Category: Peak Oil

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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Power lines criss-cross the sky near downtown Los Angeles, California in September. European Pressphoto Agency IVÁN MARTÉN : Many still fail to appreciate the huge potential for using energy more efficiently, which is probably the best way to reduce carbon emissions. In the Boston Consulting Group’s report The Energy Efficiency Opportunity: Winning Strategies for a High-Growth Market , which was published in May, we calculate potential energy savings of 200 megatons of oil equivalent (Mtoe) in the U.S., which is equal to 20% of annual energy demand. In Europe, we project that energy-efficiency technologies will represent a market worth approximately €30 billion ($38.2 billion) by 2020. The most robust growth will be in countries with high energy prices, determined regulators, stable regulatory environments, and established energy-efficiency markets. Some important challenges remain in the residential market, however. One challenge is that consumers perceive energy-efficiency projects as risky. They are unsure […]

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Russell Gold writes in the Wall Street Journal that perhaps the idea of peak oil is a myth. After all, technology keeps getting better and better, allowing us to extract more oil from old fields. Of course, it’s expensive to do business this way: When the oil industry overcomes an obstacle and boosts oil production, costs typically increase. That opens the door for a better and cheaper energy source that will eventually displace crude oil. So at some point, the cost of getting more and more oil likely will get so high that buyers can’t—or won’t—pay….Already, economics is bringing about some changes. Despite the abundance of oil that fracking has delivered, global oil prices remain high. This has kept the door wide open for alternative sources of energy and spending on energy efficiency. …."There will be peak oil, but it will be [because of] peak consumption," says Michael Shellenberger, […]

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Russell Gold’s Wall Street Journal article “ Why Peak-Oil Predictions Haven’t Come True ” hit the web yesterday. And given Gold’s position as senior energy reporter for the Journal, this is likely the highest profile Peak Oil article of the year. You may also remember Gold from the great video interviews filmed as part of his book tour for his latest work “ The Boom: How Fracking Ignited the American Energy Revolution and Changed the World .” Gold’s article comes from a very optimistic side of the Peak Oil Debate, but the pessimistic position isn’t as weak as Gold suggests. Let’s jump in to examine the truth about past oil predictions, why the rate of oil production is the only correct metric for these debates, why these discussions should be grounded on present-day events, and why realistic estimates of our energy future should be our ultimate goal. Peak Oil […]

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A year ago saw the final post on The Oil Drum, a popular blog — started in 2005 — devoted to discussing the idea that global oil production had peaked. Next up was an age of energy scarcity and economic collapse. Actually what peaked was interest in “peak oil.” As reporter Russell Gold points out in the WSJ today, US oil production began to rise in 2009 and continues to rise today thanks to the oil field innovation of hydraulic fracturing and horizontal drilling. Innovation met scarcity and innovation won. And there are more innovations on the way, according to Gold. But won’t we one day run out of oil? It’s not infinite, after all, right? Actually price and technological advances rather than petroleum supply is more likely to keep plenty of oil in the ground forever. Gold:  When the oil industry overcomes an obstacle and boosts oil production, […]

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I’ve described the dynamic of structural imbalances of supply and demand leading to lower prices for crude oil as the Oil Head-Fake:  high global production (supply) continues while demand declines due to global recession, and the resulting imbalance of supply and demand triggers a major decline in price. But this drop is not positive; it’s a temporary response that triggers a variety of disruptive consequences. There’s nothing fancy about a basic supply-demand pricing model; if the world is awash in crude oil and demand slides, price will eventually follow. The interesting parts of the Oil Head-Fake Dynamic arise from the supply side, not the demand side.  Demand for oil is famously inelastic, meaning that easy substitutes are not readily available, and the primacy of oil in the global economy insures a steady demand. Yes, natural gas can be substituted for vehicles that have been converted to burn natural gas, […]

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How Far Will the Shale Boom Go? The shale energy revolution has already upset the “peak oil” forecast, which predicted that the world will soon reach the point of highest physical oil output and thereafter global production will begin an inexorable decline. Now, in the context of the worsening political situation in the Middle East and Eastern Europe, its impact is being discussed in terms of America’s ability to secure its own energy supplies and assist its allies with theirs. The near-term enthusiasm for shale energy is understandable, but what are its longer term prospects? Energy markets are notoriously difficult to predict. In the 1970s, as U.S. oil production reached a historic high point and turmoil in the Middle East produced two spikes in crude prices, there was talk of imminent scarcity. While global output stood at around 60 million barrels per day (mbd), some analysts declared that the […]

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Ready Or Not… The Unsustainable Status Quo Is Ending ~ Walking straight in a hall of mirrors I have to confess, it’s getting more and more difficult to find ways of writing about everything going on in the world. Not because there’s a shortage of things to write about — wars, propaganda, fraud, Ebola — but because most of the negative news and major world events we see around us are symptoms of the disease, not the disease itself. There are only so many times you can describe the disease, before it all becomes repetitive for both the writer and the reader. It’s far more interesting to get to the root cause, because then real solutions offering real progress can be explored. Equally troubling, in a world where the central banks have distorted, if not utterly flattened, the all important relationship between prices, risk, and reality, what good does […]

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Have we beaten "peak oil"? For decades, it has been a doomsday scenario looming large in the popular imagination: The world’s oil production tops out and then starts an inexorable decline—sending costs soaring and forcing nations to lay down strict rationing programs and battle for shrinking reserves. U.S. oil production did peak in the 1970s and sank for decades after, exactly as the theory predicted. But then it did something the theory didn’t predict: It started rising again in 2009, and hasn’t stopped, thanks to a leap forward in oil-field technology. To the peak-oil adherents, this is just a respite, and decline is inevitable. But a growing tide of oil-industry experts argue that peak oil looks at the situation in the wrong way. The real constraints we face are technological and economic, they say. We’re limited not by the amount of oil in the ground, but by how inventive […]

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Growth in China has slowed from double digits to 7.5% A “poisonous combination” of record debt and slowing growth suggest the global economy could be heading for another crisis, a hard-hitting report will warn on Monday. The 16th annual Geneva Report , commissioned by the International Centre for Monetary and Banking Studies and written by a panel of senior economists including three former senior central bankers, predicts interest rates across the world will have to stay low for a “very, very long” time to enable households, companies and governments to service their debts and avoid another crash. The warning, before the International Monetary Fund ’s annual meeting in Washington next week, comes amid growing concern that a weakening global recovery is coinciding with the possibility that the US Federal Reserve will begin to raise interest rates within a year. More On this story On this topic IN Global Economy […]

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While the world starts to understand that behind the evil behind ISIS there is also another element to it, greed. US airstrikes hit mobile oil refineries in Syria that was help fund the terrorist group. Ideology is always best suited when it is being funded with oil and to strike at these mobile units is a step in destroying this ISIS terror threat. That was clear that when they were fighting over the Brega refinery in Iraq they went to great measures to kill people but save the refinery. While the Brent Crude fell hard against the WTI as Libyan oil comes back on line a late surge led by RBOB gasoline as refinery glitches and a larger than expected drop in US crude supply brought the market back. Yet with a soaring dollar it is hard to be too excited about the long side of almost any commodity. […]

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Due to the highest level of domestic crude oil production in 45 years, oil imports will make up less than a quarter of U.S. consumption next year, according to a forecast by the Energy Information Administration (EIA). In August, “total U.S. crude oil production averaged an estimated 8.6 million barrels per day,” which was “the highest monthly production since July 1986,” according to EIA’s “ Short Term Outlook ,” which was released September 9th. EIA expects domestic oil production to increase to an average 9.5 million barrels per day in 2015, which would be the highest level since before the Organization of Arab Petroleum Exporting Countries’ (OPEC) oil embargo in 1973. At that time, the federal government placed a ban on exporting U.S.-produced oil abroad. “If achieved, the 2015 forecast would be the highest annual average crude oil production since 1970,” the EIA forecast stated. As a result, U.S. […]

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David Archibald has recently revised his peak date for shale oil. The below was contained in a recent post I received from him: Ron, For what it is worth, just to let you know that I have recanted on my estimate of US LTO production. This is from reading the presentations put out in September by the US independents.   I started with the EOG presentation and then worked through the others that EOG referred to.  If Hubbert-type analysis works for LTO, it may be too early to apply it. The rig count for the Bakken etc may be down to flat but the fraccing units are pumping a lot more sand and the economics of fraccing have improved a lot over the last two years.  That in turn means that the resource is larger at a given IRR cutoff.  This is currently my best guess of the three major […]

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Oil and other commodity prices have recently been dropping. Is this good news, or bad? Figure 1. Trend in Commodity Prices since January 2011. Brent spot oil price from EIA; Australian Coal from World Bank Prink Sheet; Food from UN’s FAO. I would argue that falling commodity prices are bad news . It likely means that the debt bubble which has been holding up the world economy for a very long–since World War II, at least–is failing to expand sufficiently. If the debt bubble collapses, we will be in huge difficulty. Many people have the impression that falling oil prices mean that the cost of production is falling, and thus that the feared “peak oil” is far in the distance. This is not the correct interpretation, especially when many types of commodities are decreasing in price at the same time. When prices are set in a world market, the […]

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In a New York Times op-ed published September 18 titled “ Errors and Emissions ,” economist-columnist Paul Krugman took a swipe at my organization, Post Carbon Institute, lumping us together with the Koch brothers as purveyors of “climate despair.” No, the Koch brothers are not in despair about the climate; apparently our shared error is that we say fighting climate change and growing the economy are incompatible. And, according to Krugman, a new report from the New Climate Economy Project (NCEP) and a working paper from the International Monetary Fund (IMF) show that the falling cost of renewable energy means this is happily not the case. But in our view Krugman himself is guilty of five critical errors, and three equally serious omissions. First the errors: 1. He mistakes post-growth realism for anti-growth activism. While Krugman linked to my book The End of Growth , it seems he may […]

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The Greatest Peak Oil Novel Ever Written Herman Melville never mentioned “peak whale oil” in his “Moby Dick”, published in 1851. But the novel can be understood taking into account the fact that the American whaling industry was going through its production peak just during those years. We may consider “Moby Dick” as the greatest peak oil novel ever written. In 1970, the United States went through their production peak for crude oil. Production reached a maximum then started a decline that has been lasting up to a few years ago. The peak was an epochal event, it was the “ great U-turn ” of the American economy, which ushered in a new era of larger social inequality and diffuse poverty. But the reaction to the peak itself was a deafening silence. Earlier on, the peak had been discussed and extensively debated since the time when, in 1956, the […]

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Probably the most important thing you need to know about the 1972 book entitled Limits to Growth is that it makes no predictions. Rather, the much maligned study provides scenarios for thinking about the future of resource use, pollution, population, food, and industrial production.  Limits to Growth detailed three scenarios originally, one of them called business-as-usual or BAU. Since then, countless scenarios have been run using the same model–called World3–and some of them are discussed in updates to the book, the most recent published in 2004. Many of the scenarios including BAU result in a collapse of industrial production and population some time this century. What has surprised those reviewing the model used by Limits to Growth researchers is how closely reality has tracked the original BAU scenario. A recent review suggests that the signs of societal collapse may be around the corner based on the observed trends. But […]

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By | Sun, 07 September 2014 00:00 | Perhaps you’ve seen one of the recent barrage of articles claiming that fears of an imminent peak and decline in world oil production have either been dispelled (because we actually have plenty of oil) or are misplaced (because climate change is the only environmental problem we should be concerned with). I’m not buying either argument. Why? Let’s start with the common assertion that oil supplies are sufficiently abundant so that a peak in production is many years or decades away. Everyone agrees that planet Earth still holds plenty of petroleum or petroleum-like resources: that’s the kernel of truth at the heart of most attempted peak-oil debunkery. However, extracting and delivering those resources at an affordable price is becoming a bigger challenge year by year. For the oil industry, costs of production have rocketed; they’re currently soaring at a rate of about […]

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Peak oil and peak coal: When will we run out of resources [infographic] Many people are pointing to society reaching its peak point for mining resources, but when will we actually run out? One person on Reddit, known as CrazyHors3 , has done the math in this infographic.

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Pumpjacks image via shutterstock. Reproduced at Resilience.org with permission. Perhaps you’ve seen one of the recent barrage of articles claiming that fears of an imminent peak and decline in world oil production have either been dispelled (because we actually have plenty of oil) or are misplaced (because climate change is the only environmental problem we should be concerned with). I’m not buying either argument. Why? Let’s start with the common assertion that oil supplies are sufficiently abundant so that a peak in production is many years or decades away. Everyone agrees that planet Earth still holds plenty of petroleum or petroleum-like resources: that’s the kernel of truth at the heart of most attempted peak-oil debunkery. However, extracting and delivering those resources at an affordable price is becoming a bigger challenge year by year. For the oil industry, costs of production have rocketed; they’re currently soaring at a rate of […]

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STAVANGER, NORWAY—The chief executive officer of Saudi Aramco, the world’s biggest oil producer, said Monday that worries such as rising oil-sector costs and global turmoil could lead to a lack of oil supplies down the line, if oil companies fail to make sufficient investments. "The factors I just highlighted are likely to put downward pressure on supplies over the longer term, if the industry fails to make prudent and timely investments," Khalid A. Al-Falih said at the Offshore Northern Seas energy conference. The factors that could threaten global oil supply include rising costs and cost overruns on oil mega projects, Mr. Al-Falih said. He also pointed to manpower shortages, climate change issues, low oil demand growth amid global economic weakness in the short term, and turmoil in oil-producing regions such as Africa, the Middle East and the former Soviet Union. "For now, however, the market is shrugging them off, […]

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The idea that we’re running out of oil may have faded slightly from the list of concerns, but that’s just one of any number of precious natural resources we’re using up far too quickly. Peak oil is the concept that new discoveries of commercially exploitable oil resources do not keep pace with growing demand. By extrapolating the data, you can estimate when we will run out of it for all practical purposes. There are a lot of disagreements about whether we have reached peak oil or when the downhill slope will hit a point that brings a significant percentage of our vehicles to a grinding halt, but the concept has made scientists and policy makers ask the question: What other critical resources may be peaking? Asia Pulp & Paper Company, one of the world’s largest, announced last month that it will no longer use wood from natural forests for […]

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The Medium Term Oil Market Report of the International Energy Agency (IEA, Paris),  published in June 2014,  contains a graph which implies that US crude production will start to peak in 2016. Few took notice although the world is continuously occupied with oil and energy related conflicts and wars in Ukraine, Libya and Iraq. So far, oil prices increased only shortly when fights flared up. Apparently oil markets are at ease while the US tight oil “revolution” is underway. But for how long? Global situation Fig 1: US tight oil and crude oil in rest of world vs oil prices The graph shows that US tight (shale) oil sits on top of a bumpy crude production plateau in the rest of the world which clearly started in 2005 (average of  73.4 mb/d since Jan 2005).  Despite increasing tight oil production oil prices did not go down but stayed at […]

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Not too long, another in the endless procession of skate-past-facts-we-don’t like articles made its way into publication via a piece entitled “Here’s The Statistic That Will Be Written On The Tombstones Of Peak Energy Believers” Those concerned about the peak in oil production have apparently earned themselves a promotion! Now we are peak “energy” advocates. Who knew? Seriously … who knew? A nice little attempt to distract from the facts, but use whatcha got! ‘Peak oil’ proponents – the guys and gals who believe overconsumption combined with scarce resources will lead to stratospheric energy prices – are now clinging* to the hope that the shale oil and gas boom will fizzle out as the cost of drilling climbs. For the most part, the boom has held up, though no one believes it will last forever. But there is a fifth-column phenomenon this group has completely overlooked that will once-and-for-all […]

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The debate over whether we are running out of oil sometimes resembles the medieval controversy over how many angels could dance on the head of a pin. By redefining the size of the pin and the agility of the angels, today’s “peak oil” proponents have managed to continue the argument. The characters have changed though. Matthew Simmons, author of Twilight in the Desert, casting doubt on Saudi oil production, died in August 2010, and the Oil Drum website closed down last September. New disputants, including economist James Hamilton from the University of California, and Stephen Kopits, the managing director of the consultancy Douglas-Westwood, argue that oil production is limited by geology and is a severe drag on economic growth. These factors will ultimately drive up the oil price if they are right. On the other side of the argument, voices such as the Reuters columnist John Kemp, who states […]

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In his 2005 New York Times best-selling book  Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy , renowned oil analyst Matthew Simmons outlined his belief that Saudi Arabia’s giant Ghawar oil field would soon begin a terminal decline that would result in permanently falling global oil production. Indeed, from the post-recession lows of 2003 until peaking in 2008, oil prices seemed to prove peak oil proponents correct — with prices seemingly on a long-term exponential increase. However, what Mr. Simmons and other peak oil theorists failed to consider is that America’s shale oil revolution could not only make up for Ghawar’s production fall, but even replace the field entirely. Permian Basin: dethroning the Saudis According to Pioneer Natural Resources , the Permian Basin of West Texas and New Mexico holds an estimated 75 billion barrels of recoverable oil, an estimate that is up 50% in […]

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We frequently see stories telling us how well the United States is doing at oil extraction. The fact that there are stories in the press about the US wanting to export crude oil adds to the hype. How much of these stories are really true? If we believe the stories, the US is now the largest producer of oil liquids in the world. In fact, it has been the largest producer since the fourth quarter of 2012. Figure 1. US Total Liquids production, including crude and condensate, natural gas plant liquids, "other liquids," and refinery expansion. Oil “Extenders” One of the issues is that a few years ago, the US created a new oil-related grouping, combining valuable products with much less valuable (lower energy content, less dense) products. Using this new grouping, the US was able to show much improved growth in total “oil” supply. The US EIA now […]

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Remember the population explosion? When population was growing at its fastest rate in human history in the decades after World War II, the sense that overpopulation was stunting economic development and stoking political instability took hold from New Delhi to the United Nations’ headquarters in New York, sending policy makers on an urgent quest to stop it. In the 1970s the Indian government forcibly sterilized millions of women. Families in Bangladesh, Indonesia and elsewhere were forced to have fewer children. In 1974, the United Nations organized its first World Population Conference to debate population control. China rolled out its one-child policy in 1980. Then, almost as suddenly as it had begun, the demographic “crisis” was over. As fertility rates in most of the world dropped to around the replacement rate of 2.1 children per woman — with the one major exception of sub-Saharan Africa — population specialists and politicians […]

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Why are  oil prices so high, after inflation above 1980 record highes? Peak oil enthusiasts have explanations (usually wrong, like their forecasts). There are many factors at work, including one simple but hidden reason: American foreign policy. The USA has played a large role in the suppression of oil production in three major oil producers, including two nations with some of the world’s largest petroleum reserves — and having the greatest potential for increased production. Perhaps it’s a coincidence that we’ve intervened in three oil producing nations, and high oil prices are an accidental by-product of our good intentions. Contents Iran Iraq Libya Another perspective For More Information (1)  Iran After a long history of interference in Iran’s government, we initiated an ever-tightening and broadening array of sanctions on Iran after the 1979 revolution — continuing until today. See a list here ; Wikipedia has details on US sanctions […]

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President Richard Nixon of the United States of America is probably the most infamous of all the American presidents to ever hold office. His involvement in the Watergate scandal and the Vietnam War are all that’s left of him in the memory of most Americans today. However in 1973, at the peak of the oil crisis, when national oil reserves were depleting and oil prices per barrel had increased by more than 300%, he made his famous address to the people in November, where he said “ Restating our overall objective. It can be summed up in one word that best characterizes this nation and its essential nature. That word is ‘ independence ’.” Today, nearly 40 years after the oil crisis crippled America, they are one step closer to Nixon’s ambitious plan of full energy independence. On July 31st, 2014; an oil tanker, the BW Zambesi , set […]

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The debate over whether we are running out of oil sometimes resembles the medieval controversy over how many angels could dance on the head of a pin. By redefining the size of the pin and the agility of the angels, today’s “peak oil” proponents have managed to continue the argument. The characters have changed though. Matthew Simmons, author of Twilight in the Desert, casting doubt on Saudi oil production, died in August 2010, and the Oil Drum website closed down last September. New disputants, including economist James Hamilton from the University of California, and Stephen Kopits, the managing director of the consultancy Douglas-Westwood, argue that oil production is limited by geology and is a severe drag on economic growth. These factors will ultimately drive up the oil price if they are right. On the other side of the argument, voices such as the Reuters columnist John Kemp, who states […]

Click here to view full article at www.thenational.ae

There are enough articles on the “myth of peak oil” floating around the Internet to fill a book; and there are enough books on the subject to fill a small library.  One of the common threads throughout these publications is their lack of credible sources, because not only is peak oil real, but we’re rapidly approaching that threshold.  An example that is smacking the United States and the oil industry in the face right now is floating in the Gulf of Mexico.  According to a new government report , oil and natural gas production in the Gulf has been steadily declining for the last decade. The report looked at oil production in the Gulf of Mexico on federal lands only, not any privately-held lands where production is taking place. Since 2010, according to the report , the annual yield of oil from the Gulf has fallen by almost 140 million barrels.  […]

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OPEC has released their Annual Statistial Bulletin 2014 . Under the heading of “Oil and Gas Data” there are several tables you can download. I was excited to find one labeled “Table 3.21: World Exports of Crude Oil and Petroleum Products by Country”. It turned out to be useless however as it includes a lot of exports of imported products. And they have no table of “Net Imports”. However their their table labeled “ Table 3.18: World Crude Oil Exports by Country” turned out to be very useful as it seems to measure the same thing as the EIA does in their International Energy Statistics, Crude Oil Exports  which also includes lease condensate. The OPEC export data goes back to 1960 but I have only plotted it from 1990. The EIA data only goes back to 1993. The OPEC data is through 2013 while the EIA data only goes through […]

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Solar and renewables are being touted as the energy sources of the future, but will they provide enough power relative to the energy that must be invested in them? Engineer Graham Palmer argues there’s no easy solution to the fact that we’re running out of fossil fuels. Canadian philosopher Marshall McLuhan once quipped that the last thing a fish would notice is the water. You could almost draw a parallel to the essential role energy plays in modern society—cheap accessible energy is now so ubiquitous that we barely notice the importance of it to modern living, nor the astonishing wealth it has brought. Just one litre of petrol provides the equivalent of a week or more of pre-industrial human labour. Having achieved this miraculous transformation, it is not likely that societies will voluntarily turn back. According to Joseph Tainter’s thesis, societies grow more complex in order to solve new […]

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These are indeed good times to be a Peak Oiler. All the  peak oil deniers are dancing with wild exuberance, pointing to that spike of US shale oil production that they believe drives the final nail in the “Peak Oil Theory” coffin. And it is all happening right before reality slaps them in the face. There is no doubt that world Crude + Condensate production, without that tight oil spike, has been on a ten year bumpy plateau. World Less USA A But, you may ask, when the shale bubble burst, won’t that only mean we will still stay on that bumpy plateau? No for several reasons. First the bursting of the shale bubble will likely cause a decline in US production of perhaps half a million barrels per day per year for three to four years. Second Russia, whose production increase of over 1.5 million barrels per day […]

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In 2006 when James Howard Kunstler published his breakthrough book The Long Emergency , the next two years seemed to vindicate his warning that the oil age was coming to an end with perilous consequences. Oil soared to $147 a barrel in mid-2008. A few analysts suggested that it was headed for $200; but that was not to be. By autumn the stock market had collapsed and with it the world economy. Oil, too, then collapsed, trading in the mid-$30 range by December as demand for oil fell off a cliff with the economy. It seemed for months that the world was headed for an economic depression. But extraordinary stimulative spending by governments around the world and emergency measures by central banks reversed the trend and led to a weak, but extended recovery of sorts that […]

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In 2006 when James Howard Kunstler published his breakthrough book The Long Emergency , the next two years seemed to vindicate his warning that the oil age was coming to an end with perilous consequences. Oil soared to $147 a barrel in mid-2008. A few analysts suggested that it was headed for $200; but that was not to be. By autumn the stock market had collapsed and with it the world economy. Oil, too, then collapsed, trading in the mid-$30 range by December as demand for oil fell off a cliff with the economy. It seemed for months that the world was headed for an economic depression. But extraordinary stimulative spending by governments around the world and emergency measures by central banks reversed the trend and led to a weak, but extended recovery of sorts that […]

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Tech Talk – Changes in global supply and demand At the beginning of the month I pointed out that there are three components to the coming Energy Mess. The first of these is the steady increase in global demand for oil and its products, the second is the decline in production from existing wells and fields, and the third is the shrinking pool of places from which new oil can be recovered to make up the difference between the first two. Internal demand gnaws away at that available for export, as the situation in Saudi Arabia clearly illustrates: Figure 1. Changing relation between Saudi production, internal demand and thus available exports. ( Energy Export Databrowser ) Internal consumption has now reached 3 mbd – out of a production of around 10 mbd, a trend bound to go higher, as the country’s population continues to grow , having risen from […]

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The debate over the impact of peak oil has been raging for decades. Although few deny that the end of mass oil consumption is drawing nearer, educated estimates now range between 2020 and 2030. But more important than the timeframe of peak oil are its consequences. Some seek to spell the end of life as we know it, so reliant is the world upon black gold. Others, equally extreme in their views, embrace the news, looking forward to a time when humanity will magically clean up its act. The truth is somewhere in the middle. Clean energy sources are making major advances as they become cheaper and easier to implement while almost all OEMs have launched lavish research programs into vehicles powered by other means. But the consequences of peak oil are not to be underestimated. Society would undergo a difficult time, given the sheer spread of oil on […]

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IEA Oil Market Forecast: Optimistic Assumptions And An Economy Unable To Grow Out Of Its Problems The International Energy Authority (IEA) forecasts a yearly increase of 1.3% in global oil demand during the period 2013-2019. This contrasts with the assumption of global economic growth rising from 3.6% in 2014 to around 4% thereafter [1] . How does a 1.3% increase in oil usage support economic growth of about three times that amount? The oil intensity of growth has been decreasing over time, with global oil intensity falling from  1:1 (a 1% increase in global oil consumption required for each 1% of global economic growth) to a ratio of 0.75:1, between 1995 and 2009 [2] . An extrapolation of that trend would result in an average oil intensity of about 0.65:1 during the 2013-2019 time period, with 1.3% growth in oil demand driving about 2% global economic growth. The IEA […]

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The International Energy Authority (IEA) forecasts a yearly increase of 1.3% in global oil demand during the period 2013-2019. This contrasts with the assumption of global economic growth rising from 3.6% in 2014 to around 4% thereafter [1] . How does a 1.3% increase in oil usage support economic growth of about three times that amount? The oil intensity of growth has been decreasing over time, with global oil intensity falling from  1:1 (a 1% increase in global oil consumption required for each 1% of global economic growth) to a ratio of 0.75:1, between 1995 and 2009 [2] . An extrapolation of that trend would result in an average oil intensity of about 0.65:1 during the 2013-2019 time period, with 1.3% growth in oil demand driving about 2% global economic growth. The IEA […]

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Here’s the introduction to a new paper I just finished: This year the oil industry celebrated its 155th birthday, continuing a rich history of booms, busts and dramatic technological changes. Many old hands in the oil patch may view recent developments as a continuation of the same old story, wondering if the high prices of the last decade will prove to be another transient cycle with which technological advances will again eventually catch up. But there have been some dramatic changes over the last decade that could mark a major turning point in the history of the world’s use of this key energy source. In this article I review five of the ways in which the world of energy may have changed forever. Below I provide a summary of the paper’s five main conclusions along with a few of the figures from the paper. 1. World oil demand is […]

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The standard way to make forecasts of almost anything is to look at recent trends and assume that this trend will continue, at least for the next several years. With world oil production, the trend in oil production looks fairly benign, with the trend slightly upward (Figure 1). Figure 1. Quarterly crude and condensate oil production, based on EIA data. Figure 1. Quarterly crude and condensate oil production, based on EIA data. If we look at the situation more closely, however, we see that we are dealing with an unstable situation. The top ten crude oil producing countries have a variety of problems (Figure 2). Middle Eastern producers are particularly at risk of instability, thanks to the advances of ISIS and the large number of refugees moving from one country to another. Figure 2. Top ten crude oil and condensate producers during first quarter of 2014, based on EIA […]

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Electric Currents I came across this OpEd this morning by , a former financial advisory and retired attorney, now turned author. Besides turning his ‘pen’ to fiction, he also blogs on energy issues, Peak Oil, in particular, so critics will likely call him, and me, ‘true believers.’ But our particular tribe trusts facts and verifiable numbers, not loose estimations and overly-rosy forecasts, like predicting Americas’ energy independence based on fracking and tar sands. Richard has analyzed the arguments aimed at debunking ‘Peak Oil’ and found that very little substantive data is used. Instead critics turn to the same tactics used by tobacco companies and global warming deniers. I thought his comments and observations worth sharing with EV World readers. Bill Moore Denial Tricks of the Trade On an issue fraught with the potential for so much societal disruption as peak oil presents (like its kin, climate change), and the […]

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Oil expert James Hamilton has an interesting summary of the current world oil market up today, and it’s worth a read. His bottom line, however, is that $100-per-barrel oil is here to stay: The run-up of oil prices over the last decade resulted from strong growth of demand from emerging economies confronting limited physical potential to increase production from conventional sources. Certainly a change in those fundamentals could shift the equation dramatically. If China were to face a financial crisis, or if peace and stability were suddenly to break out in the Middle East and North Africa, a sharp drop in oil prices would be expected. But even if such events were to occur, the emerging economies would surely subsequently resume their growth, in which case any gains in production from Libya or Iraq would only buy a few more years. The chart on the right shows the situation […]

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Average monthly production from Texas wells drilled in indicated period as a function of months since well completion. Source: Anderson, Kellogg, and Salant (2014).” src=”http://econbrowser.com/wp-content/uploads/2014/07/AKS1-866×1024.png”> >Average monthly production from Texas wells drilled in indicated period as a function of months since well completion. Source: Anderson, Kellogg, and Salant (2014). Makati1 on Tue, 22nd Jul 2014 7:52 am  The recovery of real petroleum has been declining for decades. Net energy produced, per capita, has also been declining for at least as long. Never any mention of that in the ‘news’ though. Too depressing and the market casino would crash and never recover. BTW: We do not “produce” oil, we recover it. Mother Nature produced it hundreds of millions of years ago. “Which force is winning the race?” – Econbrowser I do not see it as a “race” nor is there any “winning,” there is only “depletion.” Anyway, the arithmetic is […]

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It’s certainly understandable and indeed common practice in probably every sales conversation in every profession known to man that putting the best spin on the story told is a given. Most buyers/consumers would be surprised at the very least if a presenter offered up her or his best but then immediately discounted that version with other information contradicting it all and discouraging the consumers from even considering what’s being offered. We all understand there’s a game to be played. While that may be standard practice and simply part of the bargain to eventually be struck in the great majority of consumer transactions where the parties tend to be on equal footing, energy supply conversations don’t fall into that category when the discussion is between everyday consumers and industry officials or their representatives. Matters of such scope tend to be outside the range of interest for all but a few, […]

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It is difficult to see any positive interpretation of the changes and conflicts that are increasingly filling the headlines of the press. Fluctuating optimism over the return to credible export production from Libya, to take but one example, is no sooner reported when the news comes of increased fighting in Tripoli , including the international airport. At the same time violence is spreading towards Egypt . Without a strong central government it is likely that the conflicts in that country will continue into the foreseeable future, with continued negative impacts on the export of oil from the country. Transient attempts to maintain a cease-fire and stabilize South Sudan have apparently failed again . The fighting has shut down local oil production, while overall production from South Sudan has been cut to 165 kbd. Capital continues to leave Russia (h/t Nick) and that flight is only likely to accelerate as […]

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