Author: ASPO-USA

The Wall Street Journal recently ran an article called, Glut of Capital and Labor Challenge Policy Makers: Global oversupply extends beyond commodities , elevating deflation risk. To me, this is a very serious issue, quite likely signaling that we are reaching what has been called Limits to Growth , a situation modeled in 1972 in a book by that name. What happens is that economic growth eventually runs into limits. Many people have assumed that these limits would be marked by high prices and excessive demand for goods. In my view, the issue is precisely the opposite one: Limits to growth are instead marked by low prices and inadequate demand . Common workers can no longer afford to buy the goods and services that the economy produces, because of inadequate wage growth. The price of all commodities drops, because of lower demand by workers. Furthermore, investors can no longer […]

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This is the cleft stick within today’s global energy supply: too little ‘cheap energy’ to enable economic growth, too low a return on capital to allow investment in higher production. A few weeks ago tremors rocked the world of ‘fracking’ in the USA – though few heard them. The US Energy Information Agency (USEIA) had issued its latest Monthly Drilling Report and the news was not good. It wasn’t simply the economic failure of fracking (covered in The Ecologist last December ) and the subsequent collapse in drilling ( covered in January ). The news from the USEIA was far more grim for those who understood its deeper meaning. Their press release was very matter-of-fact: “EIA’s most recent Drilling Productivity Report (DPR) indicates a change in the crude oil production growth patterns in three key oil producing regions… The DPR estimates include the first projected declines in crude oil […]

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Since around 2005 many countries have increased their oil production but more have decreased. But the combined production of the United States and Russia have kept the world on a slight uptrend since that time. World oil production jumped in 2011, hardly moved at all in 2013 but it was up by more than 1.5 million barrels per day in 2014. And after such a huge gain everyone and their brother were singing “peak oil is dead’. But if you scroll down through the 37 major world oil producers it becomes obvious that a majority of nations have peaked and most of them are in steep decline. The above chart is EIA data; however, the next four charts below are JODI data with the last data point February 2015. The data on all charts is thousand barrels per day. In the last decade it has been two of the […]

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The result, in my opinion, is as startling as it is world-changing: Global oil demand will peak within the next two decades. A less potent weapon The geopolitical and economic implications of peaking demand will be huge. The fall in the importance of Saudi Arabia is already palpable, with all the major powers from the U.S. to China more willing to accommodate Saudi archrival Iran. In addition, Russia’s ability to use oil as a weapon will wane, as will the economic leverage of the Organization of the Petroleum Exporting Countries. As economic growth becomes increasingly disconnected from oil, world powers will likely shift their attention to other increasingly scarce resources that will be equally critical to economic well-being, such as food, water and minerals. A greater interest in Africa, for example, is already starting to emerge. For sure, peak demand is far from how the oil patch sees things. […]

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Since around 2005 many countries have increased their oil production but more have decreased. But the combined production of the United States and Russia have kept the world on a slight uptrend since that time. World oil production jumped in 2011, hardly moved at all in 2013 but it was up by more than 1.5 million barrels per day in 2014. And after such a huge gain everyone and their brother were singing “peak oil is dead’. But if you scroll down through the 37 major world oil producers it becomes obvious that a majority of nations have peaked and most of them are in steep decline. The above chart is EIA data; however, the next four charts below are JODI data with the last data point February 2015. The data on all charts is thousand barrels per day. In the last decade it has been two of the […]

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Despite the exploitation of unconventional oil resources like high-cost tar sands (pictured in Canada) and shales, peak oil really is upon us. Photo: Gord McKenna via Flickr (CC BY-NC-ND). The ‘death of peak oil’ has been much exaggerated, writes Paul Mobbs. Take out high-cost ‘unconventional’ oil and production peaked ten years ago, and even North America’s fracking and tar sands boom has failed to open up new resources both big enough to make good the shortfall, and cheap enough to reward investors. We really do need to be thinking ‘beyond petroleum’. This is the cleft stick within today’s global energy supply: too little ‘cheap energy’ to enable economic growth, too low a return on capital to allow investment in higher production. A few weeks ago tremors rocked the world of ‘fracking’ in the USA – though few heard them. The US Energy Information Agency (USEIA) had issued its latest […]

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4 Comments on "Dmitry Orlov Peak Oil Lessons From The Soviet Union" Plantagenet on Mon, 4th May 2015 1:55 pm  The Soviet Union was never at peak oil. The problem in the USSR had to do with bad economic policies and genocide and repression carried out by a totalitarian red fascist police state. sugarseam on Mon, 4th May 2015 3:43 pm  As always, you don’t appear to know what you’re talking about, Plant. Your Red Scare is showing, as is the case with most narrow-minded cons. “Red fascist.” What a laughable bastardization of language. They showed us their underbelly after the Wall fell, and predatory capitalists went in and pilfered their country to the tune of hundreds of billions (Harvard Foundation, et al). The number of times that nation has offered an olive branch since Hiroshima only to have greedy Western fascists pull the rug out is hard to […]

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There has been a lot of attention recently to the longer term viability of global fossil fuel reserves. Due to the fall in oil, natural gas and coal prices, the FT reports this week that all the oil majors have slipped into loss as a result of of the low oil and natural gas prices. Why Manufacturers Need to Ditch Purchase Price Variance That’s not the reason for the viability questions, though, that attention is due more as a result of future climate change legislation raising the cost of carbon-based fuels. Another article leads with comments made by Glencore Plc ’s chief executive, Ivan Glasenberg, in the company’s recent sustainability report. Glencore’s Bullish Reacting to investor concerns (not just at Glencore but at all energy companies) he is quoted as saying “Although climate change issues are part of the political, societal and regulatory landscape, we do not believe that […]

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Summary Recent oil crashes show you the hard floor for gauging value oil company equities. Properly understood, the crashes lend an insight into the concept of Peak Oil. All oil equity investors should understand the overarching upward trend on display here. PLEASE NOTE: ALL prices used in this article are using current 2015 dollars, inflation adjusted using the US BLS inflation calculator Generally, when I invest, I try to keep my thesis very simple. Find good companies, with good balance sheets and some kind of specific catalytic event on the horizon. But when one starts to concentrate their holdings in a sector, as I have recently in energy (see my recent articles on RMP Energy (OTCPK: OEXFF ) and DeeThree Energy (OTCQX: DTHRF ) , you need to also get a good handle on the particular tail or headwinds that are affecting it. Sometimes a sector like oil (NYSEARCA: […]

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