Category: Peak Oil

Goldman Sachs executive Gary Cohn says we could see so much oil, there would be no way to physically store it all, resulting in falling prices, at least in certain locational areas. Further destabilization across the globe could, logically, follow. Cohn told Bloomberg News : “I think the oil market is trying to figure out an equilibrium price. The danger here, as we try and find an equilibrium price, at some point we may end up in a situation where storage capacity gets very, very limited. We may have too much physical oil for the available storage in certain locations. And it may be a locational issue.” “And you may just see lots of oil in certain locations around the world where oil will have to price to such a cheap discount vis-a-vis the forward price that you make second tier, and third tier and fourth tier storage available.” […]

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(This is Part 3 of my series – A New Theory of Energy and the Economy. These are links to Part 1 and Part 2 .) Many readers have asked me to explain debt. They also wonder, “ Why can’t we just cancel debt and start over? ” if we are reaching oil limits, and these limits threaten to destabilize the system. To answer these questions, I need to talk about the subject of promises in general, not just what we would call debt. In some sense, debt and other promises are what hold together our networked economy. Debt and other promises allow division of labor, because each person can “pay” the others in the group for their labor with a promise of some sort, rather than with an immediate payment in goods. The existence of debt allows us to have many convenient forms of payment, such as dollar […]

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The collapse in oil prices over the last seven months looks to destabilize the world stage by redirecting over $1.8 trillion in spending if current prices hold. While worldwide demand exceeds 92 million barrels per day , the drop in price from over $105 this past summer to under $50 translates into sizable savings for the average American. Who Gains vs. Who Loses Spread out across all industries, U.S. consumers could be looking at an extra $300 billion in savings this year, since oil touches just about every aspect of daily life in one form or another. The working poor, in particular, will be the largest beneficiaries , since energy expenses constitute a greater percentage of household income for them than for any other group. They will likely feel as though they are getting ahead, for a change, rather than continuing to slip further into the abyss . The impact of “less pain at the pump” […]

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Christophe McGlade on who gets left with the unburnable carbon Christophe McGlade is a research associate in energy materials modelling at the UCL Institute for Sustainable Resources.  He recently co-authored, with Paul Ekins, a paper called “The geographical distribution of fossil fuels unused when limiting global warming to 2°C ”, a paper whose stark call to leave the substantial majority of fossil fuels in the ground generated a lot of media coverage in recent weeks (see for example here and here ).   I started by asking him to give an overview of the paper and of its key findings: “The paper is looking at the optimal use of fossil fuels if we want to have a good chance of staying below the agreed 2°C threshold. Within that, it breaks down the amount of oil, gas and coal reserves that are used and aren’t used at a regional level, so […]

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The collapse in oil prices over the last seven months looks to destabilize the world stage by redirecting over $1.8 trillion in spending if current prices hold. While worldwide demand exceeds 92 million barrels per day , the drop in price from over $105 this past summer to under $50 translates into sizable savings for the average American. Who Gains vs. Who Loses Spread out across all industries, U.S. consumers could be looking at an extra $300 billion in savings this year, since oil touches just about every aspect of daily life in one form or another. The working poor, in particular, will be the largest beneficiaries , since energy expenses constitute a greater percentage of household income for them than for any other group. They will likely feel as though they are getting ahead, for a change, rather than continuing to slip further into the abyss . The impact of “less pain at the pump” […]

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The World After Cheap Oil thumbnail The World After Cheap Oil By Rauli Partanen, Harri Paloheimo and Heikki Waris 250 pp. Routledge – Oct. 2014. $59.95. Toward the end of this book, its authors make an astute, if self-deprecating, observation about its potential merits. They’ve been discussing how innate human biases cause us to make cognitive errors when trying to make sense of world crises. They’ve described in particular the tendency of scientifically knowledgeable people to become less convinced about climate change the more evidence they encounter for it, due to confirmation bias. For the authors, this fact “raises the question of how meaningful writing this book has actually been.” Won’t skeptical readers simply cherry-pick the data that support their views and reject the rest? While it is, of course, correct that some readers will do this, there’s no question that writing the book has been meaningful. Indeed, in […]

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Terraced rice paddy fields are seen during the harvest season in Mu Cang Chai, northwest of Hanoi. Global food poisoning? Yes, We’re maxing out. Forget Peak Oil. We’re maxing-out on Peak Food. Billions go hungry. We’re poisoning our future, That’s why Cargill, America’s largest private food company, is warning us: about water, seeds, fertilizers, diseases, pesticides, droughts. You name it. Everything impacts the food supply. Wake up America, it’s worse than you think. We’re slowly poisoning America’s food supply, poisoning the whole world’s food supply. Fortunately Cargill’s thinking ahead. But politicians are dragging their feet. They’re trapped in denial, protecting Big Oil donors, afraid of losing their job security; their inaction is killing, starving, poisoning people, while hiding behind junk-science. The truth is, America, Big Ag worldwide farm production can’t feed the 10 billion humans forecast on Planet Earth by 2050. Can we wait till 2050 for the fallout? […]

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ENLARGE Tumbling oil prices were supposed to boost growth in a host of major oil-importing economies. It isn’t necessarily working out that way. Some governments have moved already to shore up their revenues by raising gasoline taxes or cutting fuel subsidies. At the same time, falling oil costs have pumped up deflation fears across Europe and Japan, adding to the risk that consumers and businesses will hold back on spending and investment, dragging on growth. China has raised fuel-consumption taxes by 50% since November. Gasoline prices have soared in Indonesia as the authorities eliminated subsidies altogether. High taxes in Japan mean pump prices have fallen only 15% in the past six months, compared with a 40% decline in the U.S. Taxes also blunt the fall in Europe: premium gasoline prices have fallen 29% in the U.K. and 32% in France. Brazil has trimmed subsidies and raised taxes to shore […]

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Cheap Oil Does Not Mean That Peak Oil Is a Myth thumbnail Peak oil is a fundamental tenet of the Transition Towns concept, but the current return of “cheap oil” has muddied the waters about how to discuss it. At a recent meeting of Transition Town Reading (U.K.), we discussed the prevailing low oil price, and the group asked me to put together some salient points on the subject, set within the context of whether or not we can now dismiss peak oil, e.g. as it is currently being contested   here and here . The following points are based on an article that I wrote on this blog which was re-posted on Resilience.org here. Most of the references that I have drawn from are in the links posted there, with a few more added into the text below. Some of the points overlap with each other, but hopefully […]

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HOUSTON, Feb. 3 02/03/2015 Expectations are moderating about growth of oil production in the US this year. A report by IHS says the US production surge may end by midyear as low oil prices crimp output from tight formations. “Growth is still expected in the early months of 2015, but that momentum will level off in the latter half of the year amidst prices at lows not seen since the 2008-09 Great Recession,” IHS said in a press statement. A study of 39,000 wells indicated month-to-month growth will cease in the latter half of 2015 if the price of West Texas Intermediate crude remains below $60/bbl. About one fourth of new wells in 2014 had break-even WTI prices below $40/bbl, according to the study. Slightly less than half the new wells had break-even prices below $60/bbl. Nearly 30% of new wells had break-even prices above $81/bbl. The study defined […]

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