Category: Peak Oil

The debate over the impact of peak oil has been raging for decades. Although few deny that the end of mass oil consumption is drawing nearer, educated estimates now range between 2020 and 2030. But more important than the timeframe of peak oil are its consequences. Some seek to spell the end of life as we know it, so reliant is the world upon black gold. Others, equally extreme in their views, embrace the news, looking forward to a time when humanity will magically clean up its act. The truth is somewhere in the middle. Clean energy sources are making major advances as they become cheaper and easier to implement while almost all OEMs have launched lavish research programs into vehicles powered by other means. But the consequences of peak oil are not to be underestimated. Society would undergo a difficult time, given the sheer spread of oil on […]

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IEA Oil Market Forecast: Optimistic Assumptions And An Economy Unable To Grow Out Of Its Problems The International Energy Authority (IEA) forecasts a yearly increase of 1.3% in global oil demand during the period 2013-2019. This contrasts with the assumption of global economic growth rising from 3.6% in 2014 to around 4% thereafter [1] . How does a 1.3% increase in oil usage support economic growth of about three times that amount? The oil intensity of growth has been decreasing over time, with global oil intensity falling from  1:1 (a 1% increase in global oil consumption required for each 1% of global economic growth) to a ratio of 0.75:1, between 1995 and 2009 [2] . An extrapolation of that trend would result in an average oil intensity of about 0.65:1 during the 2013-2019 time period, with 1.3% growth in oil demand driving about 2% global economic growth. The IEA […]

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The International Energy Authority (IEA) forecasts a yearly increase of 1.3% in global oil demand during the period 2013-2019. This contrasts with the assumption of global economic growth rising from 3.6% in 2014 to around 4% thereafter [1] . How does a 1.3% increase in oil usage support economic growth of about three times that amount? The oil intensity of growth has been decreasing over time, with global oil intensity falling from  1:1 (a 1% increase in global oil consumption required for each 1% of global economic growth) to a ratio of 0.75:1, between 1995 and 2009 [2] . An extrapolation of that trend would result in an average oil intensity of about 0.65:1 during the 2013-2019 time period, with 1.3% growth in oil demand driving about 2% global economic growth. The IEA […]

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Here’s the introduction to a new paper I just finished: This year the oil industry celebrated its 155th birthday, continuing a rich history of booms, busts and dramatic technological changes. Many old hands in the oil patch may view recent developments as a continuation of the same old story, wondering if the high prices of the last decade will prove to be another transient cycle with which technological advances will again eventually catch up. But there have been some dramatic changes over the last decade that could mark a major turning point in the history of the world’s use of this key energy source. In this article I review five of the ways in which the world of energy may have changed forever. Below I provide a summary of the paper’s five main conclusions along with a few of the figures from the paper. 1. World oil demand is […]

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The standard way to make forecasts of almost anything is to look at recent trends and assume that this trend will continue, at least for the next several years. With world oil production, the trend in oil production looks fairly benign, with the trend slightly upward (Figure 1). Figure 1. Quarterly crude and condensate oil production, based on EIA data. Figure 1. Quarterly crude and condensate oil production, based on EIA data. If we look at the situation more closely, however, we see that we are dealing with an unstable situation. The top ten crude oil producing countries have a variety of problems (Figure 2). Middle Eastern producers are particularly at risk of instability, thanks to the advances of ISIS and the large number of refugees moving from one country to another. Figure 2. Top ten crude oil and condensate producers during first quarter of 2014, based on EIA […]

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Electric Currents I came across this OpEd this morning by , a former financial advisory and retired attorney, now turned author. Besides turning his ‘pen’ to fiction, he also blogs on energy issues, Peak Oil, in particular, so critics will likely call him, and me, ‘true believers.’ But our particular tribe trusts facts and verifiable numbers, not loose estimations and overly-rosy forecasts, like predicting Americas’ energy independence based on fracking and tar sands. Richard has analyzed the arguments aimed at debunking ‘Peak Oil’ and found that very little substantive data is used. Instead critics turn to the same tactics used by tobacco companies and global warming deniers. I thought his comments and observations worth sharing with EV World readers. Bill Moore Denial Tricks of the Trade On an issue fraught with the potential for so much societal disruption as peak oil presents (like its kin, climate change), and the […]

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Oil expert James Hamilton has an interesting summary of the current world oil market up today, and it’s worth a read. His bottom line, however, is that $100-per-barrel oil is here to stay: The run-up of oil prices over the last decade resulted from strong growth of demand from emerging economies confronting limited physical potential to increase production from conventional sources. Certainly a change in those fundamentals could shift the equation dramatically. If China were to face a financial crisis, or if peace and stability were suddenly to break out in the Middle East and North Africa, a sharp drop in oil prices would be expected. But even if such events were to occur, the emerging economies would surely subsequently resume their growth, in which case any gains in production from Libya or Iraq would only buy a few more years. The chart on the right shows the situation […]

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Average monthly production from Texas wells drilled in indicated period as a function of months since well completion. Source: Anderson, Kellogg, and Salant (2014).” src=”http://econbrowser.com/wp-content/uploads/2014/07/AKS1-866×1024.png”> >Average monthly production from Texas wells drilled in indicated period as a function of months since well completion. Source: Anderson, Kellogg, and Salant (2014). Makati1 on Tue, 22nd Jul 2014 7:52 am  The recovery of real petroleum has been declining for decades. Net energy produced, per capita, has also been declining for at least as long. Never any mention of that in the ‘news’ though. Too depressing and the market casino would crash and never recover. BTW: We do not “produce” oil, we recover it. Mother Nature produced it hundreds of millions of years ago. “Which force is winning the race?” – Econbrowser I do not see it as a “race” nor is there any “winning,” there is only “depletion.” Anyway, the arithmetic is […]

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It’s certainly understandable and indeed common practice in probably every sales conversation in every profession known to man that putting the best spin on the story told is a given. Most buyers/consumers would be surprised at the very least if a presenter offered up her or his best but then immediately discounted that version with other information contradicting it all and discouraging the consumers from even considering what’s being offered. We all understand there’s a game to be played. While that may be standard practice and simply part of the bargain to eventually be struck in the great majority of consumer transactions where the parties tend to be on equal footing, energy supply conversations don’t fall into that category when the discussion is between everyday consumers and industry officials or their representatives. Matters of such scope tend to be outside the range of interest for all but a few, […]

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It is difficult to see any positive interpretation of the changes and conflicts that are increasingly filling the headlines of the press. Fluctuating optimism over the return to credible export production from Libya, to take but one example, is no sooner reported when the news comes of increased fighting in Tripoli , including the international airport. At the same time violence is spreading towards Egypt . Without a strong central government it is likely that the conflicts in that country will continue into the foreseeable future, with continued negative impacts on the export of oil from the country. Transient attempts to maintain a cease-fire and stabilize South Sudan have apparently failed again . The fighting has shut down local oil production, while overall production from South Sudan has been cut to 165 kbd. Capital continues to leave Russia (h/t Nick) and that flight is only likely to accelerate as […]

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