Category: Peak Oil

Container terminal image via shutterstock. Reproduced at Resilience.org with permission. The world needs to end its dependence on fossil fuels as quickly as possible. That’s the only sane response to climate change, and to the economic dilemma of declining oil, coal, and gas resource quality and increasing extraction costs. The nuclear industry is on life support in most countries, so the future appears to lie mostly with solar and wind power. But can we transition to these renewable energy sources and continue using energy the way we do today? And can we maintain our growth-based consumer economy? The answer to both questions is, probably not. Let’s survey four important sectors of the energy economy and tally up the opportunities and challenges. The electricity sector: Solar and wind produce electricity, and the fuel is free. Moreover, the cost of electricity from these sources is declining. These are encouraging trends. However, […]

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BP statistical review finds Russia leading in terms of declines in gas production and pipeline deliveries just as the Kremlin holds out its reserves as a key to European energy security. File Photo by UPI Photo/BP/HO LONDON, June 10 (UPI) — BP in a statistic review said Russian natural gas production declined, just as the Kremlin holds out its reserves as a component of European energy security. BP in the 64th edition of its statistical review of world energy said global natural gas production last year grew by 1.6 percent, which is nearly a full percentage point below the 10-year average. Production from members of the European Union declined 9.8 percent to its lowest level since 1971, though in terms of overall volume, Russia’s decline of 4.3 percent was among the largest drops in the world, the review found. European economies rely on Russia for about 20 percent of […]

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Delayed gratification is said to be a sign of maturity. By that standard OPEC at age 55 demonstrated its maturity this week as it left oil production quotas for its members unchanged . It did so in the face of oil prices that are about 40 percent lower than they were at this time last year , delaying once again a return to the $100-per-barrel prices seen during the past four years. Why OPEC members chose to leave their oil output unchanged is no mystery . The explicit purpose for keeping oil prices depressed is to close down U.S. oil production from deep shale deposits–production that soared when oil hovered around $100 a barrel, but which is largely uneconomic at current prices. That production was starting to threaten OPEC’s market share. If OPEC were to cut its oil production now and drive prices back up, it would only lead […]

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But the company’s focus on cash distributions to shareholders, and the fact that its oil and gas production is lower now than immediately after Exxon bought Mobil back in 1999, certainly look like evidence that it has given up on long-term revenue growth. Exxon is the world’s largest listed energy group, and like all big international oil companies it is facing structural challenges that make it difficult for it to grow. Stability while throwing off a lot of cash may be the best they can do. Critical strategic question Rex Tillerson, now in his tenth year as chief executive, faces a critical strategic question. Does Exxon accept that fate, curbing capital spending and returning cash to investors whenever possible? Or does it attempt to break out by making a large acquisition ? The decline in Exxon’s number of shares outstanding has been dramatic. In 1999, the newly merged company […]

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Major technological advances in horizontal drilling and hydraulic fracturing (fracking) have dramatically expanded U.S. oil and gas production. By year-end 2014, U.S. daily crude oil production from shale layers had increased 230 percent over 2010 levels, and total U.S. crude oil production had risen 67 percent. Despite that dramatic, unprecedented growth, the price of West Texas Intermediate (“WTI”), used as a global benchmark for oil pricing, remained between $80 a barrel (bbl) and $110/bbl from October 2010 until late November 2014. The unrelenting and massive increase in U.S. oil supply should have driven down the global price of oil. It didn’t because as these new U.S. supplies were coming online, geopolitical conflicts were flaring up in key oil-producing regions around the world. For example, there was a civil war in Libya. Iraq faced threats from ISIS. Both the United States and Europe imposed new sanctions on Iran, significantly curtailing […]

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Oil rising to $60/bbl is displeasing some people, particularly the shorts. Some of the more extreme –those calling for oil in the $20’s – have wisely fallen silent. Others, like Goldman Sachs, who a few months ago had set their flag in the 30’s, have unfortunately not gone so silent. They recently moved their flag into the 40’s but they continue to talk a lot. A better strategy – though one that would require some humility — would be to stop talking and listen. Recent and compounding data will soon wash away the walls of worry erected by the experts. Four consecutive weeks of inventory draws, each one larger than the last is irrefutable proof that a 60% decline in the rig count means something. Shorts will downplay this trend and point to last week’s surge in US production. But this could have had as much to do with […]

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Something is wrong with the economy. No kidding, you might reply, but what is the underlying cause? Is it Peak Oil? Or is capitalism just a system that doesn’t work and is destined to failure? Are we just stuck with inevitable deterioration in living standards for the majority, or is there at least theoretically something we can do about it? Would political decisions help or are we just doomed to watch the disintegration of civilization as the oil runs out? In an interview a few weeks back with Tom O’Brien of the From Alpha to Omega podcast , KMO asked him about the predictions of Peak Oil collapse and why they seem to have not come to pass the way some people thought they would: Tom O’Brien: “Think if we lived in Syria or Egypt. We might think [about] things slightly differently. I don’t know about yourself KMO, but […]

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This week’s meeting of the world’s oil cartel will show how much its power has diminished amid sweeping changes in the global energy market. Oil prices have plummeted in the past eight months because of a half-decade surge in U.S. production and weak international demand. Brent crude for July delivery ended Friday near $65 a barrel on London’s ICE Futures exchange, far below the $100 needed by several members of the Organization of the Petroleum Exporting Countries to balance their budgets. In the past, OPEC forced prices higher by cutting production , or it steadied them by flooding the market during crisis, war or when it wanted to make a point about its collective might. The 12-country group’s meeting in Vienna on Friday is likely to result in a very different response: doing nothing. OPEC delegates expect the group to keep its current production ceiling of 30 million barrels […]

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From Earth Insight by Nafeez Ahmed, hosted by the Guardian, Former BP geologist: peak oil is here and it will ‘break economies’ : Dr. Richard G. Miller, who worked for BP from 1985 before retiring in 2008, said that official data from the International Energy Agency (IEA), US Energy Information Administration (EIA), International Monetary Fund (IMF), among other sources, showed that conventional oil had most likely peaked around 2008. Dr. Miller critiqued the official industry line that global reserves will last 53 years at current rates of consumption, pointing out that “peaking is the result of declining production rates, not declining reserves.” Despite new discoveries and increasing reliance on unconventional oil and gas, 37 countries are already post-peak, and global oil production is declining at about 4.1% per year, or 3.5 million barrels a day (b/d) per year: “We need new production equal to a new Saudi Arabia every […]

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