Category: Peak Oil

THE problem is not that there is not enough coal left underground; there is. But the task of lifting it, transporting it and using it depends on many other factors, most importantly on the continued availability of oil as a lubricant for all the machines involved in the supply chain, and as a fuel for transportation. It is reckoned that there are some 109 years of coal left under current consumption assumptions according to a new report by BP, an energy producer.  Broadly that is in line with forecasts by the International Energy Agency (IEA) in Paris which also predicts the availability of other fuels. Discussions about fossil fuel reserves start by aggregating firm and expected supplies from known and almost unknown sources, equating the resulting volume against fairly loose forecasts of economic activity including the assumption that rising costs will be accepted by consumers. While the EROEI (Energy […]

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It’s here. This IEA report spells out peak oil as being in the past . “Days of cheap energy over, IEA figures show” The IEA’s annual outlook on investment, released today, shows annual investment in new fuel and electricity supply has more than doubled in real terms since 2000. Costs to the oil and gas industry also have doubled in that period and the IEA warns of “gradual depletion of the most accessible reserves.” Canada is already seeing projects cancelled because of the high costs of developing the oilsands. And its contradictory stance on climate change  with rules for the oil and gas industry repeatedly delayed may contribute to future uncertainty. .@ vschmo @ traikman @ CBCNews Indeed, that report does describe the world as being past #PeakOil . No longer "in the future". #climatechange — John Klein (@JohnKleinRegina) June 03, 2014 There would be no “gradual depletion” if […]

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The oil industry used to be a no-brainer investment. There seemed to be an infinite supply of oil, and with more and more people owning cars, demand — and thus oil prices — were rocketing. This meant that oil companies would be booming. But has anyone asked the question: what happens when the oil runs out? Oil companies such as BP (LSE: BP.L – news ) (LSE: BP) (NYSE: BP) and Shell (LSE: RDSB.L – news ) (LSE: RDSB) (NYSE: RDS-B.US) are already finding that their production is falling. They are now scouring the furthest reaches of the planet for oil, from the Artic to the Gulf of Mexico and the South Atlantic. Oil is increasingly difficult to extract But any oil they do come across is increasingly difficult, and expensive, to extract. And the Macondo tragedy shows what can happen when the oil industry tries perhaps a little too […]

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In 1956, Marion King Hubbert, a prominent geologist for what is now Royal Dutch Shell (NYSE: RDS-A  ) , made a bold prediction. Based on an extensive analysis of reserves and production data, he concluded that U.S. crude oil production would peak at some point in the late 1960s or early 1970s, after which it would begin an inexorable decline. For decades, his dire prediction looked startlingly accurate. In 1970, U.S. oil production reached 9.6 million barrels a day — a level that hasn’t been equaled since — and then began to decline. It fell steadily from 1970 to 1976, and then rose modestly until 1985, after which it once again slipped into a steady decline that lasted for more than two decades. Hubbert’s prediction laid the path for what has since become known as peak oil theory, a highly influential theory that argues that global oil production is […]

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The roster of Fellows at the Post Carbon Institute hardly strikes any reasonable person as a collection of bug-eyed extremists out to strike fear into the hearts of mere mortals everywhere. Disagree if one must with the conclusions they draw, but this think tank has shared with the public a variety of thoroughly-research, fact-based reports on energy, fossil fuel supplies, climate, and related issues. “Extremists” is not the first thought that comes to mind when reading the great body of work the Institute has created over the years. Unless of course you are one of the advocates of fact-free nonsense as policy still out there in full force peddling their views by stirring up their readership with less than admirable efforts to steer policy debates away from reality and into the rabbit hole of denial. Anything or anyone contradicting their narrow and self-serving interests is met with whatever arsenal […]

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Canadian oil and gas companies will be competing head to head with lower-cost energy producers in the near future, and the country needs a better strategy to remain competitive in a post peak-oil world. According to a PwC report released May 30, Canada has four options when it comes to the future of oil and gas: continue relying on exports to the United States ; focus on building pipelines to either the west or east coasts to get oil and gas to offshore markets; or look to develop “unconventional resources” in Canada’s north. “As Canada moves from a focus on the US market toward exporting our oil production to world markets, it will fight for market share with nations that have strategic interests and the regulatory will to capture demand, particularly in the high-growth Asian market,” says the report. While Canada still has some of the largest oil reserves […]

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“First is conservation. That’s the missing piece in most proposals for dealing with peak oil. The chasm into which so many well-intentioned projects have tumbled over the last decade is that nothing available to us can support the raw extravagance of energy and resource consumption we’re used to, once cheap abundant fossil fuels aren’t there any more, so—ahem—we have to use less. Too much talk about using less in recent years, though, has been limited to urging energy and resource abstinence as a badge of moral purity, and—well, let’s just say that abstinence education did about as much good there as it does in any other context. The things that played the largest role in hammering down US energy consumption in the 1970s energy crisis were unromantic but effective techniques such as insulation, weatherstripping, and the like, all of which allow a smaller amount of energy to do the […]

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BP Plc (BP/) must pay hundreds of millions of dollars in damage claims while it seeks U.S. Supreme Court review of disputed payments in its $9.2 billion accord over the 2010 Gulf of Mexico oil spill, a court ruled. The U.S. Court of Appeals in New Orleans rejected the U.K.-based energy company’s request to maintain a temporary halt on payments to businesses that can’t prove they were directly damaged by the spill. BP settled with most private-party plaintiffs in 2012, initially estimating the cost of the agreement at $7.8 billion. The company contends a flawed interpretation by the claims administrator helped raise the price to $9.2 billion or more. A trial judge in December suspended payments to all businesses harmed by the spill, even those with losses unquestionably linked to the disaster, while the appeals court weighed BP’s concerns. On May 19, the court refused to reconsider its earlier […]

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Second Conference on Economic Degrowth for Ecological Sustainability and Social Equity March 26-29th 2010, Barcelona Peak oil is not some fuzzy academic concern but a reality: for the US in 1970, for some 60 of 80 oil-producing countries and, at least for the moment, for the world since about 2005. In addition the net energy delivered to society (as opposed to the total) is declining in recent decades from 30 or more to one to ten or less to one as we have exhausted our largest, shallowest, closest to shore and highest quality oil and gas fields. While technological improvements have slowed the effects of depletion the net effects are that there is a declining EROI (Energy Return on Energy [and money] Invested). Most alternatives to oil and gas except hydroelectric or coal have a small or very small EROI, and even for these the highest EROI sites in […]

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Peak oil is seen by many oil experts and economists as a major threat to the stability of the global economy and social structure. In 1956, M King Hubbert developed models that correctly foretold that between 1965 -70 oil production in the United States of America would reach a peak and then decline. This model known, as Hubbert’s Peak has proved to be acceptably accurate in forecasting the rise and fall in production for oil-fields both regionally and nationally. The reliance of western economies on oil Most of the important component activities of an industrialised nation such as the UK are dependent on the use of oil. For example, most forms of mechanical transport rely on oil for fuel or lubrication. Therefore, what is produced in factories or farms and then sent to the marketplace uses oil for transportation and probably in some stage of the production. Even the […]

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There has been very little new data to report lately. The JODI, Joint Organizations Data Initiative , data for March came out a few days ago. JODI is very good as far as the data it reports goes. The problem is there is a lot of data they just don’t report. If a country does not report their production for a given month then JODI just leaves it blank. And some countries they can’t seem to get any data from, so JODI just gives them zero for every month. For those countries I just substitute EIA numbers. As far as OPEC goes JODI is very political, reporting the inflated numbers that Iran and Venezuela report. I use instead the EIA data for those two countries.  Anyway here is what I have from JODI. The Data is in kb/d, last data point March 2014: But for a few countries JODI […]

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If oil is “just another commodity,” then there shouldn’t be any connection between oil prices, debt levels, interest rates, and total rates of return. But there clearly is a connection. On one hand,  spikes in oil prices are connected with recessions . According to economist James Hamilton,  ten out of eleven post-World War II recessions have been associated with spikes in oil prices . There also is a logical reason for oil price spikes to be associated with recession: oil is used in making and transporting food, and in commuting to work. These are necessities for most people. If these costs rise, there is a need to cut back on non-essential goods, leading to layoffs in discretionary sectors, and thus recession. On the other hand, the manipulation of interest rates and the addition of governmental debt (by spending more than is collected in tax dollars) are the primary ways […]

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If oil is “just another commodity,” then there shouldn’t be any connection between oil prices, debt levels, interest rates, and total rates of return. But there clearly is a connection. On one hand, spikes in oil prices are connected with recessions . According to economist James Hamilton, ten out of eleven post-World War II recessions have been associated with spikes in oil prices . There also is a logical reason for oil prices spikes to be associated with recession: oil is used in making and transporting food, and in commuting to work. These are necessities for most people. If these costs rise, there is a need to cut back on non-essential goods, leading to layoffs in discretionary sectors, and thus recession. On the other hand, the manipulation of interest rates and the addition of governmental debt (by spending more than is collected in tax dollars) are the primary ways […]

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Generals and others have talked about the dangers of conflicts and/or wars being generated as resources are depleted ( Natural Resource Depletion and the Changing Geopolitical Landscape ). A conflict between Vietnam and China is an example of the tensions that can arise – in this case oil is the resource ( China Blames Vietnam ). But as the TIME cover shows, using the oil resources is just as dangerous, or more so, than running out of oil is –in other words it is a catch-22, a conundrum, or a no-win situation any way we choose to look at this situation that is only getting worse. Britain and France over in Europe are facing the problem of depletion: In just over five years Britain will have run out of oil, coal and gas, researchers have warned . A report by the Global Sustainability Institute said shortages would increase dependency […]

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Time for another roundup of some of the better peak oil stories from the last few months: Former BP geologist: Peak oil is here and it will ‘break economies’ (Raw Story) US Army colonel: world is sleepwalking to a global energy crisis (The Guardian) Peak oil theory, as originally conceived by Hubbert and his followers, was largely governed by natural forces.  As we have seen, however, these can be overpowered by the application of increasingly sophisticated technology.  Reservoirs of energy once considered inaccessible can be brought into production, and others once deemed exhausted can be returned to production; rather than being finite, the world’s petroleum base now appears virtually inexhaustible. Does this mean that global oil output will continue rising, year after year, without ever reaching a peak?  That appears unlikely.  What seems far more probable is that we will see a slow tapering of output over the next […]

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The modern world is totally dependent on a continuing supply of energy from oil and other fossil fuels. However, recent natural disasters, global political upheavals, price hikes in the cost of gas, heating oil and electricity, and the eye-watering cost of filling up a car are signposts toward an unexpected, different, energy-constrained future. The central theme of this book is this: as traditional energy sources and in particular oil start to run short, we are sleepwalking into an energy crisis which will have farreaching effects on every part of the modern world. Christians and the church will have to grapple with these issues if we want to understand the context in which we will live, worship, minister and witness in the years ahead. In this book we aim to raise awareness of ‘peak oil’ and its consequences amongst Christians, and to prepare the church in practical ways for the […]

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Diving Into Stories of Energy Transition with Chris Nelder Part Two of Four.  Link to Part 1 . A transcript of our interview on Extraenvironmentalist #76  by Scott Bohachyk Editor’s note:  Last time we discussed nuclear power and the potential role it may have in the 21st century energy transition. This time we are discussing the story of peak oil and whether it has any validity. Justin: A core part of the story we were just talking about, in the audio we were playing from the film Pandora’s Promise film is the idea that we’re going to hit 9 or 10 billion people and consume two, three, four times as much energy as we do now, but one story that really counters that is the idea of geology limiting oil output and the peak oil story. Now that we can reflect back on a few years of recession, and […]

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Only weeks after the Australian Prime Minister Tony Abbott introduced “Team Australia to help China build the Asian Century” to the Boao Forum on the island of Hainan in the South China Sea we get a foretaste how this much hyped Asian Century will look like: many fights over oil and gas. In a well prepared action China moved a 30,000 ton, 1$ billion semi-submersible drilling rig (HD 981) into position in contested waters 220 kms off the Vietnamese coast near the Paracel islands, and just 330 km South East of Hainan where Abbott spoke. Vietnamese coast guard boats tried to interrupt the positioning of the rig but were attacked by water cannons and rammed by Chinese boats. For Vietnam control over offshore oil and gas is absolutely vital because oil production has peaked 10 years ago and gas is expected to peak by 2018. Abbott would neither know […]

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  1.  Oil and the Global Economy Last week’s trading left futures prices little changed. New York oil closed Friday at $99.99 a barrel and London closed at $107.89. As has been the case for several weeks, the US crude inventory, weak demand, and the Ukrainian and Libyan situations were the main drivers of the oil markets. US crude imports were down markedly the week before last leading to a drop in inventories along the Gulf coast and even total US crude inventories for the first time in many weeks. Some analysts are wondering if Gulf Coast storage facilities can absorb much more oil. Natural gas futures dropped sharply on Thursday after the inventory report showed that the warmer weather has led to natural gas being injected into storage caverns at close to the normal pace. Futures prices are down about 30 cents per million from the $4.85 level […]

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[The] increased oil expenditure is drawing money away from the rest of the economy. Overall, were it not for the price increase [from the historical average of $25.00 per barrel], the US would have an extra $1.5 billion per day to spend in the broader economy, or $543 billion per year. Instead, all that money is being spent on expensive oil, which is distorting the economy. Is it any wonder oil-dependent economies are struggling to grow their economies? Could it be that expensive oil signifies the twilight of industrial growth, as we have known it…? At the current price of $105 …, the world spends $9.45 billion per day on oil, or $3.5 trillion per year. This is a difference of $7.2 billion every day, an extra cost to the global economy which is largely a result of crude oil having peaked. It lacks credibility to pronounce the death […]

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Our lead story: This week Stanford said that it would divest all of its investments in coal mining companies, becoming the wealthiest US university to pledge divestment from sectors of the fossil fuel industry. Erin gives you her take on the situation. For our interviews today, we look at peak oil theory with Richard Heinberg and James Hamilton. Heinberg argues that we have reached peak oil supply and that will have major economic consequences for our future prospects of economic growth. Hamilton on the other hand sees this as more of a demand issue. Take a look. Finally in today’s Big Deal, Edward Harrison and Erin take a look at the return of the subprime auto loan market. Is this another example of perverse incentives in the search for yield? Edward gives you his take.

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The most lasting change in the U.S. energy landscape may not be that we’re producing more oil — but that we’re using less. Demand for oil has fallen in recent years, as Americans drive less and buy more fuel-efficient cars. Daily consumption is down nearly 2 million barrels since 2005, a 9 percent decline. The drop is small in percentage terms, but it represents a remarkable shift, one that few people saw coming. For most of the post-World War II era, Americans burned more oil each year, a trend broken only briefly by the price shocks of the late 1970s. This time, the shift appears to be more lasting: In a new report released this week , the Energy Information Administration (EIA) said the U.S. will burn slightly less oil in 2040 than it did in 2010. Overall energy consumption per person is set to fall even more steeply, to […]

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[The] increased oil expenditure is drawing money away from the rest of the economy. Overall, were it not for the price increase [from the historical average of $25.00 per barrel], the US would have an extra $1.5 billion per day to spend in the broader economy, or $543 billion per year. Instead, all that money is being spent on expensive oil, which is distorting the economy. Is it any wonder oil-dependent economies are struggling to grow their economies? Could it be that expensive oil signifies the twilight of industrial growth, as we have known it…? At the current price of $105 …, the world spends $9.45 billion per day on oil, or $3.5 trillion per year. This is a difference of $7.2 billion every day, an extra cost to the global economy which is largely a result of crude oil having peaked. It lacks credibility to pronounce the death […]

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Why Oil Prices Haven’t Gone Crazy By Matthew Philips Bloomberg Businessweek Illustration by 731 The oil markets have plenty of reasons to be spooked. In Libya, home to Africa’s largest reserves, production has fallen more than 80 percent since militias seized control of the country’s biggest ports last summer. Most of Iran’s oil remains trapped as well. Sanctions aimed at punishing Iran for its nuclear weapons program have crippled its crude exports by 1.5 million barrels a day. Nigeria is in the midst of its worst oil crisis in years: Rising violence, plus rampant sabotage and theft, have knocked out about 300,000 barrels of oil output a day. In Venezuela, which has the world’s largest oil reserves, production has remained unchanged after years of underinvestment. Political chaos and violence are keeping 3.5 million barrels of daily oil production off the market, according to estimates by Citigroup (C). With tensions […]

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For oil executives there are few things more exciting than expensive, large-scale projects aimed at pumping more of the black gold. That doesn’t mean investors in oil majors should approve. Large oil companies are betting up to $1.1 trillion on “high-risk” oil projects over the next decade, according to London-based think tank The Carbon Tracker Initiative . Investors, it says, should question the assumptions underpinning that spending. “Many oil companies are betting on a high demand and price scenario,” said James Leaton, research director at the CTI, a group that lobbies to change the evaluation of carbon-intensive projects. “Investors need get ahead of the carbon supply cost curve to ensure capital is not being wasted.” The CTI said it was especially concerned about projects which need oil prices to stay above $95 per barrel in order to remain profitable. Among the companies with the highest exposure […]

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In February, oil production in Texas hit a 34-year high , with combined oil and condensate volumes exceeding 2.9 million barrels of oil per day.  For the first time in memory, Texas now produces more than 36% of all the oil produced in the United States, and if it were a separate country, Texas would now rank as the 8th largest oil producing nation on earth.  Wow. We see endless speculation about how long we should expect the current boom in shale oil and natural gas that is happening in Texas and throughout much of the United States to last. Prophets of doom like proponents of “Peak Oil” theory and radical anti-economic growth activists like Bill McKibben say it’s all a “bubble” that will burst at any moment. Others actually involved in the development of shale resources tend to believe the correct answer today will be some variation on […]

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In February, oil production in Texas hit a 34-year high , with combined oil and condensate volumes exceeding 2.9 million barrels of oil per day.  For the first time in memory, Texas now produces more than 36% of all the oil produced in the United States, and if it were a separate country, Texas would now rank as the 8th largest oil producing nation on earth.  Wow. We see endless speculation about how long we should expect the current boom in shale oil and natural gas that is happening in Texas and throughout much of the United States to last. Prophets of doom like proponents of “Peak Oil” theory and radical anti-economic growth activists like Bill McKibben say it’s all a “bubble” that will burst at any moment. Others actually involved in the development of shale resources tend to believe the correct answer today will be some variation on […]

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Here’s the good news. We probably don’t have to worry about peak oil just yet, as it isn’t going to run out anytime soon. The bad news is, as the IPCC has recently reported , we can’t afford the costs of what liberating all that carbon into the Earth’s atmosphere would do to the climate. So we will have to leave it in the ground and come up with alternatives fast. The really bad news is that we may not even have to worry about peak oil or dangerous climate change – instead we can fret over peak phosphorous . Unlike moving from our current dependence on fossil fuels, there is no alternative to phosphorus and if it runs out our global food production system would grind to a halt. is present in all cells in all forms of life because it makes up part of the backbone of […]

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There have been hundreds of books and essays written on the evolution of Homo sapiens and I assume you are familiar with that history. In this short essay I am going to point out a few things that are usually left out of that story, the part that deals with the very nature of the species Homo sapiens. First I would like to point out a few things that are common to all species, not just Homo sapiens. All species produce more offspring than can possibly survive to adulthood and reproductive age. Some produce hundreds of offspring and leave it to chance that a few will survive. Others produce far fewer offspring and care for them for months to years to increase their chances of survival. However if there is ever an abundance of food for any species, that species will multiply its numbers to take advantage of that […]

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What is behind the Russia/Ukraine problem? It seems to me that what we are seeing is Russia’s attempt to fix a two-part problem: Some oil and gas exporters, including Russia, are not receiving enough oil and gas revenue to meet their needs. They are not able to collect enough taxes to provide the services they have promised to their citizens, plus allow the amount of reinvestment that is needed to maintain production. Russia is starting to experience economic contraction because of the low revenue situation. This situation very closely related similar problems I have written about  previously. In one post I talked about major independent oil companies not producing enough profit to provide the revenue needed for reinvestment, and because of this, cutting back on new investment. In another , I talked about the problem of too low US natural gas sales prices, relative to the cost of extraction. […]

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Given that shale oil production is, in fact, currently doing the most to meet growing oil demand, any shale oil ‘bust’ is likely to have significant implications for an already-strained oil market. [1] While there’s some (strained) logic to the efforts of fossil fuel industry officials and their spokespeople to do nothing but offer the most optimistic scenarios and forecasts about future oil supply and production, it’s impossible to imagine that those in charge are not contemplating the very same facts we on the “other side” of the discussion regularly share. Facts are stubborn things. They refuse to go away, for one. Ideology and optimism may carry one today, but eventually there simply is nothing left to contend with except those often-inconvenient truths. It’s also understandable that foregoing today the accessible and still-economically-feasible extraction and production opportunities at hand in favor of transitioning their own efforts to efforts largely […]

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In this informal paper, I conduct Hubbert Linearization exercises on the world’s 11 topoil producers as well as the rest of the world. The results are used to project the Continue Reading

Not much new data to report this past week but I did try to hammer out a few things of interest. The EIA released their Crude Oil Production report for the US and individual states with data through February 2014. I combined Montana and North Dakota to show their production. Their combined production was 1,027 kb/d. This is still below their production of 1,055 kb/d in November. This is more than just the Bakken as both Montana and North Dakota have production outside the Bakken. Part of the EIA’s plan for 9.6 mb/d of C+C by 2016 has The Gulf of Mexico going to 2 million bp/d by 2016. The GOM does not appear go be going anywhere however. There are new fields coming on line but they are just barely keeping up with those very high decline rates of the deep water fields. The Gulf of Mexico has […]

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Energy Independence is a Hoax Everyone wants to talk about shale, about U.S. energy independence, about oil exports… But there’s a problem: We don’t have as much oil as everyone thinks. In fact, we’re actually closer to an energy crisis than we are to energy independence. Don’t get me wrong — we have oil. It’s just too expensive for us to extract. Think about it. Two decades ago, oil cost just $20 per barrel. Now it costs nearly $100 per barrel. Well, if we have more oil than ever before, how can that be? It’s because the oil we have is too costly to produce. Here’s what I mean… The Cost of "Energy Independence" According to Bernstein Research, it now costs $104.5 per barrel to produce non-OPEC crude. Furthermore, there was an "unprecedented" jump in the cost of oil from U.S. fields, which rose from $89 a barrel in 2011 to $114 […]

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The roots of energy independence lie in the energy crises of the 1970s. US oil production peaked in 1970, and we became increasingly dependent on oil imported from the Middle East. In response to US support for Israel, OPEC cut production and doubled prices in 1973 and again in 1979. The economy stagnated for most of the decade, and Americans recoiled at the thought of the economy and foreign policy being held hostage by Arab sheiks. Independence from these threats then became a key national objective. An effort was made to increase domestic exploration, develop alternative fuels, and conserve energy. Automobile gas mileage standards were increased, natural gas displaced oil in industry and home heating, and the generation of electricity from oil was phased out. The Strategic Petroleum Reserve was put in place as a buffer against supply disruptions, and the Carter Doctrine in the wake of the Iranian […]

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Peak oil theory predicts that oil production will soon start a terminal decline. Most authors imply that no adequate alternate resource and technology will be available to replace oil as the backbone resource of industrial society. This article uses historical cases from countries that have gone through a similar experience as the best available analytical strategy to understand what will happen if the predictions of peak oil theorists are right. The author is not committed to a particular version of peak oil theory, but deems the issue important enough to explore how various parts of the world should be expected to react. From the historical record he is able to identify predatory militarism, totalitarian retrenchment,and socioeconomic adaptation as three possible trajectories The Stone Age came to an end not for a shortage of stones. The Coal Age came to an end not for a shortage of coal. But, contra […]

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There may never be a ‘shock moment’ of peak oil’s arrival; instead, peak oil may continue to play out as a gradual, unplanned transition to a new set of energy and consumption patterns that are less oil dependent, giving rise to social, economic, and ecological impacts that no one can predict with any certainty. [1] A key focus among the several hundred blog posts here has been my expression of concern that we’ve done almost no planning and very little preparation to deal with the consequences and challenges of peak oil. As Dr. Samuel Alexander noted in another of his well-considered reports on the topic, we’re not all going to awaken one morning to the Breaking News that peak oil has arrived. There will be several reasons for the absence of that advisory, not the least of which is that peak oil—insofar as conventional crude oil production is concerned […]

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Robert Gordon has painted a dark picture of the world’s long-run economic growth prospects. But if the past is any guide, he will likely join the band of earlier distinguished economists who proved to be far too pessimistic about the human capacity to innovate. Dennis Robertson, the renowned Cambridge economist and a contemporary of John Maynard Keynes, famously remarked that economic fashion was like going to the greyhound races. If one stood still long enough, the dogs would come around one more time. This certainly seems to be the case with fashions in economic pessimism about the long-term economic growth prospects of the world’s advanced industrial economies. Each time these economies stumble, there is no shortage of economists who come out of the woodwork to advance plausible reasons as to why the limits of economic growth might have been reached. Yet each time, events seem to have proved these […]

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Until Colin J. Campbell and Jean H. Laherrère published their paper The End of Cheap Oil in 1998 (Campbell & Laherrére, 1998), the petroleum geologist Marion King Hubbert (1903 – 1989) was all but forgotten, including his correct forecast – back in 1956 – of the US’s peak of oil production in 1970 (Hubbert, 1956). In their paper Campbell and Laherrère warned that: “Barring a global recession, it seems most likely that world production of conventional oil will peak during the first decade of the 21st century.” It took another 12 years, but eventually the oil production optimist par excellence, the International Energy Agency (IEA, of the OECD countries), also had to admit the undeniable in their World Energy Outlook of 2010 (IEA, 2010): “Crude oil output reaches an undulating plateau of around 68–69 mb/d by 2020, but never regains its all‐time peak of 70 mb/d reached in 2006, […]

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Waiting for Godot was a two act play by Samuel Beckett where two men kept waiting for Godot and they just kept waiting and waiting and waiting… And no, I don’t think we will be kept waiting and waiting like the characters in that play. Peak oil is about to arrive, in my opinion anyway. Way back in 2005 we thought it likely that crude oil production had peaked at just under 74 million barrels per day. During the preceding three years C+C production had risen by 6,481,000 barrels per day or 2,160,333 barrels per day per year. The reason for that dramatic increase was a doubling in the price of oil from $25 per barrel in 2002 to $54.43 in 2005. So oil production depends, to a great extent, the price of oil. The more money the more oil. However…  The C+C data in all charts below are […]

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Yes, we see 10 early warnings that Big Oil stocks are going to trigger an economic collapse by 2020, maybe 50% as gas prices go through your SUV’s sunroof. A contrarian view? Yes, pump prices already shot up 11% this year. Plus Big Oil cherishes its new role as exporter: Bloomberg’s even predicting the U.S. will “surpass Russia and Saudi Arabia as the world’s top oil producer by 2015, and be close to energy self-sufficiency in the next two decades, amid booming output.” So why worry? Why contrarian? Because a decade ago the Bush Pentagon predicted that by 2020 “an ancient pattern of desperate, all-out wars over food, water, and energy supplies would emerge” as global “warfare is defining human life.” But, that’s light years away in today’s twitter-brain world where today’s news is so bullish: “100% of economists think yields will rise within six months,” no recession in […]

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With 2013 in the rearview mirror, peak oil is beginning to create big problems for big oil. Free cash flow is like the canary in the coal mine. Earnings can be massaged with accounting magic, but it is more difficult to massage free cash flow. Total (NYSE: TOT ), along with its fellow big oil brethren, has seen its free cash flow fall significantly in 2013. Now is the time to examine the fundamentals and see just what sort of unique risks and challenges big oil faces. Oil prices are stable, but free cash flow is falling TOT Free Cash Flow (TTM) data by YCharts Sometimes, falling free cash flow is a short-term issue. Such was the case after the 2008 oil crash. Oil prices fell, and as a result free cash flow fell as well. The current downturn is different. Oil prices have remained relatively stable and yet free […]

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A new multi-disciplinary study led by the University of Maryland calls for immediate action by government, private and commercial sectors to reduce vulnerability to the imminent threat of global peak oil , which could put the entire US economy and other major industrial economies at risk. The peer-reviewed study contradicts the recent claims within the oil industry that peak oil has been indefinitely offset by shale gas and other unconventional oil and gas resources. A report by the World Energy Council (WEC) last month, for instance, stated that peak oil was unlikely to be realised within the next forty years at least. This is due to global reserves being 25 per cent higher than in 1993. According to the WEC report, 80% of global energy is currently produced by either oil, gas or coal, a situation which is likely to continue for the foreseeable future. The new University of […]

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Over the next decade and a half, 2.5 billion people in China, India and other developing countries will join the global middle class. They are going to need skyscrapers to live in and superstores to shop in. They are going to want smartphones, cars, flank steaks, air conditioning, pet clothing, Disneyland vacations, and probably some throw pillows. How is a planet already straining under the pressure of today’s 2 billion middle class consumers going to accommodate 2.5 billion additional ones? For many observers, this unprecedented economic growth foretells a Malthusian meltdown. In this scenario, skyrocketing demand for scarce natural resources will lead to unchecked carbon emissions, water wars, massive deforestation, $100 Big Macs for the rich and cricket-meat Bug Macs for everyone else. McKinsey director Matt Rogers and Stanford professor Stefan Heck have a more optimistic take on the future. In their compelling new book, Resource Revolution , they […]

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Researchers from the University of Maryland and a leading university in Spain demonstrate in a new study which sectors could put the entire U.S. economy at risk when global oil production peaks (“Peak Oil”). This multi-disciplinary team recommends immediate action by government, private and commercial sectors to reduce the vulnerability of these sectors. While critics of Peak Oil studies declare that the world has more than enough oil to maintain current national and global standards, these UMD-led researchers say Peak Oil is imminent, if not already here—and is a real threat to national and global economies. Their study is among the first to outline a way of assessing the vulnerabilities of specific economic sectors to this threat, and to identify focal points for action that could strengthen the U.S. economy and make it less vulnerable to disasters. Their work, “Economic Vulnerability to Peak Oil,” appears in Global Environmental Change […]

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There has been considerable debate lately on what effect the supply and price of oil is having on the economy. It is, to my mind, a lot more serious than the vast majority of economists believe. In fact one can just look at what is happening today to see the effect of a constrained oil supply and high oil prices. Just look at the unemployment rate: Real unemployment is double what it was in 2007. And it is creeping higher. If you have not watched Oil Supply and Demand Forecasting with Steven Kopits   then you have missed the best and most informative video that has come along since this whole debate started over a decade ago. I have just finished watching it for the third time. This time I made notes. Kopits makes it very clear that oil is a binding constraint on economic growth. Of course that […]

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