Click on the titles below to read the full articles.
The Peak Oil Crisis: Decision at Abu Dhabi
Tom Whipple, Falls-Church News Press, 06 December 2007
Tom gives an excellent summary of the reality of OPEC. One point is worth expanding on: "Over the last 30 years, the influence of OPEC has waxed and waned". OPEC has very rarely been able to control oil prices. This implies a level of self-control that OPEC just does not have, but it has suited 'the West' to give the impression that it does and always has done, so it can be blamed for high oil prices (as Gordon Brown, until recently the UK govt's money-man, now Prime Minister, has done repeatedly over the last couple of years). It has a high level of control now because only one country has any spare capacity, maybe, as Tom explains: <<... Ten years before production peaked in Texas, however, several of the then major oil exporters, who were tiring of the international oil companies dictating what they were paid for their oil got together. In 1960, they formed the Organization of Petroleum Exporters (OPEC) and the world was off on a different course. After oil production in the U.S. peaked, OPEC controlled the world’s marginal oil tap... As the century turned, however, so did the fortunes of OPEC. Around the world giant oil fields started to decline leaving only a few OPEC members with much or any spare production capacity or prospects for growing output. More importantly, the world’s two most populous countries, China and India, which had been dormant for centuries, got their economic acts together and began to import ever increasing quantities of oil. The price of oil that in 1998 was $10 a barrel soared to nearly $100. OPEC members were not only getting rich, they were back at the center of world affairs... Its 13 members are an eclectic group with widely varying amounts of oil production and, more importantly, widely varying prospects for ever producing more oil. A few members have large dirt-poor populations and a few are small and filthy rich... When OPEC gathers in a closed room to discuss a production increase, only one country (the Saudis) can do much about increasing production. Most of the rest just want to see higher and higher prices, in some stable currency, so as to get the most real return for their oil before it runs out. Thus, it is the Saudis who carry the trump card for only the Kingdom (or so they would like us to think) can increase production. The other 12 are really just there for window dressing that gives the appearance of a “group” decision...>>
George Monbiot, Monbiot.com, 04 December 2007
Monbiot on climate change / cutting carbon levels. He argues convincingly that we still do not understand the nature / seriousness of the problems facing us. Ditto Peak Oil / Gas / Coal/ Uranium: <<The numbers show that this should be the real question at the Bali talks. When you warn people about the dangers of climate change, they call you a saint. When you explain what needs to be done to stop it, they call you a communist. Let me show you why... The government proposes to cut the UK’s carbon emissions by 60% by 2050. This target is based on a report published in 2000(3). That report was based on an assessment published in 1995, which drew on scientific papers published a few years earlier. The UK’s policy, in other words, is based on papers some 15 years old. Our target, which is one of the toughest on earth, bears no relation to current science. Over the past fortnight, both Gordon Brown and his adviser Sir Nicholas Stern have proposed raising the cut to 80%(4,5). Where did this figure come from? The last G8 summit adopted the aim of a global cut of 50% by 2050, which means that 80% would be roughly the UK’s fair share. But the G8’s target isn’t based on current science either... An 85% cut means that (if the population remains constant) the global output per head should be reduced to 0.537t by 2050. The UK currently produces 9.6 tonnes per head and the US 23.6t(9,10). Reducing these figures to 0.537t means a 94.4% cut in the UK and a 97.7% cut in the US. But the world population will rise in the same period. If we assume a population of 9bn in 2050(11), the cuts rise to 95.9% in the UK and 98.3% in the US... To stabilise temperatures at 1.5° above the pre-industrial level requires a global cut of 100%. The diplomats who started talks in Bali yesterday should be discussing the complete decarbonisation of the global economy... The real issues in Bali are not technical or economic. The crisis we face demands a profound philosophical discussion, a reappraisal of who we are and what progress means. Debating these matters makes us neither saints nor communists; it shows only that we have understood the science.>>
The Last Days of the United States Dollar
James Howard Kunstler, 321Energy [Kunstler.com], 27 November 2007
Kunstler describes what Liam Halligam (below) more aptly calls "the end of the US hegemony": <<... The dollar is losing about a cent every three weeks against other currencies. A penny doesn't seem like much, but keep that pace up for another year and the world's "reserve currency" becomes the world's reserve toilet paper. Oil prices are poised to enter the triple-digit realm, the psychological effect of which may be jarring to 200 million not-so-happy motorists. The value of chipboard-and-vinyl houses is tanking beyond question... But I must say, at the risk once again of sounding extreme, that the structural and systemic sickness in the finance realm is now so severe that it is hard to imagine we will get through the month of December without some major trauma in the markets. In fact, I'd go so far as to predict a thousand-point drop (or more) in the Dow just in this week after Thanksgiving. Real wealth "out there" is evaporating like popsicles dropped on the floor of Hell's fifth circle. It is coming out of the system whether the Big Boyz or anybody else likes it or not, and its absence will assert itself... To some extent, the speed and severity of the financial train wreck will occur in a mutually reinforcing relation to what happens in the oil markets. The rise in price is only the mildest symptom of growing instability for the system that allocates the world's most critical resource. Even in the face of "demand destruction," weird changes are occurring in the way that the oil producers do business. The decline in export rates and the new spirit of "oil nationalism" will take center stage now, even if the US economy seizes up. These phenomena will represent a new cycle in world affairs: the global contest for remaining fossil fuel resources. Sooner rather than later, the next symptom will appear: spot shortages around the US and hoarding behavior. This is what will finally wake the American public out of its long sleepwalk (and Matthew Simmons said this first, by the way) -- when the lines form at the gas stations and the tempers flare and the handguns come out of the glove compartments. In the financial markets and the economies of nations, it's not a case of either / or. It's a matter of either / and.>>
Bet your bottom dollar tensions will follow
Liam Halligan, The Telegraph, 24 November 2007
Liam Halligan, Economics Editor of the UK's Telegraph, wrote about the falling value of the US dollar, where he concludes with the question: "How will Washington react to the end of the US hegemony?" Halligan uses a slightly different prose from Kunstler (article above), but the messages are more or less the same: <<The weak dollar used to be an economic issue. But the greenback has now dropped so far, and has so much further to fall, that its decline is of profound political importance. The dollar isn't any old currency. And it isn't just the currency of the biggest economy on earth. The dollar is the world's "reserve currency" - which means central banks everywhere use it to stockpile wealth. No less than two-thirds of all sovereign foreign exchange holdings are denominated in dollars... In recent months, though, the dollar has headed south with a vengeance - after Wall Street recklessly securitised $900bn of sub-prime loans. And, of course, as US property prices fall and default rates keep rising, this sub-prime crisis gets worse. Last week, Federal Reserve Chairman Ben Bernanke said $150bn of loans will end up being written off. The Bank of England, in private, says $200bn. The reality, as this column has long maintained, will be at least $300bn... No wonder French President Nicolas Sarkozy describes America's drooping dollar as "a precursor to economic war"... But America's currency-related tensions with Europe are as nothing compared to the brewing crisis with China, Russia and the oil-rich Gulf states... The greenback's fall, of course, is costing these countries serious money. Until sub-prime, they didn't talk about quitting the dollar - the world's "reserve currency". But the decline has now gone so far, and the US looks so wounded, that tomorrow's economic superpowers are now "dollar divesting" - despite the fact that doing so will further weaken the currency, undermining their reserve values even more... Incredibly, this long-standing system is now unravelling. Rather than keeping their reserves in falling dollars, the new economic titans are stuffing them into "sovereign wealth funds" - which they're using to buy-up debt-distressed Western firms, African oil fields and any other canny investment they can find. These upstart countries no longer want just stability and value preservation. They're looking for, and achieving, asset accumulation - and all the power that brings. The importance of "dollar divestment" cannot be overstated. At the very least it means the greenback has much further to fall - plunging the US into recession. But it begs a bigger, more alarming, question. How will Washington react to the end of the US hegemony? >>
See also: Has the Long Farewell of the US Dollar Begun? (Gwynne Dyer, Arab News, 27 Nov. Another excellent review.)
The Peak Oil Crisis: Wall Street Comes To Reality
Tom Whipple, Falls-Church News Press, 22 November 2007
Earlier this week, the Wall Street Journal published a substantial front page, mostly sympathetic, article on Peak Oil (see 'Oil Officials See Limit Looming on Production' on the Bulletin Board). Tom Whipple analyses the article and the implications henceforth. Tom highlights one inconsistency in the WSJ article. Near the very beginning, the authors berate the 'traditional' members of Peak Oil movement, then go on to quote them and promote their message in a positive tone: <<The day was a long time in coming. For many months now, world oil production has remained essentially flat and world oil exports have fallen while world oil prices just climbed and climbed. Poor country after poor country was priced out of the market and world oil stockpiles started to melt. Yet as the world lurched towards the mother of all economic crises, the major media of the country led by Wall Street’s own Journal remained strangely silent. From time to time they would report some good news such as “billions of barrels found 25,000 ft under the Gulf” or “steaming out sticky oil will save us.” However, they never got around to asking what is involved in extracting oil from deepwater wells or just where all that tar-melting steam was coming from. Anyone who questioned that oil production could keep on growing for the foreseeable future was castigated as lunatic fringe. This make-believe world finally came crashing down on Monday when the Wall Street Journal published a front-page story admitting there was a big, big problem with oil production just ahead. Now the flagship of economic journalism does not come to such a decision lightly. To admit that you have been dead wrong in ignoring the most important economic issue the world is likely to face in the next century certainly strains your journalistic credibility... There you have it. The story is not portrayed as “evidence is growing that world oil production will soon go into decline.” It turns out that the real news is that an increasing number of oil-industry leaders are afraid that the world is approaching “a practical limit” on oil production. “Practical limit” is a nice touch which sweeps a number of issues under the rug... The Journal’s story marks an important turning point in the public’s understanding of peak oil. Now that the ice has been broken by the flagship of the financial press, it will not be long before others muster the courage to explore and discuss the ramifications of “plateauing” oil. This cannot be a bad thing for as the notion that we are entering the greatest paradigm shift of the last 100 years sinks in, people can start preparing for it.>>
Justin Fox, Time, 21 November 2007
Interesting item in this week's Time magazine, following the trend amongst Peak Oil articles at the moment of not giving the so-called 'optimists' a say (last Monday's Wall Street Journal front page Peak Oil article was an exception, see 'Oil Officials See Limit Looming on Production' on the Bulletin Board, quoting arch-deacon of the Peak Oil deniers Michael Lynch). The balance in the mainstream media, for the few that report on Peak Oil, seems to have moved away from emphasis on Peak decades away to about now, give or take a few years. Good: <<In July 2006, the world's oil rigs pumped out crude at a rate of nearly 85.5 million bbl. a day. They haven't come close since, even as prices have risen from $75 to $98 per bbl. Which raises a question of potentially epochal significance: Is it all downhill from here?... It's not as if nobody predicted this. The true believers in what's called peak oil--a motley crew of survivalists, despisers of capitalism, a few billionaire investors and a lot of perfectly respectable geologists--have long cited the middle to end of this decade as a likely turning point... In most official scenarios, production will soon begin rising again, peaking at more than 110 million bbl. a day around 2030. That's alarming enough in itself. Even the optimists think we have less than three decades to go? But at industry conferences this fall, the word from producers was far gloomier. The chief executives of ConocoPhillips and French oil giant Total both declared that they can't see oil production ever topping 100 million bbl. a day. The head of the oil importers' club that is the International Energy Agency warned that "new capacity additions will not keep up with declines at current fields and the projected increase in demand." This isn't quite the same as saying that oil production has peaked and is about to start declining sharply--the view of the true peakists. In "peak lite," as some call it, the big issues are not so much geological as political, technical, financial and even human-resource-related (the world apparently suffers from a dearth of qualified petroleum engineers). These factors all delay the arrival of oil on the market, meaning that production would not so much peak as plateau. But with demand rising sharply, especially from China and India, even a plateau could be precarious... Among the peakists, war and economic breakdown are favorite themes. They figure that cheap oil is the essential fuel of modern capitalism, which will founder without it. A more hopeful take is that innovation is the essential fuel of modern capitalism and that high oil prices will drive rapid advances in conservation and alternative energy. Either way, the beginning of the end of the oil era may be upon us, well ahead of schedule.>>
John Bruni, The Emirates Center for Strategic Studies and Research, 06 November 2007
Introduction from an ODAC contact: “This from an Abu Dhabi [UAE] Gov funded 'Think Tank'. Considering previous hostility to Peak Oil I find this quite encouraging.” An excellent article, especially considering its roots in a Middle East think-tank where straight-talking might be awkward: <<On October 22nd, 2007, the German Energy Watch Group (EWG) released a new report. This report comes after a series of high-profile environmental awareness campaigns, including that of former US Vice President Al Gore’s An Inconvenient Truth, makes for disturbing reading. It is one thing to say that our consumption of fossil fuels is choking us to death and poisoning our planet; it is, however, quite another matter to say that we are running out of the most important of these fuels—oil. But this is exactly what the EWG’s report states... Central to EWG claims is that... In the short term, while OPEC and non-OPEC oil producing states might well rejoice over the guaranteed windfall coming from a drop in oil output, monies gained from the sale of oil have not and are not being re-invested in diversifying national energy sources or on research and development projects designed to reduce world oil consumption on a scale that would allow for an easy transition away from oil-based industries. Instead, money is being spent on weaponry, war and other frivolous enterprises that will alter our future in very negative ways. While we might all be addicted to oil, we are equally addicted to short-term thinking, stubbornness and individual gratification. Altruism, compassion and a sense of collective responsibility for the state of the world is lacking internationally at the political and corporate levels. It is still too easy to dismiss reports like those published by the EWG and other such organisations as simply more ‘alarmist fodder’. As such, the EWG findings, while prominent in the news cycle at the time of launch, were not the lead story. Other international matters such as Benazir Bhutto’s return to Pakistan or Turkish sabre- rattling against the PKK in northern Iraq, took the headlines. Then there is the oil industry’s own interest in not unduly panicking the markets and so for every oil analyst who predicts the decline of oil production, there are others who will publicly refute such predictions as ‘scare-mongering’... Of course such a gloomy forecast does not have to occur especially if some of the massive profits forecast from near-term oil wealth are re-invested in alternative energy sources in a systematic and organised fashion. Only then can there be a basis for long-term political and consumer confidence. Scientific breakthroughs and inspired political leadership can change the future if they are encouraged and nurtured.>>
Ignoring the Obvious - James Howard Kunstler
James Howard Kunstler, Atlantic Free Press, 05 November 2007
Kunstler discusses the NY Times inability to report on one of the most important global issues today: <<One of the biggest laughs of the season came out of a New York Times business section story last Tuesday by reporter Michael Grynbaum, who wrote, "Oil is on a steady march toward toppling the inflation-adjusted high of $101.70 it set in April 1980, analysts said, though many are at a loss as to what keeps driving the price." (Italics mine.) Actually, lots of people know what is driving up the price — just not anybody who works at that once-august and now-clueless newspaper. It can be stated simply — the demand line has crossed the supply line — though that simple fact has many curious ramifications... The export crisis is only an additional layer on top of the general peak oil situation, but it illustrates the way that complex systems we depend on — and oil markets are one — are liable to wobble and fail just as the world comes off the all-time oil production peak for good. Finance is another complex system and it, too, is entering a stage of robust instability. Food production is yet another, with a grain scarcity that has driven wheat prices to all-time highs. The roster of complex systems entering phase change is long and gruesome... Selling oil to favored customers will be an extremely potent instrument of geopolitics in the decade ahead, and is only one aspect of a desperate global resource contest that could turn ugly and violent. For the moment, though, its meaning for the US is that the two-thirds of our daily oil supply composed of imports is in jeopardy... Another big element of the oil price story is the condition of the equipment used all over the world for getting it out of the ground, moving it around the globe, and refining it into useful byproducts like gasoline and aviation fuel. The world is woefully short of drilling rigs, and the cost of steel is way up. The demand for new equipment is out-of-sight. The existing worldwide inventory of equipment can be fairly described as decrepit. As Simmons points out, there is a frightening gap between the need for investment in new rigs, tankers, and refineries and the money available to just keep production at current levels. The outlook is grim... There is really no excuse for The New York Times and the rest of the mainstream news media to not understand what is going on out there... The USA could not find itself in a less favorable position among all these forces roiling the scene. It certainly can't afford to continue its pathetic pose of cluelessness.>>
Nicky Smith, Financial Mail (South Africa), 26 October 2007
ASPO-South Africa has had several articles published in the South African media this year. They seem to have built up a sufficiently high reputation that they now get quoted in general oil price articles: <<One fact appears clear: no-one really knows what's happening. Oil prices are, in real terms, flirting with highs not seen since the Iranian revolution in 1979. A psychological three-digit target for a barrel of oil has been set after futures prices traded through the US$90/bbl mark on the New York Mercantile Exchange (Nymex) last week. The International Energy Agency (IEA) says that, after adjusting for inflation, prices reached the equivalent of $101,70/bbl in April 1980 in the wake of the US embassy crisis in Tehran. Barclays Capital says steep gains in price are the result of "a prolonged period of tightening oil market balances [in supply and demand]" and that the fundamentals in the market are "set to stay very supportive moving into the winter season". It says geopolitical tensions will continue to apply upward pressure on prices. So shall the "prolonged and continuing" deterioration of oil stocks... Economist Jeremy Wakeford, from the Association for the Study of Peak Oil & Gas SA, says there is growing evidence the peak has been reached. "About half of global oil reserves are contained in the largest 100 fields, almost all of which were discovered 25 years ago. Production from many of these super-giant and giant fields is in decline," he says. Since 1981 more oil has been consumed each year than has been discovered; in recent years, "about five or six barrels have been used for each new one found". In the past, supply rose to meet demand, but if there isn't enough oil to be extracted, the scene is set for high inflation and economic recession. "The post-peak depletion rate is about 3%/year. Considering oil prices trebled in 1979/1980 after a mere 5% reduction in output, the potential for runaway oil prices becomes evident," says Wakeford. Others also believe there are extreme price shocks ahead. Online investment magazine Energy & Capital (E&C) says oil could reach $300/bbl should the tension over Iran's nuclear programme escalate to the point where there is a military intervention...>>
Michael T. Klare, The Nation, 25 October 2007
Michael T. Klare, one of the foremost academics of Peak Oil and geopolitics, discusses a little noticed event - the US Energy Department recently "stopped talking about 'oil' in its projections of future petroleum availability and began speaking of 'liquids' ". Klare suggests that this is an attempt to "disguise the fact that worldwide oil production is at or near its peak capacity". Klare also discusses other factors suggesting Peak is near, including the IEA's July 2007 Medium-Term Oil Market Report: <<This past May, in an unheralded and almost unnoticed move, the Energy Department signaled a fundamental, near epochal shift in US and indeed world history: we are nearing the end of the Petroleum Age and have entered the Age of Insufficiency. The department stopped talking about "oil" in its projections of future petroleum availability and began speaking of "liquids"... But the real story is not the impressive growth in unconventional fuels but the stagnation in conventional oil output. Looked at from this perspective, it is hard to escape the conclusion that the switch from "oil" to "liquids" in the department's terminology is a not so subtle attempt to disguise the fact that worldwide oil production is at or near its peak capacity and that we can soon expect a downturn in the global availability of conventional petroleum... In just the past six months, however, the signs of an imminent peak in conventional oil production have become impossible even for conservative industry analysts to ignore. These have come from the take-no-prisoners world of oil pricing and deal-making, on the one hand, and the analysis of international energy experts, on the other... Most dramatic, perhaps, has been the spectacular rise in oil prices. The price of light, sweet crude crossed the longstanding psychological barrier of $80 per barrel on the New York Mercantile Exchange for the first time in September, and has since risen to as high as $90...>>
The Peak Oil Crisis: A Message from Houston
Tom Whipple, Falls-Church News Press, 25 October 2007
Tom summarizes his thoughts from the ASPO-USA Peak Oil conference in Houston, Texas last week: <<... The most ominous development for countries such as the U.S., which must import most of its oil, is the emerging concept of “peak exports” which was discussed by several speakers. Peak exports simply means that oil-producing countries are using more and more oil at home – leaving less to sell abroad. Moreover, sentiment is starting to develop in many nations that they must save some oil for future generations, not just sell it to the foreign devils as quickly as possible... For me, the most interesting insight of the conference had nothing to do with oil production but rather was an insight I gained into the psyche of the American people. A keen observer of the American scene pointed out that most literate Americans are aware that we have some sort of energy problem... The problem is that most have no concept as to how soon the transformation will start and how much their lives are going to change... If gasoline available for distribution in the U.S. were to fall from 9 million barrels a day to the order of 5 million through a combination of declining production and declining exports, it is not hard to figure out what would happen when the government gets around to prioritizing uses... Thirty seconds of pondering this situation should leave you with the idea that there will be very little gasoline available for your gas station to sell to you. For sure, there will be a lot fewer gas stations around ten years from now and you are not going to like the prices.>>
The defining issue for transport planning is peak oil, not traffic congestion
Stuart McCarthy, Online Opinion [Australia], 19 October 2007
Globally, residents of towns and cities are concerned about traffic congestion, largely oblivious that this is a problem that will soon take care of itself as Peak Oil begins to bite, and lack of fuel, either because they cannot afford it or due to physical shortages, will become the main problem. Stuart McCarthy writes about current developments in Queensland, Australia: <<While the current debate revolves around efforts to address traffic congestion, the underlying assumption here is that car travel will continue to be inexpensive. The peak and subsequent decline in world oil production, or “peak oil”, is invalidating this assumption, hence affordability, not traffic congestion, will soon become the defining issue for transport planning in South East Queensland. The only question is whether or not our policy makers recognise this reality before it’s too late to avoid a public infrastructure crisis that will make the water grid look like child’s play... The [Australian] annual petroleum trade deficit already exceeds $8 billion, two thirds of the entire trade deficit. Belinda Robinson, Chief Executive of the Australian Petroleum Production and Exploration Association, recently estimated that this annual petroleum trade deficit would increase to $27 billion by 2015 (PDF 830KB), assuming that prices would remain at US$50 a barrel. Given that oil prices are already hovering around US$80 a barrel before world production has begun to decline in earnest, a much more realistic figure lies somewhere in the range of $40-80 billion, equivalent to 5-10 per cent of current GDP, or double to quadruple the current value of our coal exports... The correlation between increasing oil prices and patronage on Brisbane’s already inadequate public transport for the last five years (see graph) is a very clear "market signal" if ever there was one... Debates about transport in Queensland are hampered by two further myths surrounding cost comparisons between public transport and roads...>>
The time remaining for serious action on energy is short
Norm Erickson, Post-Bulletin, 18 October 2007
Interesting opinion piece in the Post-Bulletin (Minnesota) reviewing a conference on the theme Heating up the energy debate. Kenneth Deffeyes has a message which the global community does not want to hear: "There may be no significant reserves beneath the Arctic ocean". Lee Lynd discussed biofuels and hit the nail on the head: "We are now moving from an era of abundant energy and labor constraints to an era of energy constraints and plentiful labor. Everything is going to change." <<Chu said biofuels will be an important but inadequate replacement for CO2-emitting fossil fuels. We also need great improvements in energy conservation, efficiency and clean energy supplies such as solar and wind energy... The global discovery of conventional crude oil peaked in 1964 and production peaked in 2005, according to Deffeyes. The upward trend in oil prices we are now experiencing is a natural outcome of growing global demand and depleting reserves... Deffeyes noted that the time remaining for serious action on energy is relatively short, perhaps five years. The path we have been on will likely lead to war and famine, but, we still have choices in that regard... Lynd is a biology professor at Dartmouth College. He said "plant biomass is the only foreseeable sustainable source of organic fuels, chemicals and materials."... He is optimistic about the viability of biomass for the production of fuels. However, he said we are going to have to reinvent agriculture to integrate food and biomass production because the amount of arable land is limited so we cannot displace land used for food production to make fuels...>>
China’s drive for wealth means end of our low-carbon dreams
Carl Mortished, The Times, 17 October 2007
Carl Mortished takes a rather brutal look at the Kyoto treaty in light of current trends in China’s coal consumption, and explains rather neatly why global coal prices are on the increase: “If Mr Hu had a message for the world in his address to the Communist Party National Congress, it was this: we will burn our coal and, if we have to, we will burn yours, too.” Jeremy Leggett emphasized in his presentation at ASPO-6 in Cork a month ago that from a climate change / CO2 emissions point of view, it is coal consumption that we have to worry about, not so much oil (see slide 25, “The arithmetic of carbon ‘resources’: IPCC view” from Jeremy’s ASPO-6 PP presentation: Warning 12.6 Mb PDF file): <<Hu Jintao wants to make every Chinese twice as rich by 2020. He has done it once – in just five years, income per capita doubled to $2,000 (£983) - and the only obstacle in the Chinese President’s path is the fuel needed to stoke the boiler in China’s locomotive. The president needs more copper, iron ore, zinc and natural gas. Above all, he needs more coal to keep the power stations humming nicely and more oil for Chinese cars and lorries. China accounts for more than a third of world demand for coal and the price in Australia soared this year as the People’s Republic switched from being an exporter to being an importer. If Mr Hu had a message for the world in his address to the Communist Party National Congress, it was this: we will burn our coal and, if we have to, we will burn yours, too. What does this mean? Put bluntly, it means that the Kyoto treaty on greenhouse gas emissions is dead and so is any prospect of persuading Beijing to bind itself to other curbs on carbon emissions. We can stop kidding ourselves that China will sign up to any green thingy that hinders his party’s ten-year plan to get rich quick. Instead, the ravenous demand for minerals and metals will continue and the desperate land grab by Chinese state companies in their pursuit of resources in Central Asia, Africa and Canada will become more politically embarrassing...>>
Waking up to the truths of oil’s past, present and future
Neville Smith , Lloyd's List, 12 October 2007
This is the second Peak Oil review article from Lloyd’s List (“The leading maritime & transport portal”) in the last four months, here reviewing the Peak Oil film “A Crude Awakening” (the previous article reviewed David Strahan’s The Last Oil Shock). And this review covers the most dire warnings from the film, the sort that editors of mainstream newspapers tend to avoid, no matter how sympathetic they are: <<THE makers of A Crude Awakening mince their words only slightly, describing their investigation of the peak oil phenomenon as “a naïve quest to examine the world’s dependency on fossil fuels” and the results as “a bit of a downer”... So have the warning signs been ignored? Experts including consultant Colin Campbell, former Opec secretary general Fadhil Chalabi and Matt Simmons, suggest that the inflation of reserves by the main producer countries is to blame, since high reserves mean a bigger Opec quota. But it also means that those countries have become prisoners of their budgets... This leads in two directions — the hunt for alternatives and securing access to the remainder. The outlook for the former is not good and the latter is little better... If the viewer hasn’t experienced a downer yet, then the closing predictions might: the end of oil will cause a seizing of the global economy so severe as to create a depression at least as serious as that in the US in the 1930s, but on a global scale, potentially cutting the global population to 1.5bn-2bn. Prices will rise to and stick at unheard of levels so that consumers will begin to see the conveniences of their modern lives replaced by the realties of the post-hydrocarbon economy...>>
The Peak Oil Crisis: Confusion
Tom Whipple, Falls-Church News Press, 11 October 2007
As Tom points out, trying to forecast where crude oil prices are headed over the winter is very difficult for various reasons explained in this article. But the US Energy Information Administration is uncharacteristically painting a bleak picture for oil prices throughout 2008: <<... Earlier this week, the U.S.’s Energy Information Administration released its Short-Term Energy Outlook for October. Keep in mind that one of the EIA’s unstated “prime directives” is not to scare the pants off Wall Street with loose talk of oil shortages. If one reads between the lines however, the report paints a rather pessimistic outlook for the year ahead. The report notes that “The current world oil market is characterized by rising consumption, moderate non-OPEC supply growth, falling inventories, and rising demand for OPEC oil.” This is followed with some happy talk about how reduced U.S. demand over the next two months suggests that oil prices might ease slightly. Then we get to the real conclusion – “if consumption growth continues at recent levels, as expected, tight global oil market conditions will likely persist through 2008.”... Meanwhile, over at Goldman Sachs, Wall Street’s premier oil pessimists, they are still calling for much higher prices this winter... Goldman’s is now talking about “peak exports” by pointing out that exports from the Middle East are lower today than in 2000 even though production is up by 2 million barrels a day. They are keeping the oil at home, folks...>>
See also:
Short-Term Energy and Winter Fuels Outlook (US Energy Information Administration)
OPEC’s Growing Call on Itself (CIBC World Markets, Occasional Report #62, PDF, 533 Kb)
Editorial, The Buffalo News, 07 October 2007
The Buffalo News publishes an editorial on Peak Oil. Avoids doom and gloom, emphasizes the recent reports from the International Energy Agency and US-based National Petroleum Council that indicate oil supply problems ahead, and offers a vision of the future that readers can connect with: <<It seems longer ago than it really was: gasoline prices at the pumps were half what they are now, and oil prices by the barrel were a quarter of the current price. In recent years, politicians and news media have discussed these issues — and yet the prices keep rising. Each time there’s a significant jump, oil company executives give simplistic excuses for the reasons they make $20 billion to $40 billion in profits per year. It’s a bad enough situation. But what is rarely discussed is that in less than a decade, the issue will not be the price of gasoline — it will be whether gasoline is available at the pump at all. The world is heading toward a “peak oil” situation. What this means is that in 2012, world consumption of oil will reach the peak capacity of existing oil resources... The United States of the 21st century continues inefficient development that assumes unlimited availability of oil. On any given day, Americans travel at least 10 miles to go to work or school, and to shopping or entertainment centers. In the future, huge malls and supermarkets with huge parking areas will be obsolete. Concentrated mixeduse urban areas — places with oldfashioned grocery and bakery shops reachable by foot or bicycle, or just by mass transit instead of by car, may stage an inevitable return once we hit the 2012 oil crisis.>>
Limits to Growth and the Hedberg Conference
Dave Cohen, ASPO-USA, 03 October 2007
The details and implications of the Hedberg conference are beginning to reach a wider audience, at last. In a nutshell, the Hedberg conference was held in the USA last November, invitation-only, to discuss remaining global oil reserves and future potential production. The results of the conference were summarised by Ray Leonard at ASPO-6 in Cork two weeks ago, and Ray confirmed Peak before 2020 - this is what the best oil reserve data from industry is telling us: <<... The Hedberg meeting brought together the world's experts on the future oil supply. Unfortunately, no one from the peak oil research community was invited to attend. Representatives of government organizations, the world's oil companies, consultancies and independent geologists shared their proprietary data to assess what our oil future is, and thereby examine the peak oil question. The Hedberg conference has been in the news lately due to a talk given by Ray Leonard, former Yukos VP for Exploration and New Ventures, to ASPO 6 in Cork, Ireland. Leonard presented his take on the Western Siberian basin at Hedberg, and gave his views on the Hedberg findings at the Ireland peak oil conference... Nehring's low end scenario may be viewed as representing a high case for peak oil analysts who see the problem as being more immediate, and therefore requiring urgent attention. In his interview with writer David Strahan, Ray Leonard voiced his opinion that the world's current surplus capacity — such as it is — can be maintained for another 5 years or so. Thereafter, world oil production will begin to level off, settling in the 95-100 million barrels per day range in a "high price environment." The devil is in the details in evaluating the Hedberg low end scenario or Leonard's version of it. Some of those details are available in Nehring's slides, while others are layed out in World Oil Production to Peak in 15-25 Years, AAPG told by Alan Petzet (Oil & Gas Journal, April 23, 2007). According to Nehring, three factors support any scenario — oil resource additions from discoveries, recovery growth, and unconventional resources. Let's examine each in turn, citing concerns and asking hard questions...>>
See also: Private industry conference finds much less oil [podcast with Ray Leonard on the Hedberg conference]
Lester R. Brown, Earth Policy Institute, 02 October 2007
Lester R. Brown has been researching and publishing on global environmental problems/sustainability issues for decades. The list is lengthy and it just got lengthier with the addition of Peak Oil. This article is adpated from his book "Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble" : <<... Liberal Democrat concerns are led by John Hemming, who chairs the 32-member all-party parliamentary group on peak oil. Their voice is barely heard in Westminster. Labour concerns are led by Michael Meacher, who predicts a rocky road ahead to all who will listen. Few do... Warnings by oil industry insiders recently reached a new pitch that should be sounding alarm bells in every capital in the world... Lord Ron Oxburgh, the former chair of Shell, was no less clear, when conflating peak oil with climate change. "Today I believe is the end of cheap energy. It's essential that we move away from fossil fuels as fast as possible. The boat is sinking and we have to do everything we can to plug the hole."... Politicians face the mother of all crises. Yet the warnings, clear as they are, barely register on the radar screen. Politicians almost everywhere, and the vast majority in the civil service and industry, remain locked in an increasingly breathtaking process of institutionalised denial. This is an issue that needs a Churchill: a leader to warn about the coming clouds, to win the hearts and minds of the British as the threat becomes ever clearer, and make history by leading the mobilisation to survive it.>>
Jeremy Leggett, The Guardian, 02 October 2007
Jeremy Leggett ponders why it is that with the evidence for Peak Oil being so clear now, our 'leaders' are showing a remarkable lack of leadership on the issue: <<... Liberal Democrat concerns are led by John Hemming, who chairs the 32-member all-party parliamentary group on peak oil. Their voice is barely heard in Westminster. Labour concerns are led by Michael Meacher, who predicts a rocky road ahead to all who will listen. Few do... Warnings by oil industry insiders recently reached a new pitch that should be sounding alarm bells in every capital in the world... Lord Ron Oxburgh, the former chair of Shell, was no less clear, when conflating peak oil with climate change. "Today I believe is the end of cheap energy. It's essential that we move away from fossil fuels as fast as possible. The boat is sinking and we have to do everything we can to plug the hole."... Politicians face the mother of all crises. Yet the warnings, clear as they are, barely register on the radar screen. Politicians almost everywhere, and the vast majority in the civil service and industry, remain locked in an increasingly breathtaking process of institutionalised denial. This is an issue that needs a Churchill: a leader to warn about the coming clouds, to win the hearts and minds of the British as the threat becomes ever clearer, and make history by leading the mobilisation to survive it.>>
Kevin Kerr, Money Week [Whiskey and Gunpowder], 26 September 2007
With a poor global wheat harvest and increasing amounts of corn being converted to ethanol in the USA, food commodities are reaching heady heights and more commentators are turning their attention to 'Peak Food'. This article is aimed at the stock market investor but an interesting and relevant read nonetheless: <<... Now, Peak Oil may be very familiar to you as a Whiskey reader, but another peak phenomenon may not — Peak Food. Russia recently announced it may curtail wheat exports due to low global stockpiles and that has sent wheat to above $9, driving everything from bread to pasta exponentially higher. The worst could be yet to come... There have been few markets in my almost 20 years of trading that have been as exciting as the grain markets have been over the past two years. In my opinion, the best is yet to come... But nowadays, in the same breath, you may hear them talking about corn, wheat, or even soybeans. Why the sudden change? The big push by individual speculators, hedge funds, and others into the agriculture sector in such a short time has been unprecedented. A great deal of this move is a direct result of the ethanol boom and the record corn prices it has helped to generate... The simple facts of the matter are that the global population is exploding and exponential increases in demand from countries like China and India are straining a system that is already overloaded by demand and has been taxed by weather problems globally. The wheat crop has been hit especially hard this year as droughts, floods, disease, and even frost have taken their toll. Wheat has risen to $9 a bushel, and $10 is entirely possible later this year. Meanwhile, the soybean complex is also soaring, as pent-up demand, especially from China, is keeping this market very well supported. It's important to realize that not only do we have exponentially higher demand for soybeans from a growing world population, but we also have the increased feed demands of a growing cattle population in answer to more demand for beef. Soybeans are also a victim/beneficiary of the biofuel boom. Combine all of these factors and throw in a little disease and bad weather and you have a recipe for a very hungry world, indeed...and much higher prices...>>
Two barrels of oil are used for each one found. $100 oil anyone?
Eric Reguly, Globe and Mail [Canada], 21 September 2007
Eric Reguly writes a pretty good summary of where we are at with Peak Oil: <<... As the Association for the Study of Peak Oil and Gas was holding its conference in Cork, Ireland, earlier this week, oil prices conveniently set record prices. By midweek, they had gone as high as $82 (U.S.) a barrel... As it were, Ronald Oxburgh, the British lord and geologist who is the former head of Shell U.K., one of the world's biggest oil companies, looked like something of a prophet. He said oil prices could hit $150 as supplies fail to keep pace with soaring demand... Talisman Energy chief executive officer Jim Buckee talked about rapidly declining production from once-prolific and seemingly stalwart oil fields... But maybe the time has come to stop putting so much faith in the economists. As Toronto's Pollitt & Co. said in an investment note this week: "Just because OPEC [the Organization of Petroleum Exporting Countries] raised output quotas doesn't mean oil wells will respond."... The better argument is that it scarcely matters whether oil production peaks this year or next if a huge gap develops between demand (rising alarmingly) and production (barely rising or rising not at all). In either case, the price goes up, as it has been, leading to potential economic upheaval or worse... Take the North Sea... Production is falling off a cliff. The U.K.'s oil and gas output peaked in 1999 at 4.5 million barrels a day (a figure that combines oil and the equivalent output of natural gas). Today it's about three million barrels, a figure expected to decline by 10 to 15 per cent a year. The U.K. is now a net importer of oil and gas... Note that some of the world's biggest oil producers are holding back oil to feed their own growing economies. Saudi Arabia's consumption was up about 30 per cent between 2000 and 2005; Iran's was up 21 per cent... Meanwhile, alternative energy is going pretty much nowhere. At a conference in Scotland earlier this month, Exxon Mobil and Royal Dutch Shell predicted that wind and solar power would supply only about 1 per cent of global energy demand by 2030. If they're right, fossil fuels will remain by far the dominant energy source. But at what price? Forget peak oil. With such a yawning gap developing between consumption and production, higher and higher prices (barring a global economic collapse) seem certain. The predictions for oil at $100-plus a barrel are now no more far-fetched than oil at $50.>>
Yolandi Groenewald and Warren Foster, Mail and Guardian [South Africa], 11 September 2007
The Mail and Guardian reviews a Peak Oil report just published by ASPO South Africa: <<A new report on South Africa’s energy future warns that if the nation does not rethink its development strategy it could herald ruin for local farmers and the poor. It calls for a long, hard look at the accelerated and shared growth initiative for South Africa (Asgisa). The Association for the Study of Peak Oil and Gas’s (Aspo) South African chapter released its report on the country’s energy future last month and issued a caveat to the government: the country has to switch to a path of sustainability for the sake of both the economy and social stability. The report says the combined effect of weakening global oil and natural gas reserves, climate change and global monetary imbalances is likely -- besides having significant effects on global and South African economies -- to disrupt the way people access their food. “Food prices will continue to rise as high levels of inflation return to South Africa for the first time in 20 years. With many farmers facing financial ruin, food production is decreasing, creating shortages that drive prices ever higher. This creates severe problems for the poor,” it warns... “We are at a critical point,” says Ratcliffe. “When oil production peaks in the very near future, oil will get only scarcer and more expensive. And this has dire implications for nations in Africa and South Africa.” The report emphasises that to sustain South African society, a paradigm shift from “exponential growth” to sustainable development through the use of renewable resources and a change in consumption patterns is needed. The report says organic and localised urban agriculture will enhance food security, which will be threatened by oil depletion. It also recommends that eco-villages with energy-efficient buildings be promoted. It calls for government leadership in setting up policies to lead the country towards the “renaissance” scenario of sustainable development...>>
See also: Current Global Challenges and Alternative Futures for South Africa (PDF, 2.56 Mb), the report referred to in the article.
Peak Oil Crisis: Minimum Operating Levels Redux
Tom Whipple, Falls-Church News Press, 06 September 2007
As the International Energy Agency reminds us regularly in its monthly Oil Market Report, oil demand outstripping supply is not the only energy problem we have to consider. There are others, including lack of refinery capacity. In other words, even if we could produce more oil, and right now that is looking rather doubtful, we do not have enough refineries to process it. This certainly seems to be an ongoing issue in the USA, where each summer there is the risk of not enough gasoline/petrol, and in winter not enough heating fuels. Tom Whipple discusses the low stocks of gasoline in the USA, and why that might become a very serious issue bringing a repeat of the long gas/petrol station queues of the 1970s: <<Last spring, when U.S. gasoline stockpiles were falling like a brick, there was much concern about shortages during the summer driving season. The average price for gasoline in the U.S. rose to $3.22 per gallon and in some parts of the country over $4. Our aged refineries were huffing and puffing to increase gasoline output enough to meet demand which was approaching record highs. But then something wonderful happened. Great ships appeared on the horizon, attracted by the record high U.S. gasoline prices, and soon there was enough gasoline so that we could all have a mobile summer... Now for the disturbing news: during June our national gasoline stockpile climbed to about 205 million barrels and held there through July. Then as prices fell throughout the summer, fewer and fewer great gasoline ships visited our shores and our stockpiles started dropping again. The last report from nearly two weeks ago places our gasoline inventory at 192.6 million barrels... Don’t overlook the possibility that someday soon there will be a run on the gas stations. A tank of gas is so important in America today that at the first reports of an impending gasoline shortage many of us will rush to fill our tanks. If we all did this at once, the national reserve would be drained by something on the order of 50 million barrels. A lot of us are sure to be disappointed because there simply is not enough gasoline in the system for this to happen.>>
Pipe dream of infinite fuel is a costly myth
Jeremy Wakeford, Business Report [ASPO South Africa], 05 September 2007
ASPO South Africa have had some success at getting their articles printed in the South African media, particularly the business media: <<Bids by Transnet Pipelines and iPayipi to construct a new liquid fuel pipeline between Durban and Gauteng received prominent coverage in the financial media recently. The pipeline is intended to address anticipated fuel shortages in Gauteng by 2010 and to enhance security of supply. However, a crucial premise needs to be interrogated: will sufficient oil imports be available and affordable over the pipeline's lifetime to ensure it is viable? It seems the competing bidders have not done their homework. In its Medium-Term Oil Market Report last month, the International Energy Agency (IEA) issued a stern warning: "Despite four years of high oil prices, this report sees increasing market tightness beyond 2010, with Opec spare capacity declining to minimal levels by 2012." Compared with the IEA's history of rosy supply forecasts, this statement is a watershed... For oil importers, there is worse news. Oil exports are sure to peak before world output peaks, and the decline will be faster... Importers will soon be competing for a shrinking pool of oil. The most powerful players will outbid and outgun the rest... South Africa's oil imports could begin to shrink in a few years, starving the proposed pipeline of its rationale... Thus far, our government's one-sided view of liquid fuel security focuses solely on supply. Transnet's R9.5 billion fuel pipeline plan is but one example. A demand-side approach that seeks to reduce dependence on liquid fuels is less risky and probably less costly... A clear look at the abundant warning signs of future constraints on oil supplies reveals the folly of basing policies and investments on extrapolations of past trends. Ultimately, South Africa's citizens and taxpayers will pay the hefty price of poorly informed decisions.>>
Conservation Lessens Energy Profits
Carlton Meyer, Sanders Research Associates Limited, 29 August 2007
Carlton Meyer discusses how in some states in the USA, some local authorities are promoting energy conservation, of a sorts, on the one hand, and making it difficult for individuals to implement on the other. And lists some ideas for saving energy in the home: <<The world is devoting more resources to renewable energy, yet little is done about the best solution – energy conservation. This is because selling energy is a business, and no businessman wants to encourage his customers to use less of his product. Another problem is that governments generate tax revenue from the sale of energy, so simple ideas to conserve energy are often ignored. The ability of solar power to evade local taxes has become a battle in the supposedly environmental friendly state of California. Most cities impose a 10% tax on electrical usage and enjoyed record revenues as electric rates soared. This encouraged many homeowners to buy rooftop solar systems. Cities and utilities recognized this threat and developed lengthy and expensive permitting and inspection requirements that deterred homeowners from leaving “the grid.” A recent survey by the Sierra Club determined that many cities charge over $1000 and the approval process can take months.[1] Some cities also require an annual inspection, which generates additional “tax” revenue... Most citizens are familiar with basic steps to conserve energy, like turning off unneeded lights. However, the greatest savings can be achieved by addressing the wasteful concept of hot water on demand 24 hours a day... >>
NPC Report is Hand Grenade in Bubble Wrap
Randy Udall, ASPO-USA, 27 August 2007
The National Petroleum Council of the USA recently published its findings of what was supposed to be a Peak Oil investigation. The main report is about 400 pages long, and while it contains some hints of problems ahead, you have to dig deep to find them. The Executive Summary, 40 pages long, avoids any clear statement on the oil supply problems that the International Energy Agency is now forecasting lie ahead as we approach 2012. The reports can be found at the NPC website. Randy Udall is a founder member of ASPO-USA: <<Facing the Hard Truths About Energy [the NPC report] is perplexing, even schizophrenic. In maddening fashion, it blends numerous cautions about the “accumulating risks” to global oil and gas production with repeated, rosy reassurances that we “aren’t running out,” as if anyone said we were. A call for maximum sustained improvements in automobile efficiency—a welcome first for Big Oil—is paired with a cheery statement about our “vast” global endowment of petroleum and natural gas. Peak oil may be near—but then again we might have 10 times more oil left than we have already used. Carbon emissions are a concern—but coal-to-liquids seems promising... One prominent chart suggests that the world will be lavished with an additional 16 million barrels/day of Mideast oil by 2030, which seems a fantasia. Another chart says the world will enjoy 20 million b/d from enhanced oil recovery by 2030, although today’s production is about 1.8 million b/d. (Despite $70 oil, U.S. EOR is 650,000 b/day and falling.) This same image promises another 20 million b/d from oil we haven’t found yet—even as it shows depletion robbing 60 million b/d from the existing production base... The EIA’s influence is most noticeable in the study’s Supply Chapter, which reads as if it were co-authored by the Wizard of Oz... >>
After oil supplies dry up, what's Plan B? Extreme scarcity could be disastrous for U.S. economy
Erica Etelson, San Francisco Chronicle, 26 August 2007
It has been a while since a mainstream US newspaper published a hard-hitting Peak Oil article on the web. This one leaves little doubt that there are serious problems ahead. Just a pity that the article was published on page C3, and not page A1: <<When Hurricane Katrina struck two years ago, Americans learned just how ill-equipped the government is to respond effectively to natural disasters. But if you think the government's response to Katrina was inept, brace yourself for peak oil... Global oil production will hit its peak in the next few years, at which point oil prices will skyrocket and voracious consumers like the United States, China and Europe will quickly drain every last barrel they can afford to buy. Our per-capita oil consumption is double that of most European nations and more than triple Mexico's, and shows no sign of slowing. As supplies dwindle, an economic disaster on a par with Katrina will start to unfold... If the peak oil doomsday scenarios are to be averted, it will require coordinated action at every level of government, by every sector of the economy and by every community and citizen in the nation. We are heading into a political era in which the need to come together to invent and support life-sustaining social and economic systems will trump all else...>>
Tomgram: Michael Klare, Tough Oil on Tap / Entering the Tough Oil Era
Michael Klare, TomDispatch, 16 August 2007
The TomDispatch website posts the latest Peak Oil article from Michael Klare. Michael points out that irrespective of when Peak occurs, both the recent reports from the International Energy Agency and National Petroleum Council add weight to the argument that the era of so-called easy oil is over, and we are now in the era of 'tough oil': <<When "peak oil" theory was first widely publicized in such path breaking books as Kenneth Deffeyes' Hubbert's Peak (2001), Richard Heinberg's The Party's Over (2002), David Goodstein's Out of Gas (2004), and Paul Robert's The End of Oil (2004), energy industry officials and their government associates largely ridiculed the notion. An imminent peak -- and subsequent decline -- in global petroleum output was derided as crackpot science with little geological foundation. "Based on [our] analysis," the U.S. Department of Energy confidently asserted in 2004, "[we] would expect conventional oil to peak closer to the middle than to the beginning of the 21st century." Recently, however, a spate of high-level government and industry reports have begun to suggest that the original peak-oil theorists were far closer to the grim reality of global-oil availability than industry analysts were willing to admit. Industry optimism regarding long-term energy-supply prospects, these official reports indicate, has now given way to a deep-seated pessimism, even in the biggest of Big Oil corporate headquarters... The other half -- what (if they are right) is left of the world's petroleum supply -- is the tough oil. They mean oil that's buried far offshore or deep underground; oil scattered in small, hard-to-find reservoirs; oil that must be obtained from unfriendly, politically dangerous, or hazardous places. An oil investor's eye-view of our energy planet today quickly reveals that we already seem to be entering the tough-oil era. This explains the growing pessimism among industry analysts as well as certain changes in behavior in the energy marketplace...>>
Chris Nelder, Energy and Capital, 10 August 2007
Although this article quotes ODAC, its strength lies in its discussion of existing energy supply problems throughout the Third World - Asia and Middle East, Africa and the Americas. Nelder also points out the details of a recent speech made by the CEO of Shell, Jeroen van der Veer. Most, but not all, CEOs of large oil companies go to some length to deny Peak Oil is close, and yet, as the quotes from Jeroen van der Veer exemplify, what they often say others would identify as signs of Peak Oil. To paraphrase Burns' "A rose would smell as sweet by any other name", Peak Oil is close at hand, however you describe it: <<... I would like to refer those Pollyannas to a little-noticed opinion essay published two days ago by the CEO of Royal Dutch Shell, one of the world's largest oil companies. Jeroen van der Veer laid out his "Three Hard Truths About the World's Energy Crisis": The first hard truth is that demand is accelerating. The second hard truth is that the growth rate of supplies of "easy oil," conventional oil and natural gas that are relatively easy to extract, will struggle to keep up with demand... But the actual feeling of peak oil didn't really hit me until this week, as I perused a page on Jim Kingsdale's excellent Energy Investment Strategies site, listing countries that are currently experiencing serious fuel shortages and grid blackouts. Here in the first world, we still have the luxury of armchair theorizing about peak oil, and paying a bit more for gasoline, but the third world is actually feeling the pain of peak oil today. Rising oil prices are acting as a regressive worldwide tax, pricing poorer countries right out of the market. Since their experience must to some extent herald ours as peak sets in, let's see how peak oil feels to those who are undergoing it firsthand.>>
Localise Ayrshire - Guest Article
by Joanne McAlpine, Localise Ayrshire, 10 August 2007
Localise Ayrshire (website) is a Peak Oil awareness-raising and campaigning group based in Ayrshire, Scotland. Here Chief Executive Joanne McAlpine describes why she set up Localise Ayrshire, and what the group hopes to achieve. Two projects that particularly stand out are Localise Ayrshire's regular lobbying of the Scottish Parliament, and the aim to deliver a leaflet to every household in Ayrshire.
Mary King, Trinidad & Tobago Express, 06 August 2007
Mary King is one of the few media columnists in the English-speaking world that writes semi-regularly on Peak Oil. Trinidad & Tobago is a small archipelagic state north of Venezuela, however the issues raised by Mary are relevant to every country/region that depends on tourism: <<The Government of T&T has chosen tourism as one of the economic pillars for the country's diversification away from energy. So much so that we are creating in Trinidad waterfront hotels and a conference centre with the hope also of attracting the business tourist, and the more general kind to Tobago. These plans are consistent with current annual growth forecasts for tourism which, according to the UN Tourism Organisation, are 3.8 per cent for regional and 5.4 per cent for long haul traffic - i.e. by 2020 some 1.6 billion people will be involved in international travel. These figures unfortunately do not take into consideration the phenomenon of Peak Oil which is manifesting itself in escalating fuel prices due in general to reducing production and increasing demand for oil... The UK, in planning the expansion of its airports, is expecting passenger volume to double by 2015 and triple by 2030. Airbus (an aircraft manufacturer) is expecting an annual growth rate of 4.5 per cent. However, with Peak Oil it is now being estimated that by 2030 only 60 per cent of passenger and 45 per cent of freight requirements will be met and these services will be provided at exceedingly higher prices. Surely then Peak Oil, as it is doing for food prices, will have an alarming impact on the tourism industry (particularly cruise ships that drag "hotels" along) that is at present the life blood of the region and one of the proposed pillars of our economic transformation...>>
Why 'peak oil' may soon pique your interest
David R. Francis, The Christian Science Monitor, 06 August 2007
The Christian Science Monitor covers Peak Oil / oil prices on a semi-regular basis. CSM columnist David Francis discusses the most recent developments, including links to the best Peak Oil websites: <<... Last Tuesday, the price of oil futures on the New York Mercantile Exchange set a record, rising as high as $78.40. That exceeded the previous high of $77.03 set in July 2006 at the onset of Israel's war in Lebanon. The world output of oil actually already peaked in May 2005 at 74.2 million barrels a day, says Mr. Simmons. Since then, production has fallen about 1 million barrels a day (MB/D). If that trend continues, the results for the world economy will be "so real, so devastating" that peak oil concerns will overwhelm slower-moving global warming in grabbing world attention... However, concern over the world's oil supply is mounting. Last month, the International Energy Agency (IEA) issued a report warning that world oil demand will rise faster than previously expected. The result could be a supply crunch – "extremely tight," one IEA economist told the BBC. The report sees world oil demand soaring 2.2 percent a year to 95.8 MB/D by 2012. That's up from the 2 percent annual growth rate it forecast in February... In July, the National Petroleum Council, a federal advisory group representing the oil industry, published a 476-page study titled "Facing the Hard Truths About Energy." Simmons, one of 350 participants who prepared the study, holds that its wording is not stern enough considering the statistics on the oil demand/supply situation it includes. The study states, "The world is not running out of energy resources, but there are accumulating risks to continuing expansion of oil and natural gas production from the conventional sources relied upon historically." Simmons uses such terms as "hogwash" and "junk report" in describing the study...>>
Ethical shopping is just another way of showing how rich you are
George Monbiot, The Guardian, 24 July 2007
The article title on Monbiot's website is a bit less confrontational, Green consumerism will not save the biosphere. Monbiot's point is that green consumerism avoids promoting the most important step towards sustainability - buying/consuming/using less. He could have mentioned that Peak Oil means we will not have much choice in the matter, we will have to use less since less will be available. There is an ongong debate within the Peak Oil community about why global warming/climate change lobbyists refuse to grasp Peak Oil. One suggestion is this - the current message is energy-intensive lifestyles can be maintained, we just need to move away from fossil fuels to renewables (or coal to natural gas), whereas Peak Oil makes it clear, lifestyles must change, a message the electorate and green consumers do not want to hear, even if the changes lead to a higher quality of life: <<Our primary political struggle must be to prevent the break-up of the Greenland and West Antarctic ice sheets. The only question now worth asking about climate change is how. Dozens of new books appear to provide an answer: we can save the world by embracing “better, greener lifestyles”. Last week, for example, the Guardian published an extract of the new book by Sheherazade Goldsmith, who is married to the very rich environmentalist Zac, in which she teaches us “to live within nature’s limits”(2). It’s easy: just make your own bread, butter, cheese... But of lobbying for political change, there is not a word: you can save the planet in your own kitchen – if you have endless time and plenty of land... Uncomfortable as this is for both the media and its advertisers, giving things up is an essential component of going green. A section on ethical shopping in Goldsmith’s book advises us to buy organic, buy seasonal, buy local, buy sustainable, buy recycled. But it says nothing about buying less... The middle classes rebrand their lives, congratulate themselves on going green, and carry on buying and flying as much as ever before. It is easy to picture a situation in which the whole world religiously buys green products, and its carbon emissions continue to soar... Against the shiny new world of organic aspirations you are forced to raise drab and boringly equitable restraints: carbon rationing, contraction and convergence, tougher building regulations, coach lanes on motorways... Hard political choices will have to be made, and the economic elite and its spending habits must be challenged, rather than groomed and flattered...>>
The oil squeeze has just begun
Jim Jubak, MSN Money, 17 July 2007
Jim Jubak is a financial adviser has written briefly on Peak Oil / oil depletion before. Here he expands his thoughts in light of the International Energy Agency's Medium Term Oil Market Report (PDF, 1.87Mb) that was released last week. He concludes that the forecasts of the IEA and the Peak Oilers are now more or less the same, at least for the next 5-10 years anyway: <<"World will face oil crunch in five years." That's not exactly the kind of headline you want to read when crude oil is already at $73 a barrel. When things are this bad -- crude prices are up 12% in the past two months as of July 12 -- you don't want to hear that they're going to get worse. Yet that's exactly what consumers -- and investors -- should expect, the International Energy Agency said in its latest Medium-Term Oil Market Report, issued July 9. The market for oil will get even tighter over the next five years. (And in case you're looking for a way out, natural-gas markets may be even tighter.) As much as I'd like to believe that the agency has made a mistake, the logic behind its pessimistic assessment of supply and demand is impeccable. Let me explain what is leading to the squeeze that will be so painful over the next five years, and then I'll give you my pick for the oil stock that's best positioned for this scenario... But the debate over an exact [Peak Oil] date is largely beside the point. Peak oil, a theory put forward by American oil geologist King Hubbert, describes what will happen as the world moves toward a peak in oil production from conventional sources. Big fields will decline -- at first gently and then rapidly. New finds will become smaller. Finding new oil will become more difficult and more expensive. Producing oil from declining older fields and from these "geologically challenged" new fields will be more difficult and more expensive. The marginal cost of each additional barrel of supply will climb even as it becomes more and more difficult to add enough new barrels to keep production growing... But all of this means that we're replacing the cheap oil of the 1990s with expensive oil.>>
If you're in a hole, merge. But is it too late for BP and Shell?
David Strahan, The Independent, 15 July 2007
David discusses why BP and Shell might want to merge into a single oil and gas company, and why it could make little difference to their fates - declining oil production: <<BP and Shell are finally set to merge. That's if you believe the tittle-tattle in the Square Mile. Of course rumours that the energy giants might unite are hardly new and have been the stuff of bankers' fevered imaginations for years. But there is now an increasingly compelling case for the two to integrate. At 4.5 million barrels per day, the oil output of a combined Shell-BP would dwarf that of American behemoth ExxonMobil and even major oil-producing countries such as Iran. Some analysts make a positive case for such a merger on the basis of massive economies of scale, claiming it could save $5bn (£2.5bn). But if and when it happens, the real motivation will be far darker: desperation. Both companies have suffered a variety of troubles in recent years - Shell in Nigeria, BP in the US, both in Russia - but their fundamental problem is identical: the inability to replenish the oil they produce with fresh reserves. This matters because the replacement ratio is one of the most important factors affecting an oil company's stock market valuation, and a rough-and-ready guide to how long it can survive. Shell's difficulties here are well known - in the five years to 2005 its reserve-replacement ratio was just 67 per cent - but BP is also struggling. Although its own ratio is still positive, it has fallen every year since 2002, and without the contribution of the fabulously risky Russian joint venture, TNK-BP, the figure last year would have been just 34 per cent... The IEA insists its predicted crunch is driven by factors above ground, such as the conflict in Iraq and does not amount to "peak oil" - the geologically determined onset of terminal decline in worldwide production. But that distinction may come to feel academic. As Mr Birol put it: "The oil industry will be facing a very serious test by 2015... the gap between supply and demand will widen significantly." At which point mega-mergers between the likes of BP and Shell will be exposed as powerless to combat the global energy crisis, whatever its cause.>>
World will face oil crunch ‘in five years’
Javier Blas, Financial Times, 09 July 2007
The International Energy Agency has been issuing covert warnings of an oil supply crisis for the last year. Now their warnings, in the just-published July 2007 Medium-Term Oil Market Report, leave no room for misunderstandings. Note also that the IEA has published a realistic (dire) forecast for UK oil production, and ignored the nonsense forecasts from the UK government: <<The world economy faces a tight oil market in the next five years because of a combination of accelerating consumption and output falls in mature areas, such as the North Sea, and long delays in new production projects. The warning on Monday by the International Energy Agency, the energy watchdog, comes as oil prices surge above $76 a barrel, to $2.50 a barrel below last summer’s all-time high of $78.65. The IEA said in its Medium Term Oil Market Repot that ”oil looks extremely tight in five years time” and there are ”prospects of even tighter natural gas markets at the turn of the decade”... The widening gap between demand and non-Opec supply will force Opec, the oil cartel which controls about 40 per cent of global oil output, sharply to increase its production between 2007 and 2012... ”Despite four years of high oil prices, this report sees increasing market tightness beyond 2010, with Opec’s spare capacity declining to minimal levels by 2012,” the IEA said... UK production is set to decline from today’s 1.7m b/d to just 1m b/d in 2012. That is below the official UK government forecast range of 1.1m-1.6m b/d for 2012. Norway’s oil production will fall to 2m b/d in 2012 from today’s 2.5m b/d. International and national oil companies were not investing enough to compensate for those declines, the watchdog added. ”Substantially higher cash returns to shareholders stand in curious contrast to growing upstream supply tightness and essentially unchanged exploration and production effort,” the report said...>>
For some oil companies, Venezuela is hardly the worst option
Natalie Obiko Pearson, International Herald Tribune [The Associated Press], 28 June 2007
No matter how bad things get for 'Big Oil' in Venezuela, “when compared to other nations, there are still sizable and substantial opportunities.” A good summary of how geopolitics is putting the squeeze on Big Oil, and how Venezuela does not seem so bad after all, in comparison: <<Exxon Mobil and ConocoPhillips have decided the profits are not worth the risk of staying in Venezuela and are writing off multibillion-dollar investments in the country. But other major oil companies have accepted the increasingly tough terms posed by President Hugo Chávez's government because they face few appealing alternatives elsewhere. Terms are even tighter in Russia, they are barred from the Middle East, and Africa comes with its own troubles of violence and instability. "The risks are clearly there and growing in Venezuela," said Patrick Esteruelas, an analyst at Eurasia Group. "But when compared to other nations, there are still sizable and substantial opportunities." Under Chávez, Venezuela first raised royalty and tax rates, then later assumed majority control of all oil projects as part of a larger nationalization drive of "strategic" economic sectors. Chávez says those policies are ensuring that oil benefits Venezuelans instead of foreign corporations and governments... In contrast, most of Venezuela's fellow members in OPEC block private investment in their oil sectors entirely, as does the other leading oil exporter in Latin America, Mexico... "Venezuela has certainly not been alone in tightening terms," Esteruelas said. But he added the terms remained "looser or more attractive" than those of many countries, including Russia, where the government has been more aggressive and companies have had little or no recourse to contest its actions...>>
The Problem's Not Peak Oil, It's Politics
Stanley Reed, BusinessWeek, 28 June 2007
Stanley Reed is London bureau chief for BusinessWeek. He mistakes Peak Oil, the peak in global oil production, with Hubbert's theory, the peaking of oil production in a region/ oil field because of geological limits. What Reed is suggesting is that geopolitical factors may cause Peak Oil to occur sooner than otherwise would happen due to geological factors alone. Perhaps true, but Peak is near and we are not prepared. Reed also highlights a very typical viewpoint in the western media - it irks that oil producing countries such as Venezuela, Russia and Saudi Arabia are acting in the best interests of their own countries and not those of the Western oil importers / oil companies, by not producing enough oil / not letting Big Oil control oil production: <<>>
IEA: without Iraqi oil, we'll be in deep trouble by 2015
'Jerome a Paris', The Oil Drum:Europe, 28 June 2007
Translation of an article from French to English quoting Fatih Birol, chief economist of the International Energy Agency. As with the Al-Husseini brothers (Moujahed Al-Husseini and Sadad Al-Husseini, the latter formerly Saudi Aramco’s Executive Vice President for Exploration and Production), Fatih is becoming increasingly outspoken: <<In a stunning interview for the French (reference) daily Le Monde, Fatih Birol, the chief economist of the International Energy Agency (i.e. the intergovernmental body created after the oil shocks of the 70s to coordinate the West's reaction to energy crises) effectively says that peak oil is just around the corner, and that without Iraqi oil, we'll be in deep trouble by 2015: "If Iraqi production does not rise exponentially by 2015, we have a very big problem, even if Saudi Arabia fulfills all its promises. The numbers are very simple, there's no need to be an expert". The whole interview is amazingly frank and free of diplomatic obfuscation. He blasts biofuels ("not based on any kind of economic rationality"), he notes that Africa is suffering the most already from expensive oil, he points out that even a slowing of China's growth will not reduce oil demand, and he talks pretty explicitly about production peaks and depletion... He says it again twice in the interview: the gap between demand and supply will widen, and he blasts our governments for doing so little...>>
Dave Cohen, ASPO-USA, 27 June 2007
Dave reviews oil production in the Gulf of Mexico : <<Little fanfare accompanied the Mineral Management Service's (MMS) report Gulf of Mexico Oil and Gas Production Forecast: 2007 — 2016, published in May, 2007. This lack of attention was in sharp contrast with Chevron's successful Jack #2 test well result announced in September, 2006. Business Week reassured an anxious world that there was Plenty of Oil — Just Dig Deeper: "You can tune out all the scare talk about Peak Oil for a while—probably a long while... a successful test in a mammoth field deep beneath the Gulf of Mexico, announced on Sept. 5 by Chevron, Devon Energy, and Norway's Statoil, should help put that scary scenario on hold for decades." It's time to revisit the Gulf of Mexico (GOM) with a focus on reality, not hyperbole... Chevron's Tahiti Offers Clues to Stamina of Gulf Oil Boom (Rigzone, June 20, 2007) provides a good vantage point from which to appraise how things are going in the Gulf. Chevron faces uncertainty about how Tahiti, with a capacity of 125 thousand b/d, will perform when the first commercial oil comes on-stream in mid-2008... Why might Chevron be leery about Tahiti's future production profile? The reason is that other comparable fields in the deepwater GOM have not met expectations. The fear is that the oil will be in a number of small, discrete traps, and the uncertainty exists because the oil lies beneath a salt canopy which makes 3-D seismic surveys difficult...>>
The real casus belli: peak oil
David Strahan, The Guardian, 26 June 2007
David Strahan summarizes the first chapter of his new book The Last Oil Shock - the main reason why the UK and USA invaded Iraq: <<Even as one of the principal architects of the Iraq war washes his hands of the whole bloody mess, there is still only a vague understanding of the real reason behind the invasion, but evidence of the intense interest of the international oil companies continues to build... The elephant in the drawing room was the fact that global oil production is likely to peak within about a decade... Oil consultancy PFC Energy briefed Dick Cheney in 2005 that on a more realistic assessment of Opec's reserves, its production could peak by 2015... In a world of looming shortage, Iraq represented a unique opportunity. With 115bn barrels, it had the world's third biggest reserves, and after years of war and sanctions they were the most underexploited... Britain's and the US's fears were secretly formalised during the planning for Iraq... What is less well known is that at the same summit, Blair proposed and Bush agreed to set up the US-UK Energy Dialogue, a permanent liaison dedicated to "energy security and diversity"... The bitterest irony is, of course, that the invasion has created conditions that guarantee oil production will remain hobbled for years to come, bringing the global oil peak that much closer. So if that was plan A, what on earth is plan B?>>
The Coal Question and Climate Change
Dave Rutledge, The Oil Drum, 25 June 2007
The Oil Drum invited Dave Rutledge to post a summary of his detailed work on global coal reserves (see the Bulletin Board item Hubbert's Peak, The Question of Coal, and Climate Change). If you have a spare hour, it is worth watching Dave's video presentation. The most important aspect of the Oil Drum posting is the extensive discussion that follows the article: <<... Oil reserves are rightly viewed skeptically at The Oil Drum, in large part because of fraud by the OPEC countries. Coal reserves are compiled by the national geological surveys, and unlike oil reserves, they are honest. However, recently Dr. Werner Zittel and Jorg Schindler and their Energy Watch Group have written an important paper “Coal: Resources and Future Production” that shows that there are major problems with the reliability of coal reserves, and indicates that the reserves may be too high. Coal is different from oil, and much of the intuition that we may have developed about oil from nights pondering TOD posts is wrong for coal. Finding oil is hard, and we have not found it all yet. In contrast, people knew where the coal was a century ago. Once oil is found, it is likely to be produced quickly, so much so that discovery history is routinely used to predict future production. On the other hand, there are large coal fields that are almost undeveloped. As an example, Montana has larger coal reserves than Europe, Africa, or South America, but it is producing less than 0.1% of that coal each year. Our estimate of future coal production depends a lot on whether we think that the people of Montana will get into serious coal production. Finally, in contrast to the situation for oil, the world market for coal is only partially developed. Most coal is consumed in the country it is produced in, and there are large differences in prices, even in the same country. For this reason, we will analyze production on a regional basis...>>
Eugene Linden, Business Week, 25 June 2007 [available from 14 June]
Eugene Linden is a writer covering mainly environmental topics and climate change for publications such as Time magazine. It is therefore a double bonus, that a mainstream environmental/climate change writer, and popular US business magazine, cover Peak Oil. Eugene makes an important point that is easy to forget. Peak may be a few years off, but the USA is still having problems importing enough crude and gasoline/petrol. A very good and short summary: <<... Given such unpleasant possibilities, you'd think peak oil would be a national obsession. But policymakers can hide behind the possibility that vast troves will be available from unconventional sources, or that secretive oil-exporting nations really have the huge reserves they claim. Yet even if those who say that the peak has arrived are wrong, enough disturbing omens—for example, declining production in most of the world's great oil fields and no new superfields to take up the slack—exist for the issue to merit an intense international focus. The reality is that it will be here much sooner for the U.S.—in the form of peak oil exports. Since we import nearly two-thirds of the oil we consume, global oil available for export should be our bigger concern. Fast-growing domestic consumption in oil-exporting nations and increasing appetites by big importers such as China portend tighter supplies available to the U.S., unless world production rises rapidly. But output has stalled. Call it de facto peak oil or peak oil lite. It means the U.S. is entering an age when it will have to scramble to maintain existing import levels... Even if the peakists are wrong, we would still be better off taking these actions. And if they're right, major efforts right now may be the only way to avert a new Dark Age in an overheated world.>>
Americans Are Gluttons For Mideast Oil
James Howard Kunstler, theday.com, 24 June 2007
James points out that if the US pulls out of Iraq completely, the resulting oil deficit will bring an end to the lifestyle to which Americans have become accustomed: <<It seems you can call the situation in Iraq a lot of things, but it's not a war. Not at this point, anyway. Call it an unsuccessful nation-building project, a failed occupation, a botched policing job. All the U.S. political factions, from left to right, do the public a disservice by calling it a war, because it misrepresents what we're doing there. We're involved in Iraq because we don't want to begin thinking about modifying our behavior at home. We are desperate to preserve our access to Middle East oil because that is the only way we can keep running our society the way we're used to running it. Mostly, we don't want to face the tragic misinvestments we've made in the infrastructure of happy motoring, and we don't want to face the inconvenient truth that there really isn't any combination of alternative fuels that will permit us to keep running all the cars the way we like to run them. Either we keep getting the oil or say goodbye to the American Dream Version 2.K... I'm waiting for one of these birds to tell the American people the truth: You can't have it both ways. You can't get our military out of the Middle East without changing the way we live.>>
Russia to reform national economy to get rid of oil dependence
Pravda, 22 June 2007
The Russian Soviet-era newspaper Pravda seems to have taken exception to the recent Independent article promoting ODAC's point of view on global oil reserves. Apparently, ODAC is a stooge of the White House. This is news to ODAC: <<British scientists recently released a report warning that world oil supplies could run out faster than expected. The scientists seem to have been commissioned by the White House to come up with a forecast that justifies U.S. aggressive policies toward oil-exporting countries... However, the scientists at the Oil Depletion Analysis Centre believe that global oil production is set to peak in the next four years, reaching the highest level in 2011. A steep decline in production is expected to occur thereafter, warn the scientists. One can get the impression that these “brand-new” assessments have been carried out at the recommendation of U.S. government research agencies. The findings seem to be designed for using as part of information warfare aiming to justify the United States and its allies interviewing in the affaires of Eurasia. The analysis fits well the belligerent rhetoric of U.S. Senator Richard G. Lugar who advocates NATO enlargement in Eastern Europe and creation of military bases around Russia by stressing the role of hydrocarbons, which are allegedly “becoming a weapon” as the demand of the West for energy keeps growing.>>
The Peak Oil Crisis: Approaching The Cliff
Tom Whipple, Falls Church News-Press, 21 June 2007
Tom reviews that lack of progress in the US Congress regarding the current energy legislation: <<Last weekend across southern South Dakota the pumps went dry. Gas terminals from Sioux Falls to Yankton to Sioux City were empty. “There is simply not enough fuel coming down the pipeline into the delivery system” said a BP station owner. Eventually the tankers were sent to Nebraska to find gas. A minor glitch in the distribution? Possibly, but more likely a harbinger of more serious problems to come. Meanwhile, I would like to tell you that Congress, which has been debating energy bills for the last two weeks, is getting ready to pass legislation that will make our lives easier during the troubled years ahead. Sadly, I cannot. From their public pronouncements and posturing, it is unlikely more than a dozen members of Congress have the slightest idea of what 2007 energy legislation should be trying to accomplish in an urgent manner... Scattered here and there are conservation measures and R&D money for more efficient something or others, but from the perspective of imminent oil depletion, the proposals are too little, too late. Setting efficiency goals for 10 or 15 years from now is absurd when the problems to solve may be upon us in 15 or 20 months, or, if the real alarmists are right, in 15 or 20 weeks... The American automobile industry is clearly on its way to committing suicide; the coal industry does not seem to realize its days are numbered; and the electric industry seems to have no notion that, within a lifetime, fossil fuels and perhaps even some forms of nuclear energy are going to have to be replaced... In general, the gasoline stockpiles situation now can be categorized as serious rather than dire.>>
Dave Cohen, ASPO-USA, 20 June 2007
An excellent article suggesting that the current 'tight' oil markets are a deliberate OPEC/Saudi Arabian policy to ensure oil prices remain high, from a Western point of view. The only problem with such a policy is that it is likely to end in tears: <<In a recent personal communication sent to ASPO-USA, former Saudi Arabian exploration and production head Sadad Al-Husseini made the following statement. "There has been a paradigm shift in the energy world whereby oil producers are no longer inclined to rapidly exhaust their resource for the sake of accelerating the misuse of a precious and finite commodity. This sentiment prevails inside and outside of OPEC countries but has yet to be appreciated among the major energy consuming countries of the world." Saudi Arabia's production declined 8% in 2006. This is a fact which requires interpretation, and there are two opposed views: they can't or they won't raise exports. Matt Simmons has doubts about current Saudi capacity, most prominently raised in his book Twilight in the Desert. At The Oil Drum, Stuart Staniford's analysis appears to buttress Simmons' position, but is hampered by a lack of current production data from Ghawar, which the Kingdom will not reveal. The "won't" position has gotten scant attention in the peak oil community. Al-Husseini's statement points to a fundamental reorganization of the world's future oil supply. Downstream investments in the Persian Gulf states lends support to his view that these producers will exert greater and greater control over their fossil fuel resources in the future.>>
Railton Frith, Sanders Research Associates Limited, 15 June 2007
Railton discusses the problems we will soon face regarding electricity supplies: <<Our power, water and communications utilities are now heavily interdependent and are particularly energy hungry — being unable to withstand interruptions to their energy source for more than a few hours or days at most. The impending peak in the world’s production of oil will have unforeseen consequences to the supply of all utilities that are wide ranging and potentially severe. The Hubbert curve which may be used to predict the supply of oil suggests a gentle decline in the oil flows of around 3% to 6% per year. The consequences of that decline will be anything but gentle and unless action is taken beforehand will potentially result in a simultaneous and catastrophic collapse of all our utilities and along with it our present way of life... The long term prospect over months, years and decades is that the current centralised generating plant will become too expensive to operate and, more importantly, too inefficient to remain viable. The centralised power generation and grid will eventually give way to localised power generation with large sections of the population having to either ration the remaining central generators as their section of the grid is switch on for an hour or two each day or return to a lifestyle more akin to that of the 18th and 19th century... To mitigate the effects of cascading power failures, a planned program of localised distribution by micro-generators using combined heat and power systems at those locations furthest away from the central generators will be required. Sadly there appears to be little government interest in promoting this forward-looking approach....>>
Petrol problems about peak oil, not snake oil
Kenneth Davidson, The Age [Australia], 14 June 2007
Kenneth Davidson is a senior columnist with The Age. He suggests that Peak is near and thus the reason for high oil/petrol prices, then goes on to discuss the implications for transport policy in Melbourne, applicable to all cities: <<It's time for Canberra and Spring Street to face the facts on transport. IF YOU think petrol is expensive at $1.34 a litre, how will you feel if it is around $2.60 a litre without any adjustment for inflation by 2015? That is when Melbourne's third public-private partnership toll road connecting the Eastern Freeway with the western suburbs via tunnel is expected to be completed. It is not a question that seems to have lodged in the collective brain of politicians in Canberra or Spring Street who want to make political capital out of motorists' perceptions that high prices are due to price-gouging by the oil cartel. The real reason petrol prices are high is because crude oil is $74 a barrel compared to $35 a barrel in 2004. The price of crude is high because world demand is beginning to outstrip supply. World discovery of oil peaked in 1964 and has been declining ever since. The most likely production scenario is for an annual decline in world production of 2 to 3 per cent, so that world oil production will fall to about 1990 levels by 2020. In Australia, oil production peaked in 2001. According to the Australian Association for the Study of Peak Oil and Gas: "High prices are the market signal that we urgently need transport and city planning that will reduce our oil dependence. Suggesting that high oil prices are temporary misleads the public and allows governments to delay difficult decisions." The Victorian political and business establishment is in denial...>>
Michael T. Klare, TomDispatch.com, 14 June 2007
Michael Klare specializes in writing about the American military machine, geopolitics and Peak Oil. This is his latest thoughts. The third and fourth sections of the article are entitled "The Bush Doctrine Faces Peak Oil and "The Pentagon as a Global Oil-Protection Service": <<It can be difficult to obtain precise details on the DoD's [US Dept of Defense] daily oil hit, but an April 2007 report by a defense contractor, LMI Government Consulting, suggests that the Pentagon might consume as much as 340,000 barrels (14 million gallons) every day. This is greater than the total national consumption of Sweden or Switzerland... For anyone who drives a motor vehicle these days, this has ominous implications. With the price of gasoline now 75 cents to a dollar more than it was just six months ago, it's obvious that the Pentagon is facing a potentially serious budgetary crunch... Nor is this destined to prove a temporary issue. As recently as two years ago, the U.S. Department of Energy (DoE) was confidently predicting that the price of crude oil would hover in the $30 per barrel range for another quarter century or so, leading to gasoline prices of about $2 per gallon. ...prompting the DoE to raise its long-range price projection into the $50 per barrel range. This is the amount that figures in many current governmental budgetary forecasts -- including, presumably, those of the Department of Defense... The rising price of oil is producing what Pentagon contractor LMI calls a "fiscal disconnect" between the military's long-range objectives and the realities of the energy marketplace... And this is likely to be the least of the Pentagon's worries... Like every other large consumer, the DoD must now confront the looming -- but hard to assess -- reality of "Peak Oil"... Spurred perhaps by rising fuel prices, or by the growing attention being devoted to "energy security" by academic strategists, the DoD has suddenly taken an interest in the problem [Peak Oil]. To guide its exploration of the issue, the Office of Force Transformation within the Office of the Under Secretary of Defense for Policy commissioned LMI to conduct a study on the implications of future energy scarcity for Pentagon strategic planning. The resulting study, "Transforming the Way the DoD Looks at Energy," was a bombshell... It was the unassailable logic of this situation that led LMI to conclude that there is a severe "operational disconnect" between the Bush administration's principles for future war-fighting and the global energy situation...>>
Lester R. Brown, Earth Policy Institute, 13 June 2007
This is a copy of Lester's Briefing before U.S. Senate Committee on Environment and Public Works. The article contains a link to interesting data on world grain and US corn production: <<The escalating share of the U.S. grain harvest going to ethanol distilleries is driving up food prices worldwide. Investment in fuel ethanol distilleries has soared since gasoline prices jumped at the end of 2005. Once completed, distilleries now under construction could double U.S. ethanol output, turning nearly 30 percent of next year's U.S. grain harvest into fuel for automobiles. This unprecedented diversion of the world's leading grain crop to the production of fuel will affect food prices everywhere, risking political instability. The U.S. corn crop, accounting for 40 percent of the global harvest and supplying nearly 70 percent of the world's corn imports, looms large in the world food economy. Annual U.S. corn exports of some 55 million tons account for nearly one fourth of world grain exports. The corn harvest of Iowa alone exceeds the entire grain harvest of Canada. Substantially reducing this export flow would send shock waves throughout the world economy... Converting the entire U.S. grain harvest to ethanol would satisfy only 16 percent of U.S. auto fuel needs... Since food aid programs typically have fixed budgets, if the price of grain doubles, food aid will be reduced by half... The stage is now set for direct competition for grain between the 800 million people who own automobiles, and the world's 2 billion poorest people. The risk is that millions of those on the lower rungs of the global economic ladder will start falling off as rising food prices drop their consumption below the survival level... There are alternatives to this grim scenario. A rise in auto fuel efficiency standards of 20 percent, phased in over the next decade would save as much oil as converting the entire U.S. grain harvest into ethanol... As the leading grain producer, grain exporter, and ethanol producer, the United States is in the driver's seat. We need to make sure that in trying to solve one problem-our dependence on imported oil-we do not create a far more serious one: chaos in the world food economy.>>
R. Emmett Tyrrell, Jr., The American Spectator, 07 June 2007
R. Emmett Tyrrell, Jr. is "adjunct fellow at the Hudson Institute" according to the article credits, which Wikipedia describes as "a right-leaning U.S. think tank". Does this mean that the US right-leaning think tanks are moving towards Peak is near? Who knows, but the article does toe the economists'/right-leaning usual line in two aspects. Economics, "Simple market forces are going to coax the U.S. toward oil alternatives", and nuclear energy, will help solve the problem: <<The presidential candidates, hustling for their parties' presidential nominations, tell us that they are going to make us "energy independent." At the same time they also tell us that $3.00-a-gallon gasoline at the pump is highway robbery. Some announce that they are going to investigate the oil companies. This is political schizophrenia. We cannot approach energy independence and maintain cheap oil prices simultaneously. In fact, in the near future neither goal is possible. America with 5% of the world's population uses 25% of the world's oil. And right now the world is consuming about as many barrels of oil a day as it is producing, which is 85 million barrels. In terms of oil production, the world is now at what is called "peak production."... Thus oil experts such as Boone Pickens predict $80 a barrel oil by the end of the year. He doubts that the world can produce more that 85 million barrels a day. That means the price of gasoline will be even higher than $3.00 a gallon. Verleger predicts $100 a barrel oil before the end of 2008. Imagine what you will be paying for a gallon of gas then... Peak production of oil, however, is here and now.>>
Our blind faith in oil growth could bring the economy crashing down
George Monbiot, The Guardian, 29 May 2007
Monbiot asks a very good question that so far has escaped the rest of the UK media and general public's attention - why has the UK government got a transport policy that assumes growing oil supplies when it does not even know whether they wil exist or not? George goes on to discuss the International Energy Agency, OPEC, a couple of Robert Hirsch's reports and Peak Oil: <<... Buried in another chapter [of the just-published energy white paper], however, and so far missed by all journalists, there is a remarkable admission: "The majority (66%) of UK oil demand is derived from demand for transport fuels which is expected to increase modestly over the medium term." To increase? If the government is implementing all the exciting measures the transport chapter contains, how on earth could our use of fuel increase? You won't find the answer in the white paper. It mysteriously forgets to mention that the government intends to build another 2,500 miles of trunk roads and to double the capacity of our airports by 2030.. So the government must have examined this question. If our economic lives depend on continued growth in the consumption of transport fuels, it must first have determined that such growth is possible. Mustn't it?... Last week I phoned four government departments - trade and industry, transport, environment, communities and local government - in the hope of finding this assessment. But it does not exist. No report has ever been commissioned by the British government on the issue of whether or not there is enough oil to sustain its transport programme... Instead, both the white paper and the civil servants I spoke to referred me to a book published by the International Energy Agency, set up by the OECD after the 1974 oil crisis... Before it presents any evidence, the book dismisses people who have questioned future oil supplies as "doomsayers". It announces that it has "long maintained that none of this [the possibility that oil supplies might be reaching a peak] is a cause for concern"... We don't need to invoke peak oil to produce an argument for cutting our use of transport fuel. But you might have imagined that the government would have shown just a