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China Peak Oil: 2015 Is the Year

Image Credit: REUTERS/Stringer Domestic production looks set to peak, with some profound implications for the world market. Intense focus on the North American shale boom, Saudi Arabia, and ISIS obscures an important emerging energy trend: China’s oil production is peaking. This has profound implications for the world oil market, because China is not just a massive importer of crude; it is also among the world’s five largest oil producers , trailing only the U.S., Russia, and Saudi Arabia, and virtually neck-in-neck with Canada. China’s oil industry has delivered impressive oil and gas production growth over the past decade. Yet a range of data and historical analogies increasingly suggest that, at global oil prices between $50-to-$100 per barrel, China’s oil supply capability is plateauing and may peak as soon as this year. Lower or higher prices would accelerate or extend this timing. China’s crude oil output has stagnated for the […]

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How Pope Francis’s climate encyclical is liberating the world

Pope Encyclical Quote In my life there are two things that have the effect of at least somewhat isolating me from others. The first is being a writer on climate change, peak oil, and the economic crises bound up with those modern predicaments. The other is being a Christian environmentalist. In the first case, my essays, as well as my social media presence, fairly well run counter to the whole of my society and culture, even when a few outliers add concurring thoughts to the mix. But in the end, by writing a write a blog about what people shouldn’t do, about the things we should give up and forsake for a concept of the greater good, about the ways our habits imperil the world and especially our children and future generations, I can kind of come off like a scold even in my most mild iteration. Even when […]

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Peak Oil in Latin America

Today, I want to focus on black gold production south of the Rio Grande. Latin America’s political leaders believe (or claim to believe) that the economic future of the region is promising. They avail themselves of every summit, every conference or bilateral gathering to express their full confidence in growth, progress and development (today called “sustainable,” even when the Amazons continue to suffer). The Cuban president and his minister for the economy, for instance, insisted that this year we would grow like doped-up champions, by no less than 4 %. I think this is magnificent, charming. The one, tiny problem is that, in order to grow like that, exponentially, one has to burn oil at the same pace. So, what legs do we have to stand on? See country graphs below. Does Latin America have the fuel needed to reach such an ambitious goal? Might this not be another […]

Posted On : Published By : Tom Whipple
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Peak Oil? Yes, Absolutely – Peak Oil Demand

You should never bet against the capability of oil investors to turn the world completely upside down. A great example occurred on Wednesday of last week, as Arthur Berman argues in this excellent article. He points out that Brent crude surged from $62 a barrel to $65 a barrel on 10 June, despite the US Energy Information Administration announcing on that very same day that the global oil production surplus in May rose to almost 3 million barrels. ‘Not to worry, ‘demand growth is robust,’ the oil markets seemed to be saying. But if you look at the same EIA report, you will find that whilst worldwide oil production declined by 106,000 barrels per day, consumption fell more by 156,000 barrels per day. It is supposed the job of oil futures markets to anticipate the future – that’s why they are, of course, called futures markets. Perhaps, therefore, they […]

Posted On : Published By : Tom Whipple
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Canadian oil producers eye hedging catch-up at $65/barrel

CALGARY, Alberta Canadian energy producers are giving up hoping for a big rebound in oil prices, preparing instead to embark on a course of belated hedging if crude prices edge just a few dollars higher. As crude markets collapsed during the first half of this year, Canada’s oil producers held back on hedging on concern they would lock in prices at barely break-even rates. That may be about to change. A rally in U.S. crude CLc1 from $60 a barrel today to about $65 could trigger a wave of selling from Canadian companies eager to build up protection against a second price slump, according to market sources in Calgary. Many allowed their hedging activity to lapse since last year, when oil tumbled to a six-year low near $42 a barrel. Canadian producers are between 10 percent and 20 percent underhedged compared with the same time last year, banking sources […]

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Peak Oil: Myth Or Coming Reality?

In 1956, a geoscientist named M. King Hubbert formulated a theory which suggested that U.S. oil production would eventually reach a point at which the rate of oil production would stop growing. After production hit that peak, it would enter terminal decline. The resulting production profile would resemble a bell curve and the point of maximum production would be identified as Peak Oil, a point of no return. The original peak oil curve Image Source: Cornell University Hubbert first predicted that U.S. oil production would peak in 1970 and then start declining rapidly. His prediction turned out to be partly true, as U.S. crude oil production peaked that same year, not to be eclipsed again until the shale boom began. Annual crude oil production (in thousands of barrels per year) for entire United States, with contributions from individual regions as indicated. “The end of the oil age is in […]

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Peak Oilists are the new Flat Earthers

Apparently it is necessary to point out that Peak Oil doctrine is still wrong. Ronald Bailey explains Hubbert’s Peak Refuted: Peak Oil Theory Still Wrong . He points out an author who has written multiple books defending Peak Oil. I just checked Amazon and can find four books from the mentioned author, written in 2001, 2005, 2008, and 2010. All are selling well. Not great, but okay. I’m astounded that so many people still believe that foolishness. Article gives some info I’ve not seen before: As I have explained earlier geologist M. King Hubbert famously predicted in 1956 that U.S. domestic oil production in the lower 48 states would peak around 1970 and begin to decline. In 1969 Hubbert predicted that world oil production would peak around 2000. Yes. The ol’ gig of my precisely calculated, ironclad calculation of the date of disaster is totally wrong so I will […]

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Retreat of ‘peak oil’: supply, demand unexpectedly expand global surplus

Robert J. Samuelson WASHINGTON — The recent meeting of OPEC provides an opportunity to understand the mysteries of the global oil market. As expected, OPEC decided not to cut its oil production. Barring unanticipated developments, prices will drop, says oil analyst Larry Goldstein. Potential oil supply, including drawdowns from bloated inventories, exceeds demand. Goldstein rightly cautions, however, that no one knows where prices will settle. Oil’s dramatic price changes seem baffling. In mid-2014, crude prices averaged around $100 a barrel; now, they’re gyrating between $50 and $60. Over the same period, U.S. gasoline prices have dipped from more than $3.50 a gallon to around $2.50. With the world economy slowly recovering, why have prices collapsed? The standard explanation comes in two parts. First, oil demand is what economists call price inelastic. Slight changes in supply and demand can produce large price swings. People and businesses need fuel. If oil […]

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The Shale-Oil Boom is Over

It comes now from the US Energy Information Agency, and is headlined by Bloomberg Business , so yes, it’s official. As Bloomberg put it, “ US Shale Boom Grinds to a Halt .” Which, actually, is overstating the case by a good bit, there isn’t going to be a “halt.” Nevertheless, as sane people everywhere have been insisting for years, the shale boom is, as it always was going to be, a bust. This — now official — assessment is in the form of a set of projections by the EIA, which, we should remember, has pretty consistently been overly optimistic in its assessment of the oil business. Remember, they were the folks who estimated that the Monterey Shale in California held 14 billion barrels of recoverable reserves — two-third of America’s total oil wealth — until they ran the numbers again and re-estimated the Monterey at 96% lower. […]

Posted On : Published By : Tom Whipple
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Peak Oil in the Congressional record

Even the most ardent techno-optimists and economists admit there are limited supplies of fossil fuels, but that we don’t need to worry for a long time. It appears they have succeeded in convincing the government they’re right, because there are only 2 documents about planning for peak oil that I’m aware of at the federal level (several cities have peak oil task force recommendations): Hirsch, R. L., et al. February 2005. Peaking of World Oil Production: Impacts, mitigation, & risk management . Department of Energy. GAO. 2007. Crude oil. Uncertainty about future oil supply makes it important to develop a strategy for addressing a peak and Decline in Oil Production . U.S. Government Accountability Office. Congress is very aware of our energy situation, they just don’t call it “peak oil” very often. You’ll get a lot of hits on “energy security” or “energy crisis” at http://www.gpo.gov/fdsys/ The problem is […]

Posted On : Published By : Tom Whipple