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Peak Oil (was "petroleum geologist explains US war policy")

Oil hits $49.06c

Analysts are now saying $70 a barrel is now a strong possibility. Any 'oil experts' care to comment?

New York light crude reached $49.06 a barrel for the first time in European trading, following reports of a new attack on an Iraqi oil pipeline......

.....Analysts warn that prices could go much higher still. "Oil at $70 is entirely conceivable," for example if "there is a big supply problem and Iraq and Venezuelan oil came off the market", said Bruce Evers, an oil expert with Investec.
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http://news.bbc.co.uk/1/hi/business/3578452.stm
 
Oh I dunno... keeps this one bubbling along 'til someone starts up discussing something again...


Incidently, I just got meself a job in the Environment and Planning dept. at my local council... so at some point I'm likely to be able to come across some facts and figures. I'll also be able to gauge attitudes within local govt to oil depletion/local sustainability/etc. If anyone can think of stuff they want to know then post it up and I'll try to find out. :)
 
Barking_Mad said:
Analysts are now saying $70 a barrel is now a strong possibility. Any 'oil experts' care to comment?
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I wouldn't claim to be an 'expert' on anything - but I'll stick my neck out and say that IMO they are being optimistic.

What we are witnessing is the shift from a buyers market to a sellers market - ask any economist what happens to the price of a commodity when supply fails to keep up with demand if an alternative is not available. The price increases. Inexorably and exponentially.

I wouldn't be surprised at $100+ by late September (19th). But then what do I know? ;)


(Off to load the pick-up) :eek:
 
Backatcha Bandit said:
I wouldn't claim to be an 'expert' on anything - but I'll stick my neck out and say that IMO they are being optimistic.

What we are witnessing is the shift from a buyers market to a sellers market - ask any economist what happens to the price of a commodity when supply fails to keep up with demand if an alternative is not available. The price increases. Inexorably and exponentially.

I wouldn't be surprised at $100+ by late September (19th). But then what do I know? ;)


(Off to load the pick-up) :eek:
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Well it ultimately it depends on the elasticity of demand, in the case of oil demand is tremendously inelastic, at the moment.
 
Oil has never really been a "buyer's" market, not in recent history. Demand is rising inexorably, supply is peaking, at root it is that simple.
 
slaar said:
Oil has never really been a "buyer's" market, not in recent history. Demand is rising inexorably, supply is peaking, at root it is that simple.
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Except people forget that the global energy market is relatively 'free'. Consequently it is an absolute certainty that the second oil and all its costs exceed the profit being made from it, it will be dumped in favour of an alternative energy source that's more profitable. It's just a question of how inelastic the demand curve is.

Forinstance there's shitloads of oil still left in the North Sea. It won't be extracted for some time though because the cost of doing so far outweighs the revenue generated.
 
Diamond said:
..it is an absolute certainty that the second oil and all its costs exceed the profit being made from it, it will be dumped in favour of an alternative energy source that's more profitable. It's just a question of how inelastic the demand curve is.
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It's not really a question of economics, as the 'economics' are subsiduary to energy. More a question of How Much Energy is Returned for the Energy Invested (EROEI).

The second it requires more energy / resources to bring the product of a well to market than is contained within that product, you have an energy sink as opposed to a resource.

Talking of energy in economic terms is a classic example of How we confuse 'symbols' and 'things'.

It leads to misleading conclusions being drawn, and wrt the very basis of our existance (energy) is very dangerous.

For instance, there's shitloads of oil still left in the North Sea. It won't be extracted for some time though because the cost of doing so far outweighs the revenue generated.
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Or rather, the cost in ENERGY exceeds the ENERGY realised. A sink.

No amount of 'money' can change the laws of thermodynamics.
 
The fundamental argument of the cornucopians, which we haven't see for a while on this thread, is that the markets can take care of our energy needs.

Any of our economists want to comment on it?

From my point of view, global markets are a proposed control mechanism or regulator for our global energy and food systems and as such, can only do so much. What they can't do is make energy out of money. The consequence of that is that markets work within the same constraints as any other proposed regulator. So yes, they might bring about homeostasis, but they seem to me more likely to do so by starving billions to death and hence reducing demand, than they are to do so by stimulating some boffin to invent a new energy technology that can be a genuine future substitute for depleted oil supplies.

All of the known oil extraction technologies run into diminishing returns on effort, and all of the known alternatives are resource constrained (e.g. to grow enough biofuels to sustain present US automobile use levels, they'd need to use something like 97% of US arable land for growing feedstocks.) I don't think the numbers add up for any known energy alternatives. If you assume a move to sustainability, and do the maths. You get a population of say 2 billion globally, with a standard of living comparable to that of the EU.

source

Now I'm sure we can better that if we try, but it indicates the scale of the problem. Some reasonable looking calculations (in link above) give a ceiling of 2 billion, when we already have 6 billion and 1/3 to 1/2 of those are malnourished already. It may be that we can do better than sustaining 2 billion in reasonable comfort, but we're not going to do that much better without being able to change those underlying constraints somehow, for example by making cold fusion work or something fairly unlikely like that.

Right now it appears that the demand for oil exceeds supply, and if this is a temporary condition, it is unlikely to remain so for much longer. The global economy is predicated on un-ending growth, which requires un-ending supplies of resources, including energy. If oil has or is about to peak, we will have a gap and must either reduce demand or find new sources of supply.

If one assumes that we bridge the gap with non-sustainable fuels (e.g. Canadian tar sands, UCG and nuclear) until they hit diminishing returns, but don't also take steps to reduce demand, we just end up with the same or a worse problem further down the line, possibly while still increasing overall demand, and we carry on increasing the later impact of climate change.

I think economics might have very useful things to say about how we might end up in one state rather than another, among the set of possible future states dictated by resource, population and cultural constraints. I don't think that 'market forces' are reliably going to produce a humane solution to oil depletion though. I think if we leave it up to 'market forces', billions starve.
 
Monbiot on the "Age of Entropy"

http://www.guardian.co.uk/Columnists/Column/0,5673,1289536,00.html

...(if oil production has peaked) the oil geologist Kenneth Deffeyes, who announced to general ridicule last year that he was "99% confident" it would happen in 2004, has been vindicated. Rather more importantly, industrial civilisation is over.

Not immediately, of course. But unless another source of energy, just as cheap, with just as high a ratio of "energy return on energy invested" (Eroei) is discovered or developed, there will be a gradual decline in our ability to generate the growth required to keep the debt-based financial system from collapsing.

A surplus of available energy is a remarkable historical and biological anomaly. A supply of oil that exceeds demand has permitted us to do what all species strive to do - expand the ecological space we occupy - but without encountering direct competition for the limiting resource.

The surplus has led us to believe in the possibility of universal peace and universal comfort, for a global population of 6 billion, or 9 or 10. If kindness and comfort are, as I suspect, the results of an energy surplus, then, as the supply contracts, we could be expected to start fighting once again like cats in a sack. In the presence of entropy, virtue might be impossible.
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Monbiot's not the cheeriest of chaps these days, but he may have a point. More mass-media coverage, including an outline of an existing sustainable community.
 
Oil Prices Fall to $45 as Iraq Oil Flows

LONDON (Reuters) - Oil prices fell more than a dollar to $45 on Tuesday, in a third day of losses as a more optimistic Iraq export picture helped unwind some of the supply worries that have lifted the market to historic levels. U.S. light crude fell $1.05 to $45.00 a barrel, slipping further from last week's $49.40 peak, which was the highest level in 21 years of New York oil futures trading. London Brent crude lost 81 cents to $42.22 a barrel.
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slaar said:
http://www.guardian.co.uk/Columnists/Column/0,5673,1289536,00.html Monbiot's not the cheeriest of chaps these days, but he may have a point. More mass-media coverage, including an outline of an existing sustainable community.
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There is a a related thread in UKP.

I posted a link there to a whitepaper published by the Tinker's Bubble eco-village community. It talks about the issues faced by such communities and the challenges of the economic environment in which they're operating.
 
Big article in the New York Press recently, with a fair amount of stuff from Matt Simmons. This is not 1973, it's much, much more serious than that.

http://www.nypress.com/17/22/news&columns/AaronNaparstek.cfm?page=1&last=6

MATT SIMMONS IS NOT prone to hyperbole. That's why you sit up when he says Americans should be taking the peak oil crisis "as seriously as we took the threat of thermonuclear war."

He thinks there should be hysteria over rising gas prices, but the hysteria should be there for a different reason. "America got so spoiled with energy costs being free. We need to do a better job of explaining how cheap a $2 gallon of gas actually is."

There is ample evidence that Americans would respond favorably to a presidential candidate who stepped up and talked about energy issues in an honest, straightforward way and began preparing Americans for the bumpy ride ahead.

According to one participant in a recent series of yet-to-be-published campaign research studies by Republican pollster Frank Luntz, Americans are responding "favorably to any messaging that includes corporate accountability—and even more favorably to industry efforts to utilize alternative energy sources such as wind and solar."

Oil giant BP-Amoco's successful recent corporate makeover suggests the same thing. BP's public image, by any metric you choose, went through the roof after they changed their brand to mean "Beyond Petroleum" and began projecting an image of caring about the environment. If you want to buy a super-efficient Toyota Prius these days, there's an eight-month waiting list. Toyota can't make them fast enough to keep up with demand. The American people may be more ready to have a serious discussion about energy than their political leaders give them credit for.

Running as the Anti-Bush, Kerry has so far failed to craft a compelling theme for his campaign. Yet it is not at all difficult to imagine the Democrats building an inspiring message around energy. Americans' relationship to energy underlies and ties together most of today's headlines—gas prices, Middle Eastern terrorism and war, the environment, suburban sprawl, traffic-clogged roadways, the obesity epidemic. Talking about changing the way that we think about and use energy would give Kerry an entry point into discussing just about every hot-button issue in American life today.

Kerry could use rising gasoline prices and spiraling violence in the Middle East as a way to create a sense of urgency around energy issues. He could propose a Manhattan Project for energy independence. Such a project would include converting our blackout-prone electrical grid to wind power, incentives for high-fuel-efficiency automobiles, rebuilding the nation's passenger rail system and re-designing American communities for less automobile dependency. Like the creation of the federal highway system in the 50s—also predicated on urgent national defense needs—a massive investment in a sustainable energy economy would create new industries, research, jobs and benefits that we probably can't even imagine. It would also give the nation a sense of mission.
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Compare that ideal to the actual race at it stands, squabbling over 30 year old war service records. It'll be another Great Depression before a new FDR stands up I'd warrant, if it's possible at all.
 
Meanwhile, for reference, the official position as stated by the oil giants (from The BP Statistical Review of World Energy 2004):

http://www.bp.com/sectiongenericarticle.do?categoryId=104&contentId=2014225

This year's Review contains much fascinating information, and I would draw your attention to just four points of particular significance.

Firstly, the data illustrates the continued growth in reserve volumes across the world. At current levels of consumption there are sufficient reserves to meet oil demand for some 40 years and to meet natural gas demand for well over 60 years. On recent trends there appears to be considerable scope for proved reserves (and production) to keep rising in Russia and elsewhere. Reserves, globally, have grown over time and it is clear that the issue of energy security, which has been so prominent over the last year, is driven not by a physical shortage of supply but by the challenges of ensuring, in a world where demand and supply are not co-located, that there will be sufficient traded oil and gas to meet rising demand.

Secondly, the Review puts in context the recent surge in prices. Even at $40 per barrel, the price of crude oil in real terms is still only half the level reached in 1980. An effective global market and continued advances in technology have enabled the world to absorb a 25% increase in daily oil demand in the intervening period.

Thirdly, though oil remains a vital fuel, with few viable substitutes in the transport sector in particular, the energy mix is being balanced by continued growth in demand for natural gas. Technical advances have encouraged gas consumption, as has the desire to move to fuels that emit less carbon. The Review records last year’s double-digit growth in liquefied natural gas trade, one indicator of the fact that gas is now traded internationally as well as regionally.

Fourthly, the Review tracks the changing geographic pattern of the energy market led by the doubling of Chinese oil demand over the last 10 years. China has now overtaken Japan as the world’s second largest consumer of oil behind the United States. Chinese decisions on imports and trading links, for both oil and natural gas, will be a major influence on the world energy scene from now on.

I would like to thank all those within BP and beyond who have helped to produce this year’s edition. I hope you will find it a useful and stimulating summary of a fascinating and ever evolving story, which remains at the heart of human progress.

The Lord Browne of Madingley
Group Chief Executive
June 2004
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slaar said:
With apologies for frequent posts, interesting summary of Donella Meadow's work on intervening in complex systems here:

http://en.wikipedia.org/wiki/Donella_Meadows'_twelve_leverage_points_to_intervene_in_a_system
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Yes that stuff is interesting isn't it? For example, 3) Goals. One of the problems I think arises with the cornucopian 'the markets will solve it!' arguments is that they have an implied claim that the goals of a market system are the right ones for sustainability. This is something I beg leave to doubt in most cases.
 
Not sure if this is OT or not, but it is an interesting example of the development of new methods to defeat a farming crisis:

http://www.eritreadaily.net/news/article20041823.htm

In the process he has pioneered a radical new way of producing food - using seawater for irrigation, and emulating the natural processes of desert coastlines to grow plants - a technique with vast potential and relevance to places such as Western Australia.
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Still seems a bit dependent on hydrocarbons, though.
 
As everything always seems to be doom and gloom here, a note of optimism in terms of depletion arguments if not over-production (climate change) issues. Anybody here heard of Thomas Gold? He was a brilliant physicist who was part of the team behind the disproved "steady state" universe theory, but also proved that pulsars were rotating neutron stars and that the ear hears with tiny hairs well before they were actually discovered by medicine. Fellow of the Royal Society etc etc. Anyway before he died he became convinced that fossil fuels are no such thing, that they exist in vast quantities below the earth and hence

1) There's a hell of a lot more hydrocarbons down there than we thought.
2) Wells are actually replenished constantly.

Here's the Economist obit:

http://www.economist.co.uk/people/displayStory.cfm?story_id=2876655

Now obviously issues of extraction expense and speed of replenishment are huge, and it would hence still require a big slowing in consumption but would provide some sort of sustained input of hydrocarbons, it wouldn't be a total collapse. The jury is out but even Paul Erhlich (he of the famous bet on commodity prices - the sceptical side) admits it totally plausible.

I'd be interested to know if anyone has looked into this more deeply and liked / debunked it comprehensively.

Edited to add: this gets more interesting, and possibly more dubious, the more you look at it. It seems he may have ripped a few of the ideas - and distorted them - from Russian theories of petro-geology that developed to an extent independently from US-dominated thought. The main proponent in the US appears to be the Gas Resources Corporation based in Houston, Texas (yes, I know, I immediately thought that too).

http://www.gasresources.net/index.htm

My immediate suspicion is that it might be rubbish, but who knows? They seem insistent it's based on a large amount of (published) research going back years and it all sounds plausible. I'm particularly interested in the article "The New Pessimism about Petroleum Resources: Debunking the Hubbert Model", to be published in Minerals and Energy, a major journal, and written by a big name from MIT, arguing that oil supply is absolutely not defined by physical limits, not in the past and not now, but by economic and political limits and factors.
 
After that daliance into an extreme, and between the two opposite camps (peak oil now, catastrophe soon vs cornocopia), neither of which I am inclined to believe is this more realistic article, which has some good stuff on north-south relations, general oil depletion and transition etc:

http://www.petroleumworld.com/SuF030604.htm

"Cheap Oil Myths and Energy Transition"

No way out but restructuring

Current leaderships of the North will, this decade, learn that no amount of munitions and ordnance can solve or defeat the geological problem of oil depletion. Some current leaderships of the North already produce 'landmark speeches' about the need to shift to renewable energy some time after 2050. In fact, even by 2025, per capita oil use will be about 40%-50% down on today and the climate and environment consequences of continued high rates of fossil fuel burning will be impossible to deny. Sooner and not later, therefore, it will be understood that there are no military solutions to geological problems of fossil energy depletion. International cooperation, an almost forgotten term from the 1970s and early 1980s, when oil prices attained about $100/barrel in dollars of 2004, should rapidly be reinstated as the way forward to preparing all persons, both in the North and South, for a future in which at least two-thirds of our current and easily producible supplies of 'conventional' oil and gas will be exhausted by about 2035.
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I've seen the abiotic theory presented before. What I haven't seen is any plausible evidence that oil reserves are actually being renewed fast enough to make any difference relative to peak oil, if indeed they're renewed at all.

Demand is demonstrably increasing, and new supplies demonstrably aren't coming online fast enough, whatever their origin. Assuming that the abiotic guys aren't talking bollocks there would still need to be significant renewal for their theory being true to make any difference to the basic peak oil problem.

I thought the 'no way out but restructuring' article in your second post was very interesting though. How plausible do you find his economic reasoning slaar?
 
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