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

[laptop]

Another point to make is that most economists would argue that Bernie's point about food, energy and population growth is in danger of putting the cart before the horse. Bernie argues that the exploitation of oil "allowed" massive population growth (ie supply led to demand); John Kay (and I suspect many other economists) argues it the other way around: the massive exploitation of oil was the result of demand (ie demand led to supply).

* Tries to tear hair out @ economists *

* Realises it doesn't work with a #3 cut *

That demand drags supply is an axiom for classical economists, isn't it?

Whereas Bernie's big into feedback loops. I, meanwhile, am big into pointing out that everything interesting is far more complicated than any 18th-century scientistic theorising can dream. Indeed the entire point of 18th-century scientistic theorising is to define the complexity out of the problem in the hope of finding simple universal laws. And the hope has not been realised. So give it up.

Here are some of the relevant things that have gone on:

• Exploitation of fossil carbon (coal and then oil) made it possible to transport food long distances in bulk
  • which reduced the likelihood of local famine
  • which decreased infant mortality and increased population
• it similarly produced urbanisation,
  • which improved sanitation
  • which decreased infant mortality and increased population;
  • and in a wider sense produced medicine
  • which decreased infant mortality and increased population
• AND increased population, and urbanisation led to increased demand for carbon
  • which led to prospecting which made supply available

 

[Backatcha Bandit]

Tom Friedman's argument sounds similar to Prof. Smalley's. Smalley suggests that we need a 'Sputnik' type event to stimulate massive investment in research into energy, that the 'miracles' neccessary to get us out of the 5hI+ might occur.

-

One has to wonder though, how much of that 'defusing' was done by improved technology per se and how much by the existence of a vast supply of cheap energy which suddenly became available at the point where we figured out how to use first coal and then oil?

The technology may keep getting progressively better, but the introduction of oil energy was an one-off giant leap. Sure you can make incrementally greater efficiencies in using it, but there's still only so much of it there...

What concerns me here is the 'path dependence' of our technology with regard to hydrocarbon energy.

Take one of the most glaring examples - the car. A perfect oil-soaked palimpsest for the achievements of human technology.

The 1908 Ford Model T did about 25mpg. Today people are buying Hummer H2's that do 11mpg.

Even the most commonly trumpeted (and well funded) proposed 'solution' to the transport energy problem - that of a "Hydrogen Economy" - is fatally flawed to the point of being nonsensicle. (only an energy carrier, requires around 25% of energy just to compress into the vehicle tank).

My fears arise when I am encouraged to put faith in 'technology' that, on the whole, tends to encourage more energy expenditure in it's proposed 'solutions' to the problems that the apparent energy abundance was often instrumental in creating.

Also, I feel it would be a mistake to consider a technological response to the problem of diminishing energy from the perspective of present (albeit $50+) apparent abundance.

Unless the technology offers a source of energy with virually no energy investment required for transition, (building infrastucture, etc) it will add to the demand at exactly the same time supply is outstripped by it.

For some reason I'm reminded of the monkey trap with the hole in the coconut shell full of rice - monkey reaches in to grab the rice, but can't get his hand out without dropping the rice...

..the belief that market solutions cannot work and that only massive concerted state action can resolve problems that have not arisen yet.

Market solutions, it is true, cannot work, and massive concerted state action will only occur if it is already too late.

Which means it's up to us as individuals to decide to 'drop the rice'.

 

[Bernie Gunther]

<snip> Another point to make is that most economists would argue that Bernie's point about food, energy and population growth is in danger of putting the cart before the horse. Bernie argues that the exploitation of oil "allowed" massive population growth (ie supply led to demand); John Kay (and I suspect many other economists) argues it the other way around: the massive exploitation of oil was the result of demand (ie demand led to supply).<snip>.

To avoid confusion, it might be useful to consider Aristotle's four causes here.

I'm suggesting that oil was the material cause of the rise of industrial economies. The role of demand seems more like cause as telos

Human needs and desires giving rise to demand certainly played a causal role in creating industrial economies, but I'm claiming that a critical material condition without which they could not have existed in their historical form was abundant fossil fuels. If oil and coal had not been available, demand could not have made them available and hence, industrial economies would not have arisen as they did. Something else would have happened instead.

The UK was already running out of fuelwood in Napoleonic times, so it's not immediately clear what would have happened if geological processes had not provided us with coal and oil deposits, but short of discovering nuclear power without first going through the coal and oil ages, that something would have been energy-limited by the amount of sunlight available, captured and used.

 

[freke]

Laptop, apologies for causing such anguish …but it’s not always a bad idea to discuss and critically examine certain assumptions. I hope that this is understood. If you knew what I am currently researching, you would know that I am also categorically opposed to modernist/enlightenment universalist assumptions. This does not, however, mean that we should just junk all economists’ arguments – in recent years the subject has been used and abused by those with rather peculiar beliefs, but let’s not chuck the baby out with the bathwater.

Am glad to hear that Bernie’s more into positive feedback loops, because I think that’s a much better way of explaining supply/demand issues regarding energy. I stated above that Bernie’s argument was in "danger" of putting the cart before the horse, and that it was necessary to put the opposing POV.

Also, John Kay should not be dismissed easily – his recent book The Truth About Markets is probably the best book on economics of the last five years. It really is a must read.

Back to positive feedback loops – this is the role that states can play with regard to energy. There is growing demand (probably a better word would be "use"), but from a low base, for renewable energy sources, and states could easily ‘pump prime’ the market by establishing regulatory structures and incentives to reshape the energy industry. Evidently, this will occur in the EU first, at least until there is a major change in US political leadership.

This perspective comes from accepting the political and economic structures we have now. To argue that the alternative is only by massive state action, and disregarding the markets, presents three issues: 1) to convince enough people that this one issue is of such seriousness that it should provoke, literally, a revolution in political and economic affairs; 2) to convince people that states are the appropriate vehicle for such change in an ideological climate that does not believe states have the capacity to manage such matters by themselves; 3) answer the question: why states and not markets? Why not both?

 

[slaar]

Laptop you're right to an extent, demand dragging infinitely pliable supply is close to an axiom, at the limit, for most economists, from Smith through Marx through Keynes to the present day. Now I'm not saying this is remotely plausible, but for example the discovery of a way of producing workable nuclear fusion would solve most of the energy problems in one stroke. So there's a degree of - quite possibly misplaced - optimism in all these theories. The worst-case scenario (for us, personally), where we come up against these buffers in the near future and don't manage to find substitutes, well, yes that would be terrible. I'm not willing to think that negatively just yet, perhaps it's my young-ish age.

 

[Bernie Gunther]

<snip> To argue that the alternative is only by massive state action, and disregarding the markets, presents three issues: 1) to convince enough people that this one issue is of such seriousness that it should provoke, literally, a revolution in political and economic affairs; 2) to convince people that states are the appropriate vehicle for such change in an ideological climate that does not believe states have the capacity to manage such matters by themselves; 3) answer the question: why states and not markets? Why not both?

I think it's not just this one issue.

The sort of corrective actions I would want to see, are also the corrective actions for other issues, climate change, soil erosion and food security generally. There's also an established strain of political thought (Kropotkin particularly) which proposes similar structures to achieve social justice.

If we are to limit energy use to that captured from the sun, arrest climate change and soil erosion and find a way to live on our ecological "income" rather than our ecological "capital", then the biggest obstacles seem to be consumer culture and grow or die capitalism. Looked at in terms of feedback loops, markets and the states which serve them, seem to me to only provide strong positive loops driving more growth. I want to see strong negative loops limiting growth, and stablising in a steady state that can be sustained.

 

[slaar]

The UK was already running out of fuelwood in Napoleonic times, so it's not immediately clear what would have happened if geological processes had not provided us with coal and oil deposits, but short of discovering nuclear power without first going through the coal and oil ages, that something would have been energy-limited by the amount of sunlight available, captured and used.

I think this point is valid Bernie, and it is a variation of Malthus; humanity - or industrialised humanity in any case, there's still hundreds of millions of subsistence farmers out there - has bene running headling into the great unknown for 250 years now. The longer we do it, the greater the material gains and the bigger the eventual collapse if the house comes tumbling down. I certainly don't buy the "perpetual progress" line but nor do I believe this tumbling down is inevitable.

 

[slaar]

I think it's not just this one issue.

The sort of corrective actions I would want to see, are also the corrective actions for other issues, climate change, soil erosion and food security generally. There's also an established strain of political thought (Kropotkin particularly) which proposes similar structures to achieve social justice.

If we are to limit energy use to that captured from the sun, arrest climate change and soil erosion and find a way to live on our ecological "income" rather than our ecological "capital", then the biggest obstacles seem to be consumer culture and grow or die capitalism. Looked at in terms of feedback loops, markets and the states which serve them, seem to me to only provide strong positive loops driving more growth. I want to see strong negative loops limiting growth, and stablising in a steady state that can be sustained.

I see this. The problem is, and this can be proven from centuries of observation, is that an economy or society that is not achieving consistent material gains is far more prone to conflict. The best way to reduce conflict is to ensure an increasing pie as it increases the likelihood that everyone can gain whilst avoiding destructive distributional conflict. I agree that if a collapse comes the resulting conflicts would be genuinely red in tooth and claw; I don't quite see how this would be avoided going down your route.

 

[Bernie Gunther]

I think this point is valid Bernie, and it is a variation of Malthus; humanity - or industrialised humanity in any case, there's still hundreds of millions of subsistence farmers out there - has bene running headling into the great unknown for 250 years now. The longer we do it, the greater the material gains and the bigger the eventual collapse if the house comes tumbling down. I certainly don't buy the "perpetual progress" line but nor do I believe this tumbling down is inevitable.

Neither do believe collapse inevitable, I but I think some form of corrective action is urgently required to damp the system down, if collapse is to be avoided.

So I'm arguing for trying to achieve homeostasis rather than letting "success to the successful" positive feedback loops push the system over a big cliff.

 

[laptop]

If you knew what I am currently researching, you would know that I am also categorically opposed to modernist/enlightenment universalist assumptions. This does not, however, mean that we should just junk all economists’ arguments...

But classical economics is the last of the modernist/enlightenment universalisms... from what you say, I'd have thought you'd find that enough reason to put it in a box with, say, shamanism.

I'd reply to your other points but unfortunately I have work to do... yes, at this time...

 

[Bernie Gunther]

I see this. The problem is, and this can be proven from centuries of observation, is that an economy or society that is not achieving consistent material gains is far more prone to conflict. The best way to reduce conflict is to ensure an increasing pie as it increases the likelihood that everyone can gain whilst avoiding destructive distributional conflict. I agree that if a collapse comes the resulting conflicts would be genuinely red in tooth and claw; I don't quite see how this would be avoided going down your route.

I see what you're saying and this certainly is an issue.

I suspect though that scarcity is the critical issue in conflict, rather than a desire for unbounded material prosperity. I also suspect there are other key issues once scarcity is addressed. A great many people seem to act on the basis of values that they hold rather than only from a desire to own stuff.

If we look at the total amount spent on promoting the desire for consumer goods, it strikes me that at least some material desires aren't deep rooted, but are instead stimulated using cultural signals, in order to drive profitability.

It seems to me that if the basic materials for a comfortable life are available, it should be possible by some form of cultural engineering to promote, instead of more and more consumption, values that are consistent with sustainability.

Perhaps some form of religion dedicated to sustainable living and opposed to consumerism may hold more hope for us than massive state intervention

 

[davekriss]

(On edit, I see a lot of posts have been made between the one I respond to and my post -- I refer to freke's post #694.)


freke I wouldn't characterize the modality of thought Bernie applies to the subject at hand as "positive feedback loops" -- a better label would be dynamic modeling (as not all feedback is "positive"), or even that old word, cybernetics (and sorry Bernie as you are not at all silo'd to this one modality, I'm just picking up on this one comment from freke).

On the ecomomics of John Kay let me offer this:

Morowitz has presented the case, in thermodynamics, for the hypothesis that a steady flow of energy from the inexhaustible source of the sun to the unfillable sink of outer space, by way of the earth, is mathematically destined to cause the organization of matter into an increasingly ordered state. The resulting balancing act involves the ceaseless clustering of bonded atoms into molecules of higher and higher complexity and the emergence of cycles for the storage and release of energy. In a non-equilibrium steady state, which is postulated, the solar energy would not just flow to the earth and radiate away; it's thermodynamically inevitable that it must rearrange matter into symmetry, away from probability, against entropy, lifting it so to speak into a constantly changing condition of rearrangement and molecular ornamentation. If there were sounds to represent this process, they would have the arrangement of the Brandenburg concertos, but I'm open to wondering whether the same events are recalled by the rhythms of insects, the long pulsing runs of bird songs, the descants of whales, the modulated vibrations of millions of locusts in migration.
-- Lewis Thomas, The Lives of a Cell, pp 27-28

I'd venture that the "organization of matter into an increasingly ordered state" extends beyond the biological and onto the cultural, the latter an acretion upon the base of biological order, which in its turn is an acretion upon the base of geo-physical order, etc. Our socio-political-economic organizations and systems represent the "emergence of cycles for the storage and release of energy". This entire edifice of order is driven by forces deaf to the demands of humankind in the marketplace, which occupies one small (and historically brief) niche in the order of things.

Men learned how to harness fire; they could cook food and warm themselves, thus opening up new ecological niches for them to occupy and they did so, successfully. Population grew. Using tools, we improved our ability to capture energy and put it to use; we cut down forests to heat our homes and build our homes and population grew. In certain regions whole forests were cut down and firewood was in scarce supply yet there stood the burgeoning population, enabled by wood and demanding heat, so men searched and found peat a good source of energy, and population grew. When the bogs were emptied, demand led to the discovery of coal, and the population grew still more. Technology advanced, ever more complex socio-organizations flourished, to the point where coal was no longer the practical choice and ever-searching man discovered uses for oil, and population grew still more. Which brings us to our present point. 6.5+ billion sacks of hungry streaming biomass grown fat by our innovative ability to find, capture, and use the stored energy from that "steady flow of energy from the inexhaustible source of the sun".

We're smart enough to know that we are at or near peak oil supply and we're about to start extracting more than new discoveries can replace it, i.e. we face diminishing supplies. None of the current alternative energy sources come anywhere near replacing the high EROEI obtained by last century's exploitation of oil. So we face in the near future possibly the greatest challenge our civilization has ever faced. Are we up to it? Or will vested interests fight hard and at all costs to preserve their interests?

It's possible technological innovation will improve the dismal EROEI associated with extracting oil from tar sands; it's possible technological innovation will allow for discovery and extraction of new large pools in hard to reach places; it's possible that new forms of abundant energy will be discovered. Market mechanisms will lead to innovation that softens the downward slope of supply, there's no doubt on this. The point of the Peak Oil adherents is that the clock is ticking, that demand and extraction rates mean supplies diminish at a much faster rate, and thus shorter time, than it took us to get to the peak. And the doomsday adherents see no political will to work cooperatively to reorganize society along lines that are more sustainable.

Instead, some of us (myself included), see elites leading their nations to wars through manufactured consent, consent manufactured on lies, that lead to strategic placement of war garrisons around dwindling oil supplies in order to preserve their own rapacious lifestyles at the cost of everyone else.

To illustrate: I don't think the USG cares one iota about the chaos that surrounds the US troops in Iraq; their intention was and is to establish a permanent military presence atop the largest pools of oil on earth. Haliburton is busy building 4 large garrisions in Iraq; from this central location the US intends to radiate military might in order to control future flows of oil from the region. Further, the US built 14 (?) bases around the Caspian basin. All that's left to establish the fortified super-garrison as envisioned by Brzenzski in The Great Game is to topple Iran and build there.

It is neo-liberal imperialism on the march, lethally successful to date. And what has imperialism always been about? It's been about securing cheap natural resources that sustain the lifestyle of elites in the homeland. History repeats itself, but perhaps on a coming scale never seen before; perhaps with species-ending violence. These are the possibilities in the absence of popular consciousness to fight against it now.

 

[slaar]

I see what you're saying and this certainly is an issue.

I suspect though that scarcity is the critical issue in conflict, rather than a desire for unbounded material prosperity. I also suspect there are other key issues once scarcity is addressed. A great many people seem to act on the basis of values that they hold rather than only from a desire to own stuff.

If we look at the total amount spent on promoting the desire for consumer goods, it strikes me that at least some material desires aren't deep rooted, but are instead stimulated using cultural signals, in order to drive profitability.

It seems to me that if the basic materials for a comfortable life are available, it should be possible by some form of cultural engineering to promote, instead of more and more consumption, values that are consistent with sustainability.

Perhaps some form of religion dedicated to sustainable living and opposed to consumerism may hold more hope for us than massive state intervention

This makes a lot of sense, and I think you're right. Conflicts seem to be more likely where there are significant numbers of people in absolute poverty with a stagnating economy, but we've got all the material prosperity we should ever really need, and a lot more. with very, very few people in serious poverty (although many in poverty relative to advanced averages, just not relative to, say, Lagos or Lilongwe). Japan's been stagnating in economic growth terms for over a decade but no sign of societal implosion there.

 

[slaar]

The thing is, in the poorest countries it's the lack of capitalism that's the problem, not too much, at least in terms of pure political economy. I guess your argument could be that they're in a better position in some ways to adapt to skyrocketing energy prices and setting up the sort of society you're talking about, as much of the populations in these places are subsistence / semi-feudal peasants in any case.

 

[Bernie Gunther]

Well if we consider what a truly sustainable society looks like, it probably involves a considerably increased emphasis on manual labour to get very efficient agriculture out of relatively small areas (sort of like the Cuban model) It involves local consumption of locally produced food for the most part. It involves local low-energy manufacture of very durable goods rather than global high-energy manufacture of shoddy goods that fall apart and need to be replaced. It would use the best modern technology, not to drive unlimited growth, but to maximise efficient use of available resources.

Back around 1900 Kropotkin described such a society in Fields, Factories and Workshops

He wasn't driven by ecological issues, but rather wanted to find the most just and equitable way for humans to live. So I think humans could at least potentially have a different value set that said "overconsumption & exploitation is bad, social justice, sustainability & living within our ecological income is good." and which implied forms of society that would be inherently sustainable.

I've edited this because I think I wasn't being too clear why I'm focussing on value sets here. Certainly I think you can change a system's behaviour by fiddling about with the feedback loops and information flows, but what we need here isn't a small change, it's a total transformation and the only way I can see to get that is by a change of values. Particularly the set of values enshrined in our economic thinking. "Growth is always good, people who earn less are worth less, nature is a stock of resources to be converted to human purposes and a toilet to dump human wastes in" (see e.g. Meadows for more of this )

 

[Backatcha Bandit]

An interesting commentary regarding the role of 'education' in constructing such a 'value base' can be found in Berry's review (1975) of the book "All God's Dangers - The Life of Nate Shaw" (by Theodore Rosengarten).

From the standpoint of our social mainstream, the idea of a well-educated small farmer, of any race, has long been a contradiction in terms, and so of course our school systems can hardly be said to tolerate any such possibility. The purpose of education with us, like the purpose of society with us, has been, and is, to get away from the small farm — indeed, from the small everything.

The purpose of education has been to prepare people to "take their places" in an industrial society — the assumption being that all small economic units are obsolete. But the superstition of education carries it even further; it assumes that this "place in society" is "up." "Up" is the direction from small to big. Education is the way up. The popular aim of education is to put everybody "on top."

Well, I think I hardly need to document the consequent pushing and trampling and kicking in the face...

...we think it ordinary to spend twelve or sixteen or twenty years of a person's life and many thousands of public dollars on "education"—and not a dime or a thought on character. Of course, it is preposterous to suppose that character could be cultivated by any sort of public program. Persons of character are not public products. They are made by local cultures, local responsibilities. That we have so few such persons does not suggest that we ought to start character workshops in the schools.

It does suggest that "up" may be the wrong direction.

Admirable as he is - Wendell Berry

 

[Dr Jon]

I read an fascinating report in The Hindu last Sunday, which described the recent visit of President Chavez of Venezuela to Kolkata (Calcutta). He had a good rant about the USA trying to assassinate him, topple his government and get their hands on Venezuela's oil.
It seems he has just signed a new deal to supply oil to India instead.

I can't find a link to the Hindu story, but there's a brief report in The Statesman.

 

[bigfish]

Oil. Big Profits. Big changes? By Edward Teague

http://www.williambowles.info//oil/oil_big_profits.html

A principal concern of Beijing, is the possible use of US and Indian naval power to control oil supplies from the Middle East in choke points of the Straits of Hormuz and the Malacca Straits. The Chinese are building up a capability to defend those sea lanes, and it is evident that naval rivalry is building in the area – a fact re-enforced by the rapid deployment of US naval might in helping after the Indonesian tsunami disaster.

As a consequence, Beijing is increasingly looking to the west coasts of the Americas, having signed deals with president Chavez on his recent visit to Beijing and with reports that the state owned China National Offshore Oil Corp are preparing to bid $7Bn for Unocal.

There are of course other oil majors, awash with cash who are eying up Unocal, the one most mentioned is Chevron Texaco similarly based in California but some 20 times the size. Sheel, BP, Italian ENI are also mentioned. But. Nobody really wants to queer their pitch with Beijing, who facing soaring demands for energy will be an increasingly important customer for oil, gas and energy products.

Impotent Uncle Sam

Mired in Iraq, faced with burgeoning deficits, set to grow by increasingly costly oil imports, debilitating social service costs and pensions, with allies fast disappearing – no longer the “Coalition of the Willing” but “Joint Military Forces” and coolness if not outright hostility from Old Europe uncle Sam is increasingly feeling the heat in his own backyard as China hoovers up world resources.

Beijing who bought up the IBM PC business for just the debt on a weeks trading, can snap up the 8th largest oil co in the US for some 2 weeks trading deficit – and it doesn’t look as though Uncle Sam can do too much about it. All this when Vladimir sent him packing- “his no means no” – when all he wanted was some of his financial backers money back which they saw pouring away when the Yukos oligarchs ended up in the slammer.

‘bout time Uncle Sam started swatting a few Beehives.

 

[Barking_Mad]

Cheers to adzp for this piece...worth the read, especailly to 'Rand' lovers out there

"World oil peaking is going to happen," the report says. Only the "timing is uncertain".

The effects of any oil peak are similarly not ignored. Specifically, the impact on the economy of the United States. "The development of the US economy and lifestyle has been fundamentally shaped by the availability of abundant, low-cost oil. Oil scarcity and several-fold oil price increases due to world oil production peaking could have dramatic impacts ... the economic loss to the United States could be measured on a trillion-dollar scale," the report says.

The authors of the report also dismiss the power of the markets to solve any oil peak. They call for the intervention of governments. But also they rather worryingly point to a need to exclude public debate and environmental concerns from the process. They say this is needed to speed up decision-making.

"Intervention by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic. But the process will not be easy. Expediency may require major changes to ... lengthy environmental reviews and lengthy public involvement."

http://english.aljazeera.net/NR/exeres/5EF86883-8CDB-49B5-9A07-5759205A9DBE.htm

 

[bigfish]

Are we really running out of oil?

http://english.aljazeera.net/NR/exe...759205A9DBE.htm

Porters piece reads like pure, unadulterated big oil company propaganda. Tell me Adam have you ever considered making an honest living as a writer?

Meanwhile, back in the real world:

*

http://www.williambowles.info/oil/no_oil.html

It will take another 30 years for the needle to sink to half empty, says Christopher Hope

If you weren’t worried before, then there’s been enough news in the past few days to make you nervous. Some of the world’s biggest energy companies are saying that they can’t find enough oil to replace the barrels they are pulling out of the ground for us to burn.

Last week Shell, which is already in hot water for managing to “lose” a third of its proven oil and gas last year, said it had only managed to find between 30pc and 40pc of the oil it had pumped in 2004. For BP, the declared rate was just 89pc.

In America, ChevronTexaco has warned that its reserve replacement rate was likely to be poor (some analysts say it could even be zero). ExxonMobil and Total will tell investors about their 2004 reserve replacement rate next week. Meanwhile, analysts at Wood Mackenzie say that Shell has 9.4 years of production left, while BP has enough to last 14.1 years.

At these rates, they will already be scraping the barrel by the time of the 2012 Olympics. So is that moment, long forecast by the hair shirt brigade, finally on the horizon? Are we running out of the black stuff? Contrary to the appearance of impending doom, the answer’s no.

According to the US Geological Survey, which spent 100 “man years” surveying 128 provinces between 1995 and 2000, the world was endowed with 3,021 trillion barrels before production began. And that was just conventional light crude, which is easy to sell.

The USGS reckons there was probably the same amount again of “unconventional” hydrocarbons such as the oil that is bubbled out of sand in Canada. Added to that there was another 2,500 billion barrel equivalent of natural gas. We are not even half way through it yet. The USGS says we have used up just over 1,000 billion barrels of the 3,021 billion total.

If global consumption keeps running at 28 billion barrels a year, the USGS says that it will take until 2036 for the world to have used half the total. By then, new technologies will almost certainly have turned up more viable reserves. Already, the Russians think the Americans are too pessimistic, putting the total at 11,000 billion barrels.

As Adam Sieminski, an analyst at Deutsche Bank, says: “Only God knows how much oil and gas there is and that has not been revealed yet in any of the scriptures.”

So why do the companies seem to be in such dire straits? Sieminski continues: “What people don’t realise is that reserves are like milk on the shelf at Tesco. A grocer does not order one month’s worth of milk to meet two days of demand. As they sell it they get in more.

“For years that is what the oil industry has done. It only makes sense to carry 10 years’ worth because that is the length of time it takes to do a project. Shell’s reserves won’t go to zero. There is as much oil in the tar sands in Canada as in Saudi Arabia, – it is just harder [and much more expensive] to get out. But if you put the price up then, by golly, you will have it.”

But if the oil and gas is in abundance, why are reserve replacement rates so low? The answer lies in the rules governing reserves’ disclosure, laid down by the US regulator, the Securities and Exchange Commission nearly 30 years ago.

Under these regulations, which were originally set up so America could be certain of its oil and gas supplies in a shortage, companies can only record “proven” barrels of which they are 90pc certain. Conceived with the best of intentions, this ruling is making a nonsense of Big Oil’s reporting. This week BP reported an 89pc reserve replacement ratio under SEC rules. Under UK rules the figure is 106pc. The difference – about 300m barrels – flows from the SEC rules on Production Sharing Contracts.

PSCs are arrangements whereby companies earn a return from selling barrels of oil that is capped at an agreed level. If prices are high, the company can earn that return from fewer barrels, thus cutting its share of the field.

In other words, if the oil price goes up, the booked reserves figure falls, even though the amount of oil that can be economically recovered rises.

 

[Barking_Mad]

Interesting piece here

The scenario I foresee is that market-based panic will, within a few days, drive prices up skyward. And as supplies can no longer slake daily world demand of over 80 million barrels a day, the market will become paralyzed at prices too high for the wheels of commerce and even daily living in "advanced" societies. There may be an event that appears to trigger this final energy crash, but the overall cause will be the huge consumption on a finite planet…

The Earth cannot, as of the world oil peak in extraction, give up ever greater quantities of black gold. Most of the world exporting companies are now reducing extraction rates due to fewer discoveries and depleted fields. Oil production in 18 producer countries has passed its peak and is declining faster than previously thought: at about 1.14 million barrels a day.

International Energy Agency figures put the total spare capacity of all 11 countries in OPEC at just 330,000 bpd (down from 6 million bpd in 2002). Conventional Saudi spare capacity is zero... An IEA report from August 2004 indicates Saudi Arabia needs up to 800,000 bpd of newly discovered oil each year just to offset declining fields and maintain its current production level." [Al-jazeera] - This can't happen, so watch for the ensuing energy crisis.

The world needs to produce another 2,723,530.2 barrels per day by the end of 2005 just in order to stand still…”

http://www.prudentbear.com/internationalperspective.asp

 

[Barking_Mad]

http://english.aljazeera.net/NR/exe...759205A9DBE.htm

Porters piece reads like pure, unadulterated big oil company propaganda. Tell me Adam have you ever considered making an honest living as a writer?

Meanwhile, back in the real world:

Oh its all a conspiracy! WHOOOAHHHH!

 

[Jangla]

http://english.aljazeera.net/NR/exe...759205A9DBE.htm

Porters piece reads like pure, unadulterated big oil company propaganda. Tell me Adam have you ever considered making an honest living as a writer?

Meanwhile, back in the real world:

I woudn't trust the USGS as for as I could throw them - memo's were sent out last year telling USG staff to say that oil reserves were actually replenishing themselves and there was therefore nothing to worry about!

 

[bigfish]

I woudn't trust the USGS as for as I could throw them - memo's were sent out last year telling USG staff to say that oil reserves were actually replenishing themselves and there was therefore nothing to worry about!

Well, in this case, the USGS have a point, as too do the Russians:

http://www.kkrva.se/sve/energi/odell.shtml

Finally, a word of caution on the essential fragility of a study on the very long-term future for the world's energy supply which accepts without question the validity of the original 18th century hypothesis that all oil and gas resources have been generated from biological matter in the chemical and thermodynamic environments of the earth's crust. There is an alternative theory - already 50 years old - which suggests an inorganic origin for additional oil and gas. [12] This alternative view is widely accepted in the countries of the former Soviet Union where, it is claimed, "large volumes of hydrocarbons are being produced from the pre-Cambrian (pre-life! bf) crystalline basement". [13] Recent applications of the inorganic theory have, however, also led to claims for the possibility of the Middle East fields being able to produce oil "forever" [14] and to the concept of repleting oil and gas field in the gulf of Mexico. [15] More generally, it is argued, "all giant fields are most logically explained by inorganic theory because simple calculations of potential hydrocarbon contents in sediments shows that organic materials are too few to supply the volumes of petroleum involved." [16]

The significance of the alternative theory of the origin of additional oil and gas potential is self evident for the issue of the longevity of hydrocarbons' production potential and production costs in the 21st century. Instead of having to consider a stock reserve already accumulated in a finite number of so-called oil and gas plays, the possibility emerges of evaluating hydrocarbons as essentially renewable resources in the context of whatever demand developments may emerge. If fields do replete because the oil and gas extracted from them is abyssal and abiotic (based on chemical reactions under specific thermodynamic conditions deep in the earth's mantle), then extraction costs should not rise as production from such fields continues for an indefinite period. Neither do estimates of reserves, reserves-to-production ratios and annual rates of discovery and additions to reserves have any of the importance correctly attributed to them in evaluating the future supply prospects under the organic theory of oil and gas' derivation. [17] In essence, the "ball park" in which consideration of the issues relating to the future of oil and gas has hitherto been made would no longer remain relevant.

 

[bigfish]

Oh its all a conspiracy! WHOOOAHHHH!

“Every ten or fifteen years since the late 1800’s, ‘experts’ have predicted that oil reserves would last only ten more years.* These experts have predicted nine out of the last zero oil-reserve exhaustions.”
C. Maurice and C. Smithson, Doomsday Mythology: 10,000 Years of Economic Crisis, Hoover Institution Press, Stanford, 1984.

 

[bigfish]

Interesting piece here



http://www.prudentbear.com/internationalperspective.asp

An IEA report from August 2004 indicates Saudi Arabia needs up to 800,000 bpd of newly discovered oil each year just to offset declining fields and maintain its current production level." [Al-jazeera] - This can't happen, so watch for the ensuing energy crisis.

But Saudi officials announced on April 28 that the Kingdom’s estimate of recoverable reserves had nearly quintupled! Were they lying?

Please note that the oil reserves claimed by Saudi Arabia alone (1.2 trillion barrels) exceed what the Peak Oil lobby claim are the total recoverable oil reserves for the entire planet.

 

[sparticus]

http://www.arabnews.com/?page=6&section=0&article=44011&d=29&m=4&y=2004

http://www.el-universal.com.mx/pls/impreso/noticia.html?id_nota=6110&tabla=miami

2 reports: one from Saudi and one from Mexico. If either is true, 'imminent' peak oil is blown out of the water.

For peak oil enthusiasts on this thread to attempt to debunk those of us who question the underpinning evidence for imminent peak oil as conspiracy theorists is just utterly bizarre, since to most oil market analysts it is the peak oilers who are on the fringe of the mainstream still and would be characterised as alarmist conspiracy theorists.

I don't deny that peak oil is gaining in popularity (largely due to the opinion of 'oil industry experts'), but it is still a minority viewpoint.

The very real threat of sudden onset massive climate change should be the true driver of moving to alternative energy supplies.

Peak oil smells to me like oil industry propaganda and given their history of big oil blocking alternative energy technologies and the use of renewables, frankly I don't trust them and I don't believe them and I would urge others to be far more questioning in their underlying assumptions.

 

[Jangla]

Slightly connected to the thread:
I was thinking about the space race recently and how they're always banging on about the possibility of finding organic life forms on planets or moons within our solar system. Seems strange that they would be so concerned with this, until you consider that if there are organic life forms, the possibility of there being carbon based fuels is greatly increased. In short, they're looking for other planets to rape once this one is exhausted.

 

[Backatcha Bandit]

Who said something about the 'real world'?

Oil prices hit new record highs: New York crude 57.23 dollars

LONDON (AFP) - World oil prices soared to fresh record high levels, with New York's main crude contract above 57 dollars per barrel for the first time, underpinned by robust global demand.

New York's main contract, light sweet crude for delivery in April, rose 77 cents to reach as high as 57.23 dollars per barrel in electronic deals before the start of formal pit trading. It stood at 57.15 dollars at about 1145 GMT

On the New York Mercantile Exchange, the April contract had hit a record closing price of 56.46 dollars a barrel on Wednesday.

In London, the price of Brent North Sea crude oil for delivery in May jumped 1.12 dollars to reach 56 dollars per barrel for the first time on Thursday.

It later stood at 55.93 dollars.

"It is really a market pushed up by demand," Investec analyst Bruce Evers said.

"Everybody keeps on talking about China, but it is not just China, the demand in India, Brazil, North America is growing strongly too." ...

... "For supply to satisfy demand as we go through the second half of the year, there needs to be a flawless crude production system in operation with no problems," said Simon Wardell, Global Insight's senior energy analyst.

Even Barbie is feeling the 'bite'.

-

Bigfish / Sparticus:

Do you have any data regarding the replenishment rates/ratios resulting from abiotic production?

You see, I would love to see some convincing figures to reassure me that the effects of abiotic production (if it is indeed true) are anything other than utterly negligable.

 

[Backatcha Bandit]

But Saudi officials announced on April 28 that the Kingdom’s estimate of recoverable reserves had nearly quintupled! Were they lying?

http://www.arabnews.com/?page=6&section=0&article=44011&d=29&m=4&y=2004

From the article:

WASHINGTON, 29 April 2004 — Officials from Saudi Arabia’s oil industry and the international petroleum organizations shocked a gathering of foreign policy experts in Washington yesterday with an announcement that the Kingdom’s previous estimate of 261 billion barrels of recoverable petroleum has now more than tripled, to 1.2 trillion barrels.

From transcripts:

Oil minister Ali Al-Naimi's speech to CSIS in Washington DC - 04/27/2004

In the case of Saudi Arabia, our proved reserves were estimated to be about 88 billion barrels in 1970. Today, we conservatively estimate them at 261 billion barrels, despite the intervening 35 years of production.

Saudi Aramco President and CEO Abdallah Jum'ah (same day, same place).

Based on exploration data acquired across the Kingdom and various regional studies we estimate that more than half of Saudi Arabia's potential hydrocarbon-bearing areas are still relatively unexplored. These areas include the central and western parts of the Rub’ al-Khali, the Empty Quarter in the south; vast areas in the northwest of the country; and the Saudi Arabian portion of the Red Sea.

Extrapolating from available data we expect to find between 80 to 100 billion barrels of recoverable reserves in these areas not including additional recoveries expected from our known fields.

The USGS published their estimates for the world for the year, up to the year 2005 and the mean value estimated by the USGS in the year 2000 for that time that we would be finding some 87 billion barrels of recoverable reserves. Therefore our estimate of future oil reserves could well reach in the range of 340 or 360 billion barrels.

So who claimed 1.2 Trillion???

Petro-comical Ali also stated in the same speech

We believe that stability in world oil markets depends on having adequate spare production capacity for maintaining balance in the market. Saudi Arabia is committed to providing a major portion of the world's spare capacity. We do it because we understand the importance of having a "cushion" for those times in the future when, for whatever reason, supplies from other sources are insufficient to meet demand. Our spare capacity has paid great dividends over the years by helping to minimize disruptions to the world economy...

...Saudi Arabia continues to be committed to OPEC's $22-$28 price bands and believes that an OPEC basket price of $25 is a fair one for both consumers and producers."

Now that prices are more than double this, do you think he was 'lying'?

-

A note on reserves reporting from Jay Hanson:

SUSPICIOUS JUMP in reserves reported by six OPEC members added 300 billion barrels of oil to official reserve tallies yet followed no major discovery of new fields.

The members of OPEC have faced an even greater temptation to inflate their reports because the higher their reserves, the more oil they are allowed to export. National companies, which have exclusive oil rights in the main OPEC countries, need not (and do not) release detailed statistics on each field that could be used to verify the country’s total reserves. There is thus good reason to suspect that when, during the late 1980s, six of the 11 OPEC nations increased their reserve figures by colossal amounts, ranging from 42 to 197 percent, they did so only to boost their export quotas.

Previous OPEC estimates, inherited from private companies before governments took them over, had probably been conservative, P90 numbers. So some upward revision was warranted. But no major new discoveries or technological breakthroughs justified the addition of a staggering 287 Gbo. That increase is more than all the oil ever discovered in the U.S.—plus 40 percent. Non-OPEC countries, of course, are not above fudging their numbers either: 59 nations stated in 1997 that their reserves were unchanged from 1996. Because reserves naturally drop as old fields are drained and jump when new fields are discovered, perfectly stable numbers year after year are implausible.

(here).