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Of Fossil Fuels and Human Destiny

There have been hundreds of books and essays written on the evolution of Homo sapiens and I assume you are familiar with that history. In this short essay I am going to point out a few things that are usually left out of that story, the part that deals with the very nature of the species Homo sapiens. First I would like to point out a few things that are common to all species, not just Homo sapiens. All species produce more offspring than can possibly survive to adulthood and reproductive age. Some produce hundreds of offspring and leave it to chance that a few will survive. Others produce far fewer offspring and care for them for months to years to increase their chances of survival. However if there is ever an abundance of food for any species, that species will multiply its numbers to take advantage of that […]

Posted On : Published By : Tom Whipple
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Russia and the Ukraine – The Worrisome Connection to World Oil and Gas Problems

What is behind the Russia/Ukraine problem? It seems to me that what we are seeing is Russia’s attempt to fix a two-part problem: Some oil and gas exporters, including Russia, are not receiving enough oil and gas revenue to meet their needs. They are not able to collect enough taxes to provide the services they have promised to their citizens, plus allow the amount of reinvestment that is needed to maintain production. Russia is starting to experience economic contraction because of the low revenue situation. This situation very closely related similar problems I have written about  previously. In one post I talked about major independent oil companies not producing enough profit to provide the revenue needed for reinvestment, and because of this, cutting back on new investment. In another , I talked about the problem of too low US natural gas sales prices, relative to the cost of extraction. […]

Posted On : Published By : Tom Whipple
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Peak Oil: What’s Their Plan C?

Given that shale oil production is, in fact, currently doing the most to meet growing oil demand, any shale oil ‘bust’ is likely to have significant implications for an already-strained oil market. [1] While there’s some (strained) logic to the efforts of fossil fuel industry officials and their spokespeople to do nothing but offer the most optimistic scenarios and forecasts about future oil supply and production, it’s impossible to imagine that those in charge are not contemplating the very same facts we on the “other side” of the discussion regularly share. Facts are stubborn things. They refuse to go away, for one. Ideology and optimism may carry one today, but eventually there simply is nothing left to contend with except those often-inconvenient truths. It’s also understandable that foregoing today the accessible and still-economically-feasible extraction and production opportunities at hand in favor of transitioning their own efforts to efforts largely […]

Posted On : Published By : ASPO-USA
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Proven Reserves, IOCs and Other News

Not much new data to report this past week but I did try to hammer out a few things of interest. The EIA released their Crude Oil Production report for the US and individual states with data through February 2014. I combined Montana and North Dakota to show their production. Their combined production was 1,027 kb/d. This is still below their production of 1,055 kb/d in November. This is more than just the Bakken as both Montana and North Dakota have production outside the Bakken. Part of the EIA’s plan for 9.6 mb/d of C+C by 2016 has The Gulf of Mexico going to 2 million bp/d by 2016. The GOM does not appear go be going anywhere however. There are new fields coming on line but they are just barely keeping up with those very high decline rates of the deep water fields. The Gulf of Mexico has […]

Posted On : Published By : Tom Whipple
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The Crisis No One Sees Coming

Energy Independence is a Hoax Everyone wants to talk about shale, about U.S. energy independence, about oil exports… But there’s a problem: We don’t have as much oil as everyone thinks. In fact, we’re actually closer to an energy crisis than we are to energy independence. Don’t get me wrong — we have oil. It’s just too expensive for us to extract. Think about it. Two decades ago, oil cost just $20 per barrel. Now it costs nearly $100 per barrel. Well, if we have more oil than ever before, how can that be? It’s because the oil we have is too costly to produce. Here’s what I mean… The Cost of "Energy Independence" According to Bernstein Research, it now costs $104.5 per barrel to produce non-OPEC crude. Furthermore, there was an "unprecedented" jump in the cost of oil from U.S. fields, which rose from $89 a barrel in 2011 to $114 […]

Posted On : Published By : Tom Whipple
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Guest blog post: more debate on the future of international oil companies

In another guest blog entry, Steven Kopits of Princeton Energy Advisors considers follows up on his previous post, examining whether the IOCs could really be headed to bankruptcy, as economist Philip Verleger suggests in a recent report.  Steve can be reached at    and his blog can be found at www.prienga.com/blog In my last Barrel post , I threw down the gauntlet to those casually predicting a collapse in oil prices, as such a collapse would effectively kill the oil business at the major oil companies.  We will know, I wrote, that such forecasters are serious when they declare the international oil companies (IOCs) “to be the walking dead.” No less than Phil Verleger, noted macro oil analyst, immediately took up the challenge.  In his weekly note (April 21st), Phil notes that “long run fundamentals may indicate bankruptcy for large oil companies.” He writes: “In the long run…companies betting […]

Posted On : Published By : Tom Whipple
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The Energy Independence Illusion

The roots of energy independence lie in the energy crises of the 1970s. US oil production peaked in 1970, and we became increasingly dependent on oil imported from the Middle East. In response to US support for Israel, OPEC cut production and doubled prices in 1973 and again in 1979. The economy stagnated for most of the decade, and Americans recoiled at the thought of the economy and foreign policy being held hostage by Arab sheiks. Independence from these threats then became a key national objective. An effort was made to increase domestic exploration, develop alternative fuels, and conserve energy. Automobile gas mileage standards were increased, natural gas displaced oil in industry and home heating, and the generation of electricity from oil was phased out. The Strategic Petroleum Reserve was put in place as a buffer against supply disruptions, and the Carter Doctrine in the wake of the Iranian […]

Posted On : Published By : Tom Whipple
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Global energy crunch: how different parts of the world would react to a peak oil scenario

Peak oil theory predicts that oil production will soon start a terminal decline. Most authors imply that no adequate alternate resource and technology will be available to replace oil as the backbone resource of industrial society. This article uses historical cases from countries that have gone through a similar experience as the best available analytical strategy to understand what will happen if the predictions of peak oil theorists are right. The author is not committed to a particular version of peak oil theory, but deems the issue important enough to explore how various parts of the world should be expected to react. From the historical record he is able to identify predatory militarism, totalitarian retrenchment,and socioeconomic adaptation as three possible trajectories The Stone Age came to an end not for a shortage of stones. The Coal Age came to an end not for a shortage of coal. But, contra […]

Posted On : Published By : ASPO-USA
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The Gross Society

Seeing only its title, a prospective reader might guess this essay is about our nation’s epidemic of obesity. Or could it be a sarcastic observation on the evolution of Lyndon Johnson’s Great Society? Might it be a jeremiad about the gross (i.e., offensive and disgusting) ways we waste and over-consume natural resources, or a comment on current television trends? There’s plenty to be said on all those scores. No, the definition of gross I have in mind is “exclusive of deductions,” as in gross profits versus net profits. The profits we’ll be considering come in the forms not just of money but, more crucially, of energy. Sound boring? Well, you may be surprised. Here’s my thesis: As a society, we are entering the early stages of energy impoverishment. It’s hard to overstate just how serious a threat this is to every aspect of our current way of life. But […]

Posted On : Published By : Tom Whipple