you exaggerate, you are overstating information, or making something seem bigger than it actually is. In the story we speak about how the Saudi government tends to exaggerate the amount of oil reserves they have. They always claim to have more oil than they do in reality.
Dez: Here is an example. When you are working in a team, it’s important that you don’t exaggerate your role. No one wants to work with someone who takes more credit than they deserve.
Skip: Isn’t that the truth. Another example would be what you always find in an election campaign. Politicians always seem to exaggerate their opponents weak points and claim that they are the much better choice.
Dez: And it seems to get worse every election season. Especially in the United States.
Skip: Unfortunately yes. Shall we move on?
Dez: Sure. Next up is the noun scrutiny, which comes from the verb to scrutinize which means to look at and examine something very closely and make sure that there are no mistakes or problems with it.
Skip: In our discussion, I mentioned that the Saudi oil company’s records were not open to outside scrutiny. In other words, their records are not examined by independent sources. Can you give our listeners another example using the noun scrutiny or the verb to scrutinize?
Dez: Yeah, because I was late for work 2 days in a row last week, my manager is now scrutinizing everything I do.
Skip: You were late for work? That’s not like you.
Dez: I know it’s only an example. I’m always on time.
Skip: That’s what I thought. At least you were always on time when we used to work together here in Japan.
Dez: Yeah. Thanks…thanks for that. Okay, moving on, I have the adjective to be depleted which means the supply of something is running out. In the story you talked about the oil being depleted in the major Saudi oil fields. Can you give us a different example?
Skip: Yes. I have severely depleted my savings recently with Christmas and my trip to Canada last year.
Dez: Don’t worry. I can lend you a few Dirhams if you like?
Skip: Pardon me? A few what?
Dez: Dirhams. It’s the currency of the UAE. I would expect interest though.
Skip: Thanks for that buddy. Okay, my next word is the countable noun ramification which means an effect that is caused by an earlier action. In the story, Dez talks about the further effects that a rise in the oil price would have on the cost of goods. These effects or ramifications would be felt as oil is used to make so many more products than just gas for transportation. Can you give us a further example Dez?
Dez: Sure, one that springs to mind was the economic ramifications of the bad weather in the UK in late 2010 with the Government saying that the weather caused ramifications that are still being felt in the economy today.
Skip: So the effects of the bad weather were not just short term. They are having a long lasting impact?
Dez: Yes, which brings me to my next phrase to take for granted, which means to be so accustomed to something that you no longer think about it. In the story Skip states that many of the products that he had taken for granted would become noticeably more expensive. Can you give us another example?
Skip: It is not so much of a business example but being a Canadian I like camping and the outdoors. It is amazing that when you are out in the wilderness all of the things that we take for granted at home become so much more important. Having a warm shower after a camping trip really is the best.
Dez: Yeah, I know what you mean and food tastes so much better too.
Skip: Our last word today is compounding which means when an action or situation adds to an already existing action or situation and so makes it better or worse. In the story Dez talks about how the effect of increasing delivery costs would further add to the increasing price of food, so compounding the problem.
Dez: Another example would be compound interest when your savings keep growing at a faster rate over the years because the interest is reinvested. Interestingly, an effect that Einstein called one of the most powerful forces in the universe.
Skip: So that interest you’re charging me, is that compound interest on those…what are they called Dirhams?
Dez: Of course. I don’t deal with any other kind.
Skip: Huh! And I called you buddy!? Okay, that does it for Vocabulary today. I hope everyone finds those words useful and that you try to use them in your English conversations and correspondence.
Dez: Just before we wrap things up today we would like to give a special shout out to Gang Cheng. Gang sent us an email back in December with some great topic suggestions, one of which was oil.
Skip: Yes, thank you Gang. I hope you enjoyed today’s episode and we will try to work your other suggestions into an upcoming show as well.
Dez: And everyone, if you have a topic you would like us to do a show on, please get in touch through our Facebook Group or email us at downtobusinessenglish@gmail.com or contact us through Twitter. My Twitter handle is twitter.com/dezmorgan.
Skip: And you can find me at twitter/skipmontreux. Also, don’t forget to visit the website to download the free audio script pdf for today’s show. All the past episodes are available as well. The address is www.downtobusinessenglish.com
Dez: And while you are on the site, please consider purchasing the Down to Business English Year in Review eZine. Not only is it a review of the some of the stories we covered in our first year of production, but it’s also a great way to develop your listening and vocabulary skills.
Skip: You will get 50 new words and audio explanations, exam style listening comprehension questions, and a special, never before released episode of Skip & Dez Unplugged. All for the reasonable price of $20.10
Dez: You would also be supporting the show and helping us bring you stories on a more regular basis.
Skip: Just visit the Down to Business English website and click on the Year in Review tab at the top of the page. We thank you so much for your support.
Dez: Yes, thanks everyone. See you next time.
Skip: Yes, thank you. See you again.
Dez: Okay bye.
