Category: Peak Oil

Cheap Oil A Boon For The Economy? Think Again thumbnail I thought it might be a nice idea to question a certain someone’s theories using their own words, while at the same time showing everybody what the dangers are from falling oil prices. There are many ‘experts and ‘analysts’ out there claiming that economies will experience a stimulus from the low prices, something I’ve already talked about over the past few days in The Price Of Oil Exposes The True State Of The Economy and OPEC Presents: QE4 and Deflation . And I’ve also already said that I don’t think that is true, and I don’t see this ending well. Today, our old friend Ambrose Evans-Pritchard starts out euphoric, only to cast doubt on his self-chosen headline. He’d have done better to focus on that doubt, in my opinion. And I have his own words from earlier in the […]

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While Americans were stuffing their faces with poultry Thursday, global oil markets were in chaos. And the implications are far-reaching. The price of oil was down more than 9.9 percent Friday afternoon after the Organization of the Petroleum Exporting Countries decided it would not cut back production significantly in the months ahead. In other words, even amid a sluggish global economy and a boom in oil production in the United States, oil-producing countries from Saudi Arabia to Nigeria to Venezuela are going to keep pumping rather than pull back on output in hopes of pumping prices back up. The latest decline pushes oil prices in the United States under $70 a barrel; the prices were more than $100 for almost all of July. And the latest OPEC move (or non-move, as it were) suggests that it isn’t going to reverse course anytime soon. The reporting out of Vienna , […]

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Oil prices have fallen a long way this year. They might fall much further still. Crude prices have fallen 36% since their summer peak, then sent into a tailspin by  the failure of OPEC, the cartel of oil producing countries accounting for 40% of global supply, to trim its output quotas. And history suggests prices can fall substantially further. It’s worth bearing in mind that for nearly two decades to 2005, crude oil prices largely ranged between $20 and $40 a barrel in today’s money. The average inflation-adjusted price of West Texas Intermediate oil since 1970 is a little under $55 a barrel compared with a little under $70 now. That’s not to say that’s how far they’ll drop. A rapid technical snap-back is always a possibility. But the fundamentals seem stacked towards lower rather than higher prices for now. Which will make for some interesting economic dynamics. Current […]

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When an asset class takes a swan dive off the cliff, fortunes can be lost trying to call the bottom. It’s often impossible to tell whether the asset in question is on a suicide run or undergoing a short-term correction. And so it is with oil. Oil prices are down by a third since June and are less than half of their 2008 high of $147 (U.S.) a barrel. So time to buy? If I knew how to call bottoms, I would not be a miserable, ink-stained wretch; I would be filthy rich and living in a villa on the Amalfi Coast or Côte d’Azur, martini in each hand. But allow me to present four ideas of why the foundation for a compelling oil price bounce-back is being set even as prices tumble. I’m just not going to tell you when that might happen, because I have no clue. […]

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It is the year 2004. With record high prices at the gas pumps and what seemed like a largely oil-explored world, it was an occasion to do what engineers do best: identify technical problems and devise solutions. With what seemed like a real “peak oil” energy shortage looming ahead, the need for reduction of electric power use had a direct impact on electronic design, resulting in the emergence of low-power circuit design. Is that emphasis still required? While some decry the demise of the ecosphere due to the burning of hydrocarbon fuels, an equal problem is the anticipated inability to supply those fuels to meet the growing world demand. This article looks in retrospect at the problem, largely through comments from senior oil engineers inside the industry, and then surveys what happened. The Oil Conundrum We go back a decade, to 2004. Glenn Morton, a geophysicist who headed North […]

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4728 Votes Getting in on the Water Rush Scramble for groundwater lures driller back into business Among critics of our society’s reliance on petrochemicals, there’s long been talk that we are nearing “peak oil” — the beginning of the end of oil reserves. Then came the fracking bonanza, and — bam! — U.S. oil supplies gained a new lease on life. The peak oil buzz died down. Maybe the critics should be talking about “peak water” in the San Joaquin Valley instead. Growers pumped out huge amounts this past summer to keep their productivity up amid drought, and they’re likely to do so again in 2015 — if they can afford it. Everybody paying attention to the situation senses that the game will be up for the Valley’s powerhouse agricultural machine if extreme drought continues, but few know it as clearly as Hanford resident Robert Carvalho. The wily 75-year-old businessman has worn a […]

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THREE times in the last 35 years, Russian military forces have crossed international borders – in Afghanistan in 1979, Georgia in 2008 and the Crimea earlier this year. As Simon Derrick, the currency strategist at BNY Mellon points out, each occasion coincided with a peak in the oil price. And each incursion was followed by a very sharp fall in the price of crude (see chart). Now of course, one can’t say the Russian actions caused the oil price fall. However the oil price peaks, by boosting the economy, may have bolstered the confidence of Soviet/Russian leaders and thus encouraged the military action. The subsequent declines simply show that the Russian government has very bad timing.  Indeed the weakness of oil in the 1980s (and the sapping effect of the Afghan conflict on morale) played its part in the downfall of the Soviet empire; this time round, the Russian […]

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4729 Votes Now the dust from the Shock & Awe of the 30% drop in oil prices has started to settle, two things are clear: (a) Saudi Arabia did not engineer anything (b) they don’t have a Machiavellian plan to stick one up the wildcatters in North Dakota, or the Russians…the Iranians…the Venezuelans, or even the genius from the Daily Telegraph who was bemoaning the fact that if oil prices go down it will be hard to import inflation into U.K. Here are five good reasons why they are going to pass on the opportunity to slash their oil production by 30% so that other OPEC members can cheat and make a windfall, like they all did in 1987/8. 1. Read My Lips Since oil prices jumped from $80 to $110 in early 2011 the Saudi’s have been saying, over, and over and over again, that oil was over-priced […]

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4728 Votes Here’s What The New Era Of Cheap Oil Means For The World’s Major Economies Brent crude oil prices hit a four-year low in November of $77.83, and Credit Suisse believes sub-$100 prices are  here to stay  for at least the next three years. What does the sudden and sharp decline portend for the world economy? Generally speaking, falling crude oil prices are an importing economy’s paradise and an exporter’s inferno. But the macroeconomic ripple effects are a bit more complicated. The United States and Malaysia, for example, are both importers  and  exporters, meaning that the same macroeconomic trend that benefits ordinary consumers and retailers can be a headwind for energy production and have mixed effects on overall GDP. In emerging markets, countries that subsidize fuel are affected differently than those that do not. To sort it all out, Credit Suisse has detailed what low oil prices mean […]

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4721 Votes The peak oil theater I am a little late for the talk at the peak oil conference. Fortunately, it seems that I didn’t lose much: the speaker must have started just a few minutes before I arrived and I only missed the introduction by the chairman. So, I relax in my seat as the speaker goes on with his presentation.(*) The first thing I note is his the way he is dressed; not the standard one in this conference. Most speakers, so far, have been physicists and they have a typical way of dressing: they look like physicists even when they wear a tie; and they usually don’t. This speaker, instead, not only wears a tie, but even wears a double breasted suit (or so it seems to me – even if it is not a double-breasted suit, he wears it as if it were one). And […]

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4721 Votes T he mentally-challenged kibitzers “out there” — in the hills and hollows of the commentary universe, cable news, the blogosphere, and the pathetic vestige of newspaperdom — are all jumping up and down in a rapture over cheap gasoline prices. Overlay on this picture the fairy tale of coming US energy independence, stir in the approach of winter in the North Dakota shale oil fields, put an early November polar vortex cherry on top, and you have quite a recipe for smashed expectations. Plummeting oil prices are a symptom of terrible mounting instabilities in the world. After years of stagnation, complacency, and official pretense, the linked matrix of systems we depend on for running our techno-industrial society is shaking itself to pieces. American officials either don’t understand what they’re seeing, or don’t want you to know what they see. The tensions between energy, money, and economy have […]

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4719 Votes [ This is a complex question, because the quality of the oil matters.  We’ve gotten the good stuff, the light, easy oil. Much of the remaining oil is deep, nasty-gunky stuff, in arctic and other remote areas, and will take a lot more energy to produce and refine ] Ron Patterson. July 14, 2014. World Crude Oil Production by Geographical Area . Peakoilbarrel.com Check out the graph “World Less North America” at Peak Oil Barrel which shows world oil production minus North American production is down by 2 million barrels.  Are we starting to see the petticoats of the net energy cliff?  As David Hughes wrote in Drilling Deeper. A reality check on U.S. government forecasts for a lasting tight oil & Shale gas boom , both peak tight (fracked) oil and gas are likely to happen before 2020 in North America.  Powers has also documented this […]

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A worker descends an access ladder outside an oil storage tank at the custody transfer facility in the Salym Petroleum Development oil fields near the Bazhenov shale formation in Salym, Russia, on Wednesday, Feb. 5, 2014. Salym Petroleum Development, the venture between Shell and Gazprom Neft, has started drilling the first of five horizontal wells over the next two years that will employ multi-fracturing technology, according to a statement today. Photographer: Andrey Rudakov/Bloomberg ©Bloomberg Not much is heard these days of “ peak oil ”. This is the argument, widely advanced less than 10 years ago, that the world had already passed the peak of sustainable oil production and that new discoveries – which would increasingly be small and incremental – could at best only slow the rate of decline. As supply continued its seemingly inexorable decline, demand was growing strongly, especially in developing countries. Between 2001 and 2007, […]

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4711 Votes The International Energy Agency (IEA) is the energy watchdog of the industrial world. The developed nations of the world were caught off guard by the oil crisis of 1973. They then realized energy resources are so fundamental to all of civilization, and recognized how vulnerable we are to supply disruptions. Forty years ago in 1974, the International Energy Agency was formed, tasked with keeping an eye on these precious resources, and providing policy makers around the world with information to make better informed planning decisions. The primary deliverable from the IEA is the massive World Energy Outlook (WEO) report that is released annually in November. Concerned about peak oil, I began reading the Executive Summary to this report 10 years ago. Five years ago I wrote a summary of what the report has been telling us from 2005 – 2009, concerning issues related to peak oil: The […]

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Printer-friendly The International Energy Agency (IEA) is the energy watchdog of the industrial world. The developed nations of the world were caught off guard by the oil crisis of 1973. They then realized energy resources are so fundamental to all of civilization, and recognized how vulnerable we are to supply disruptions. Forty years ago in 1974, the International Energy Agency was formed, tasked with keeping an eye on these precious resources, and providing policy makers around the world with information to make better informed planning decisions. The primary deliverable from the IEA is the massive World Energy Outlook (WEO) report that is released annually in November. Concerned about peak oil, I began reading the Executive Summary to this report 10 years ago. Five years ago I wrote a summary of what the report has been telling us from 2005 – 2009, concerning issues related to peak oil: The IEA […]

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John Kemp is a Reuters market analyst. The views expressed are his own LONDON, Nov 12 (Reuters) – There has always been a close link between U.S. oil production, international prices and OPEC, so it should come as no surprise that North America’s shale drillers find themselves locked in a battle with Saudi Arabia over prices and market share. Until the 1950s, the United States accounted for more than half of all global oil production. Big finds such as Oklahoma’s Glenn Pool (1905) and the East Texas field (1930) drove oil price changes around the rest of the world. Since the 1970s, the United States has been a net importer, and international prices have tended to drive changes in U.S. exploration and production. Drilling and output in major oil-producing states have been closely correlated with the rise and fall in real oil prices. And nowhere has the relationship been […]

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4708 Votes We would do well to pause, and ponder both the data and implications presented in the Post Carbon Institute’s latest report , released a few days before Halloween, “Drilling Deeper: A Reality Check On U.S. Government Forecasts for a Lasting Tight Oil & Shale Gas Boom” . The PCI’s new report exposes current oil industry & Energy Department oil production forecasts as wildly exaggerated. Further, it makes a compelling case that production of “U.S. shale gas and tight oil reserves will peak and drop off swiftly, long before officially predicted by the U.S. Energy Information Administration.” The report was written by PCI Fellow and geoscientist David Hughes, who previously predicted the vast downgrade of available oil resources in California’s Monterey Shale. According to PCI Executive Director Asher Miller, “based on our analysis, the reality is far different from what the industry is telling the Energy Department, and […]

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Printer-friendly by Gail Tverberg , originally published by Our Finite World  | TODAY The world is in a dangerous place now. A large share of oil sellers need the revenue from oil sales. They have to continue producing, regardless of how low oil prices go unless they are stopped by bankruptcy, revolution, or something else that gives them a very clear signal to stop. Producers of oil from US shale are in this category, as are most oil exporters, including many of the OPEC countries and Russia. Some large oil companies, such as Shell and ExxonMobil, decided even before the recent drop in prices that they couldn’t make money by developing available producible resources at then-available prices, likely around $100 barrel. See my post, Beginning of the End? Oil Companies Cut Back on Spending . These large companies are in the process of trying to sell off acreage, if […]

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4689 Votes James Schlesinger said once that humans have only two modes of operation: complacency and panic. This bimodal kind of functioning seems to be applied also to the oil market, where everything is judged on the base of a simple binary rule: high prices: bad; low prices: good. So, with oil prices falling rapidly during the past few days, the general attitude seems to be mostly of rejoicing. All worries about peak oil are being swept under the carpet and SUV owners seem to be happily expecting the fall of gas prices that will allow them to fill up their tanks on the cheap. Unfortunately, the bimodal perception of the world makes people blind to the fact that nothing happens in isolation in the world. It is the basic law of complex systems: you can’t do just one thing. If something changes in a complex system, it is […]

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Resilience Published on Resilience (http://www.resilience.org) Original article: http://www.postcarbon.org/how-to-shrink-the-economy-without-crashing-it-a-ten-point-plan/ by Richard Heinberg Earth image via shutterstock. Reproduced at Resilience.org with permission. The human economy is currently too big to be sustainable. We know this because Global Footprint Network, which methodically tracks the relevant data, informs us that humanity is now using 1.5 Earths’ worth of resources . We can temporarily use resources faster than Earth regenerates them only by borrowing from the future productivity of the planet, leaving less for our descendants. But we cannot do this for long. One way or another, the economy (and here we are talking mostly about the economies of industrial nations) must shrink until it subsists on what Earth can provide long-term. Saying “one way or another” implies that this process can occur either advertently or inadvertently: that is, if we do not shrink the economy deliberately, it will contract of its own accord […]

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The oil field which helped kick-start the North Sea oil boom in the 1970s now looks set to be approaching the end of its useful life.  Anglo-Dutch energy company, Royal Dutch Shell, has announced that it will close two of its three remaining platforms this weekend, while the third will be decommissioned in the near future. It raises questions as to the future for Britain’s energy dependencies and whether North Sea oil and gas are now things of the past. VoR’s Tim Walklate has more. The multi-national oil and gas company also said that the remaining platform, Brent Charlie, would follow suit “in the next few years.” In late 2011 another platform, Brent Delta, was the first to be decommissioned and this marked the beginning of the retirement of the giant oilfield. Shell said in a statement that “from a technically innovative installation phase through to a long period of […]

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Printer-friendly by Kurt Cobb , originally published by Resource Insights  | TODAY Back in March 1999 "The Economist" magazine carried a  cover photo  of two men drenched in oil as they attempted to close a faulty valve that was spraying a huge stream of crude skyward. Over the photo was the headline: "Drowning in oil." At the time it really did seem as if the world were drowning in oil. The previous December  crude oil on the New York Mercantile Exchange touched $10.72 per barrel . That month  U.S. gasoline prices averaged 95 cents per gallon . "The Economist" opined that  oil might go down to $5 per barrel . But, of course, in retrospect the magazine’s cover proved to be the perfect contrarian indicator, for oil had already begun its historic ascent toward $147 per barrel. The 2008 price spike was the culmination of a 10-year bull market […]

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4688 Votes The media is full of peak oil refutations. Unfortunately for the pundits, while they’re heavy on rhetoric they tend to be short on data. In comparison, way back in 2009, Praveen Ghunta, used the BP Statistical Review of World Energy to make a list of countries past peak oil on his True Cost blog . He updated the data again in 2011 . Taking Ghunta’s work as a base I have followed up with figures from the 2014 BP Statistical Review of World Energy . I have purposefully been much more conservative in in defining what a country past peak actually looks like: I have made the arbitrary decision that any country or region that peaked more than 10 years ago and produced a minimum of 10% less oil in 2013 than in the peak year has officially reached peak oil. That is of course is the […]

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4666 Votes By Drs. Robert & Sonia Vogl President and Vice President, Illinois Renewable Energy Association Our economy was built on cheap fossil fuels, which supported our economic and technological progress. As sources of conventional low-cost oil are depleted, we have turned to unconventional sources with higher extraction costs. With current oil prices around $80 to $85 per barrel, it has been estimated that new tar sands oil requires $95 per barrel to be extracted. If the oil is not extracted, prices could still rise, as competition for the existing oil would intensify. Energy economist Douglas Reynolds believes our economic malaise is a result of a decrease in energy supplies. He notes that the United States has a vast global military presence that we are unable to pay for, a decreasing standard of living, increased concentration of wealth, and a continuous energy crisis that began in 1973. He sees […]

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David Hughes, a Canadian geoscientist and a fellow of the anti-fracking Post Carbon Institute , has emerged as one of the media’s favorite proponents of “Peak Oil,” the debunked theory that oil production will soon be in permanent decline. Never mind, of course, that there are more proven oil reserves today than there were decades ago, when “Peak Oil” advocates were saying the exact same thing as they are today. In a new report , Hughes once again gives succor to anti-development and anti-fracking activists with more claims that shale development will “peak” a lot earlier than expected. More specifically, Hughes claims that “tight oil production from major plays will peak before 2020”. He also adds: “…by 2040, production rates from the Bakken and Eagle Ford will be less than a tenth of that projected by the EIA.” Hughes is arguing, in effect, that the hundreds of thousands of […]

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Printer-friendly The world price of oil – Brent Crude – fell below $84 per barrel on October 15.  This was 26% less than the $115 it had reached in June, just four months before.  The rise during the spring had many explanations:  global tensions in Ukraine, the South China Sea and especially the Middle East with the emergence of the Islamic State, plus a capital crunch challenging the health of the U.S. shale fracking boom.  Then suddenly in June, prices started dropping, reaching levels unseen since 2010 (though still high by historical standards – twice that of 10 years ago). What is going on?  Why does the price of oil matter to financial advisors?  What might these fluctuations mean to the price and supply of oil for the rest of the decade?  Isn’t oil just another commodity? A primer on oil prices Oil is unique. There is a tight […]

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4607 Votes Not even a third world war or a lethal pandemic, leave alone a one child policy globally, will be able to slow down the planet’s rocketing population rise, scientists say. New multi-scenario modeling of world human population has concluded that even stringent fertility restrictions or a catastrophic mass mortality would not bring about large enough change this century to solve issues of global sustainability. Scientists concluded that even a world-wide one-child policy like China’s, implemented over the coming century would still likely result in 5-10 billion people by 2100. There are currently about 7.1 billion people on earth, and demographers estimate that this number could rise to about 9 billion by 2050. Professor Corey Bradshaw and Professor Barry Brook from the University of Adelaide’s Environment Institute said that the locked-in population growth means the world must focus on policies and technologies that reverse rising consumption of natural […]

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The Post Carbon Institute has just released a critique of the EIA’s Light Tight Oil projections. It is titled DRILLING DEEPER . The report is highly critical of the EIA’s projections and should be read by everyone interested in Peak Oil. All data on all charts is in million barrels per day unless otherwise specified. EIA Oil Projection First a look at the EIA oil projections for US production from all sources. They expect offshore to increase to 2 million barrels per day by 2016, an increase of almost 600,000 bpd from current production. Also note that the EIA has US almost peaking in 2016 and increasing only slightly until the peak in 2019. EIA LTO Hi Lo Projection The EIA has several projections, covering all bases. However the reference, or most likely, will be the only one covered in this post. EIA LTO Projection Here is where all […]

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4599 Votes Peak Oil is still the reality of the future In a reply to my previous contribution, “The falling oil price may presage a future recession”, Civil Economist Magnus Grill ( 19 October in Swedish ) says that I assert, “that Peak Oil does not mean that oil will run out rather than that demand for oil will disappear. Thus it is no longer a question of Peak Oil from a production standpoint rather than now it is from a demand standpoint. This means that Aleklett has completely altered his early reasoning.” I must disappoint Magnus Grill. Peak Oil is still related to production of oil from oilfields. When we discuss Peak Oil we do this based on the fact that oil production in an area or group of areas reaches a maximum and then declines. There are several factors that determine the production profile when production begins […]

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Peter Thiel last August Photo: Art Streiber for Fortune The famed investor says the fracking revolution, fuel efficiency standards, and slowing demand have only bought us time in the search for a true technological breakthrough Peter Thiel, whom we profiled in September in the cover story “ Peter Thiel Disagrees With You ,” is the founder of two billion-dollar companies (PayPal EBAY 0.46% and Palantir), a venture capitalist (his flagship Founders Fund now manages $2 billion in assets), a hedge fund manager, the first outside investor in Facebook FB -0.15% , and the author of the recently released book about launching startups, Zero to One . When his hedge fund, Clarium Capital, launched in 2002, Thiel followed a peak-oil thesis, which paid off splendidly as oil prices rose from about $40 to $140. But prices fell off a cliff in 2008, the fund got clobbered, and institutional investors fled. […]

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In public lectures that I give about global energy, I often note that since the writing of A Cubic Mile of Oil the global reserves of oil have increased, not decreased, despite the fact that in the intervening time (i.e., between 2007 and 2013) the world has consumed about 7.5 cmo. In this post I want to dig deeper and look at the changes that have brought about this paradox, and what it means for Peak Oil. As I explain in the book, reserves have a special meaning refer to those geologic accumulations that can be economically extracted with the current technology. With the development of technology and/or changes in the price of oil, geologic accumulations that were once only part of the larger resource base may get transferred to the reserves. Focusing only on the reservesis apt to give a wrong impression about the total availability of oil. […]

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A person might think that oil prices would be fairly stable. Prices would set themselves at a level that would be high enough for the majority of producers, so that in total producers would provide enough–but not too much–oil for the world economy. The prices would be fairly affordable for consumers. And economies around the world would grow robustly with these oil supplies, plus other energy supplies. Unfortunately, it doesn’t seem to work that way recently. Let me explain at least a few of the issues involved. 1. Oil prices are set by our networked economy. As I have explained previously , we have a networked economy that is made up of businesses, governments, and consumers. It has grown up over time. It includes such things as laws and our international trade system. It continually re-optimizes itself, given the changing rules that we give it. In some ways, it […]

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4597 Votes Increasing Oil Reserves and Peak Oil As I explain in the book, reserves have a special meaning refer to those geologic accumulations that can be economically extracted with the current technology. With the development of technology and/or changes in the price of oil, geologic accumulations that were once only part of the larger resource base may get transferred to the reserves. Focusing only on the reservesis apt to give a wrong impression about the total availability of oil. The chart below shows the historic data from the 2014 edition of the BP Statistical Review of Global Energy (BP2014) for the World Proved Reserves and the Reserves to Production (R/P) ratio. This ratio has often been mistakenly interpreted as the years to exhaustion. Likewise, current price of oil largely reflects the immediate surplus or shortage of supplies, and reflects more on the conditions above ground (in the supply […]

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So how’s peak oil working out? Crude prices have fallen about 20 percent since June. A gallon of gasoline is on average 20 cents cheaper than it was a month ago. The world is facing a glut of petroleum and, for the first time in 40 years, America is exporting oil. Obviously this is not the scenario of limits sketched out by some geologists, environmentalists and industry observers a few years ago. At the risk of oversimplifying, peak oil, which originated with petroleum geologist M. King Hubbert in the 1950s, generally stated that the planet would soon use up half of its available oil. The easy and inexpensive to reach and refine half. The theory was borne out when the continental U.S. hit peak around 1970. I wrote about peak oil as one of many disruptions headed our way. Nor was peak oil a tin-foil-hat coven on the margins. […]

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4591 Votes TreeHugger has a post on a rare mention of peak oil in the mainstream media – HSBC Economist Says Weve Got Just 50 Years of Oil Left. Now if youve even gotten a small bit of knowledge about the state of the worlds oil reserves and the concept of peak oil, the statement that weve got confidently just 50 years of oil left in the ground is hardly shocking–check out the video of HSBC senior economist Karen Ward delivering the lines below (around the 02:00 minute mark), h/t Climate Progress. But what is shocking to me is the calmness with which the line is delivered and how outside of specialist reporting such statements are seldom to be heard. Fifty years is within my lifetime as in within the lifetime of many TreeHugger readers, yet when President Obama recently talked about transitioning off foreign oil and developing future […]

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Printer-friendly Energy Information Awareness graph of oil prices (2004). Source US Government via Wikimedia Commons.  So oft in theologic wars, The disputants, I ween, Rail on in utter ignorance Of what each other mean, And prate about an Elephant Not one of them has seen! — The Blind Men and The Elephant by John Godfrey Saxe When the world’s business editors sent their reporters canvassing to find out what is behind the recent plunge in the world oil price, they were doing what they do almost every day for every type of market: stocks, bonds, currencies, commodities and real estate. In financial journalism more often it’s the price that makes the story rather than the story that makes the price. If a story is about something very surprising which almost no one can know in advance–a real scoop–say, an unexpected outcome in a major court case affecting a company’s […]

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For decades there have been predictions of peak oil and the disastrous consequences it will have on society. As the theory goes, eventually the world’s oil reservoirs will run out of oil, driving us to more expensive reservoirs and higher oil prices until there’s not enough cheap oil to serve the world’s energy needs. Essentially, there will be a peak in cheap oil supply. Those who fear peak oil also often think there will be a cascade of economic disasters as a result of this peak in cheap oil supply. Today, there is emerging evidence that a peak is on the horizon — but it’s not a peak in supply, it’s a peak in demand. Energy efficiency is improving, alternatives are becoming viable, and oil just isn’t as attractive as it once was to consumers. The result could be a peak oil scenario that works in exactly the opposite […]

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With Brent falling below $90 / barrel, panic seems to be gripping the oil community, from the majors to the frackers.  It’s time for a bit of perspective.  Start with supply.  Libya has added 550 kpbd of supply in just the last three months.  That’s a 2 mbpd / year pace, plenty to tank prices without other considerations.  That country could still boost production by a similar amount over the next year in the better case (and there are worse cases, too), but once it puts capacity back on line, Libyan production will no longer depress oil prices. On the unconventional  side, US shales and Canadian oil sands continue to power overall supply growth.  But keep in mind that the US independents were free cash flow negative at $105 WTI, and they’re going to be even more negative at $84 / barrel.  If they can’t fill the funding gap, they’re going […]

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By Chris Hamilton Production of crude oil has nearly stalled despite a near quadrupling in the price since ’01 and it seems likely the world has entered the Peak Oil phase and neither the governments nor central banks (try as they may) can paper this over. Without the growing supply of adequate cheap energy, there isn’t adequate GDP growth, and without the GDP growth, there is no way to outgrow, pay off, or service the huge debts incurred but by interest rate suppression. The dual occurrence of peak oil with ZIRP (zero interest rate policy) is a truly unfortunate state of affairs. But whether or not they happened in tandem, both were inevitable. Still, governments and central banks are attempting to maintain the pre-peak oil system and avoid the pain of free market corrections to supply, production, and price. It is in this light that the centralization and "intervention" […]

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4582 Votes In the last few days (written 14 October 2014) the headlines have focused on the increase in oil production from OPEC producers, now at its highest level since the summer of 2013 – In its monthly oil market report, OPEC said its oil production rose by 402,000 barrels a day in September 2014 to total 30.47 million barrels a day. Higher levels of supply from Iraq and Libya were the main drivers of the production increases. Oil production is also rising due in part to the shale oil boom in North America. Whereas demand has weakened as growth falls in the global economy, this saw a 20% fall in the spot price for Brent crude over 3½ months. From the oil industry’s point of view this all sounds very positive, growing production, a product where supply exceeds current demand. But we need to step back and look at the longer-term picture. Richard […]

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Printer-friendly I’ve been advancing a thesis for several months with friends that World War III is now underway. It’s just that it’s not the war we thought it would be, that is, a confrontation between major powers with the possibility of a nuclear exchange. Instead, we are getting a set of low-intensity, on-again, off-again conflicts involving non-state actors (ISIS, Ukrainian rebels, Libyan insurgents) with confusing and in some cases nonexistent battle lines and rapidly shifting alliances such as the shift from fighting the Syrian regime to helping it indirectly by fighting ISIS, the regime’s new foe. There is at least one prominent person who seems to agree with me, the Pope. During a visit to a World War I memorial in Italy last month Pope Francis said: "Even today, after the second failure of another world war, perhaps one can speak of a third war, one fought piecemeal, with […]

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WASHINGTON — As global leaders sounded the alarm about a slowing world economy, a more immediate concern drew the attention of policy makers at the International Monetary Fund ’s semiannual meetings last week: inflated asset prices and increasing levels of debt overseas. Bond markets in the eurozone are booming, debt in China is at historic highs and the United States stock market, even with its sharp fall last week, has been on a tear. As economists and politicians heap pressure on global central banks to continue, and even escalate, their unusually loose monetary policies in order to spur global demand, the fear that these measures could provoke another market convulsion is spreading. “A major lesson of the last crisis is that accommodative monetary policy contributed to financial excesses,” said Lucas Papademos, a former vice president of the European Central Bank . “We are pursuing a similar policy for good […]

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4576 Votes One of the more disruptive consequences of peak oil is likely to be peak air travel . What does peak air travel mean? Why is it likely? Why haven’t you already heard more about it? And what business and investment opportunities does this coming disruption create? I’ve been writing about the unsustainability of air travel for more than 20 years, and I’m pleased that this year it’s on the SXSW Eco conference agenda . But let me make one thing perfectly clear from the start: I am not here to tell you that you shouldn’t fly. Some people do make that argument , and it’s a legitimate question , but that’s not what I’m saying. I came to Austin by plane, and I think very few people who can afford to fly will choose to fly significantly less for reasons of ethics or sustainability. People like me […]

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As I previously predicted Uganda has now found a substantial reservoir of natural gas and the government will be looking at a development plan to fully utilise such a find.  Therefore It now seems a good time to return to the controversial issue of fracking. In the UK, the North Sea natural gas reserves are on a major decline and supplies are quickly running out, therefore the British government has submitted to the demands of the oil industry to start fracking on UK soil. So what is fracking and why is it causing so much discontent? The Earth is made up of a number of layers, after you drill past the water table you will eventually come to a type of rock called shale, which is sedimentary and fine grained in nature comprising of a mixture of clay flakes and other minerals such as calcite and quartz. Usually a […]

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Where is George Orwell when you need him? It is a supreme irony that cornucopian oil industry mouthpiece and consultant Daniel Yergin should receive America’s first medal for energy security named after James Schlesinger, the first U.S. energy secretary. For those not familiar with the late Dr. Schlesinger’s views, in a keynote speech he told attendees at a 2007 conference sponsored by the Association for the Study of Peak Oil (ASPO) the following: Conceptually, the battle is over. The peakists have won. I was sitting next to an oil executive in New Mexico just recently, and he said to the audience, "Of course, I’m a peakist. We’re all peakists. I just don’t know when the peak comes." But that represents part of a conceptual victory. And, therefore to the peakists I say, you can declare victory. You are no longer the beleaguered, small minority of voices crying in the […]

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On Monday, September 29, the Wall Street Journal (WSJ) published a story called “ Why Peak Oil Predictions Haven’t Come True .” The story is written as if there are only two possible outcomes: The Peak Oil version of what to expect from oil limits is correct, or Diminishing Returns can and are being put off by technological progress–the view of the WSJ. It seems to me, though, that a third outcome is not only possible, but is what is actually happening. 3. Diminishing returns from oil limits are already beginning to hit, but the impacts and the expected shape of the down slope are quite different from those forecast by most Peak Oilers. Area of Confusion In many people’s way of thinking, the economy is separate from resources and the extraction of those resources. If we believe economists, the economy can grow indefinitely, with or without the use […]

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