Category: Peak Oil

Why is the price of oil so low now? In fact, why are all commodity prices so low? I see the problem as being an affordability issue that has been hidden by a growing debt bubble. As this debt bubble has expanded, it has kept the sales prices of commodities up with the cost of extraction (Figure 1), even though wages have not been rising as fast as commodity prices since about the year 2000. Now many countries are cutting back on the rate of debt growth because debt/GDP ratios are becoming unreasonably high, and because the productivity of additional debt is falling. If wages are stagnating, and debt is not growing very rapidly, the price of commodities tends to fall back to what is affordable by consumers. This is the problem we are experiencing now (Figure 1). Figure 1. Author’s illustration of problem we are now encountering. I […]

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As an investor in start-up companies, I am always working to test my assumptions and update my understanding of where the energy sector is now, and the direction it is moving in towards the future. Some key questions for this dynamic year: Is the current oil crisis the marking of a step change towards a cleaner energy industry or merely history repeating itself? While today’s oil price at $45-50 per barrel is probably too low to be considered the new normal, what should we expect moving forward? One thing is for sure: change is coming. Although demand for oil and gas will continue for decades to come, it will gradually diminish as renewable energy sources rise. A lot could happen between then and now. The International Energy Agency (IEA) and many other credible parties continue to forecast that our growing world population from 7 billion people today to 9 […]

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All views expressed here are those of Verwimp Bruno and do not necessarily represent those of Ron Patterson. 1. INTRODUCTION Peak Oil is the moment in time when, on a global scale, the maximum rate of oil production is reached. The moment after which oil production, by nature, must decline forever. Since Earth is a closed system, next to this production (supply) event, there must be an equal demand event: Peak Oil Consumption. Since there are no substantial above ground deposits, Peak Oil Production and Peak Oil Consumption must coincide. The world consists of a lot of different countries, some of which are already far beyond peak oil production That leads to the assumption the world as a whole reaches peak oil production. On the demand side, it is worth looking, because different countries have different economies, different degrees of development, and so on, if, while some countries still […]

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Have we peaked? Interesting info graphic put together by Chiltern Thrust Bore LTD. 2 Comments on "Peak Oil Info-Graphic" GregT on Sat, 24th Oct 2015 2:57 am “Peak oil is a concept that was originally devised by M King Hubbert in the 1950s. The basic concept is that once oil production reaches it’s maximum output, a sharp decline will follow causing huge economic problems.” No need to worry folks, no huge economic problems in the foreseeable future. Everything is A OK. Now back to your regularly scheduled programming, and don’t forget that consumption is the key to prosperity.

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The idea that we will use up all of the earth’s oil has just gone from extreme to ludicrous. According to a new report by BP plc (BP) , the oil game has significantly changed over the last few years. What you thought you knew about how the oil industry works is wrong. But that doesn’t mean we are in any worse shape than before. However, if you are even thinking about getting into today’s incredibly low-priced oil company’s stocks, you need to pay attention. BP’s report, titled "New Economics of Oil," lays out why conventional thinking about oil production and prices is all wrong. For starters, the "Beverly Hillbillies" idea of get-rich-quick oil finds is over. Oil is not something that is found in huge quantities that can be traditionally drilled for decades anymore. Geologists have gotten darn good at finding the big fields, leaving new ones in […]

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In late summer 2015, commercial oil reserves of Saudi Arabia reached 326.6 million barrels, thus setting a new record for the world’s largest oil supplier since 2002. Thus, the level of oil reserves in July amounted to 320.2 million barrels, while oil exports fell from 7.28 million barrels per day in July to 7 million barrels a day in August, Bloomberg says. According to expert Mohamed Ramadi, a decline in oil exports from Saudi Arabia reflects the realities of present-day market. Oil production in Saudi Arabia declined from 10.36 million barrels per day in July to 10.27 million barrels a day in August , Pravda.Ru reports with reference to RIA Novosti. In September, Saudi Arabia reported the production of 10.23 million barrels a day. In June, the country reached its peak in oil production since 1980 with 10.56 million barrels a day. pravda.ru

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The fall in oil prices heralds a momentous shift in world energy markets from the BRIC era of emerging markets (Brazil, Russia, India and China) to the Shale Era. An oil tanker sits anchored off the Fos-Lavera oil hub near Marseille, France, Oct. 15. © Reuters Yet there are two continuing puzzles about the price collapse. First, the 50% fall in prices has not been the global economic stimulus that might have been expected. So far, at least, it has not been a Fourth Arrow for the world economy. Is this telling us something about deeper troubles ahead for the world economy? The second puzzle concerns geopolitics. The oil market is usually very sensitive to geopolitics. Geopolitical risk is high now: The Middle East is in crisis. The West’s relations with Russia are the worst they have been since the end of the Cold War; the stand-off in Syria […]

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Source: Hess Corp. It was roughly one year ago when reports surfaced that Occidental Petroleum Corporation ( NYSE:OXY ) was seeking a buyer for its Bakken Shale assets. At that time, Wall Street pegged the value of those assets at as much as $3 billion. However, one year later, those same assets are reportedly being unloaded for a mere $500 million. What’s important to understand about that price is the fact that it is not the result of a fire sale by a company in desperate need for cash — Occidental is doing just fine — nor is it due to a huge disconnect in the M&A market. Instead, the low reported sales price boils down to two things: poor timing and a less-than-ideal location. Once upon a time When Occidental Petroleum first put its North Dakota oil assets on the market, it was right around what, in hindsight, […]

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We all know Goldilocks from the story of Goldilocks and the Three Bears in which the young maiden wanders into the home of the bears and samples some porridge that happens to be sitting on the dinner table. The first bowl is too hot, the second is too cold and the third is just right. Like a corporate version of Goldilocks, the oil industry has been wandering into the world marketplace in recent years often finding an oil price that is either too high such as in 2008 and therefore puts the brakes on economic growth undermining demand and ultimately crashing the price as it did in 2009. Or it finds the price too low as it is today therefore making it impossible to earn profits necessary for exploiting the high-cost oil that remains to be extracted from the Earth’s crust. Oil that hovered around $100 per barrel from […]

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