Kezorm

Revving Up the Electric Car

Great article - especially the final paragraph. Adoption of electric cars will free up hydrocarbon supplies for heavy trucks, shipping and aircraft where viable electric alternatives do not (yet) exist.

Crude Oil: How Far Will It Fall?

Several large oil exporters have threatened to cut production to support crude prices if they fall too far. Why should any exporter sell many barrels at low prices when they can sell fewer, for higher prices while also extending the productive life of their reserves and increasing the ultimate yield?

Why I'm Not Buying Oil's Recent 'Correction'

Quick comments:

Russia just increased export tariffs on crude to $70/bbl. Given the enormous output of Russian crude, this number has got to be part of the equation for calculating a new price floor. After all, $70 is just the tariff.... It does not include lifting, profit, or shipping.

Saudi Arabia and Libya have threatened or promised to slash production if oil fell too far, too fast. Although I do not recall a "strike price" being stated, I'd guess they would defend at $100/bbl or so.

The USA crude oil demand experiences very consistent seasonal variations and we are at the second of two predictable summer minima. From the fourth week of July, till the last week of September, demand traditionally builds. Expect this effect to exert itself, even if other political factors overlap.

Abiotic Oil? It is fascinating that the famous Brazilian prospect called Sugarloaf or Carioca will be the subject of exploratory drilling by Seadrill's West Polaris, on behalf of XOM, HES and PBR over the next year. The particular block being drilled is BM-S-22. The basement structure which is responsible from producing this particular hydrocarbon target is a failed spreading center related to earlier rifting tween SA and Africa. Two miles of salts overlie the old rifting center. See this site: www.searchanddiscovery...
Combine this especially attractive prospect with the recent news about abiotic hydrocarbons found at the Lost City Hydrothermal field, and one is forced to wonder if the massive Brazilian sub-salt reservoirs might be created by inorganic reactions between water and ultra-mafic rocks.

Insiders Preparing for Major Drop in Oil Prices

Forgive this paltry submission to an otherwise worthy pile of messages, but if you look at long term crude oil demand in the USA versus season, there are strong variations and we are at a local minima (third week of July) and set to see demand climb as refiners build inventories and increase demand until the end of September. Surely this is only one variable among many, but didn't the Saudi's, Libyans and other promise or threaten to slash supply if crude neared $100? And didn't the Russians just increase their export tariff to $70/bbl? Another factor is this. IF gasoline prices fell to $3.50/gallon, there would be alot of folks "escaping to Wisconsin" in their SUV's. That is the flip side of destroyed demand - it comes right back if prices fall.

Gas Lines Coming This Fall

AvA, concerning your doubt about converting truck transport to natural gas: www.cumminswestport.co...

Speculation and the Price of Oil

Excerpt from article:

"Speaking as a teacher of economics and finance, I would advise my political masters to always assume that they (the suppliers of crude in this case) do have this intention (maximize profit) until they obtain irrefutable proof that such is not the case, because the kind of economics that I study and teach leads me to insist that, theoretically, adjusting supply in such a manner as to keep the dollars rolling in makes all the sense in the world."

So, if the Saudi's do release an extra 500,000 bbl's/day, might that inspire other suppliers to restrict their outputs by comparable amounts?

The Case for Not Drilling ANWR

To Chad Gray: Good thinking. It would be idiotic to release such a wonderful and valuable resource to the market while profligate uses are encouraged by low prices. Much better for high quality, local sources to be conserved for a time when they are better appreciated and are used by more efficient machines, (like my 1990 Geo Metro for instance.) :)
To those who reacted negatively to Chad's suggestion, what would you have us do? Release all such known reserves to maintain cheap oil right up until there is zero surplus production, and then expect decades of technological innovation and adaptation to happen overnight - and in the midst of a probable worldwide recession, if not also in the midst of world resource wars?
Chad is right. Cheap oil will prevent the change that needs to happen, from happening until it would be too late for changes to avert disaster.

Odds Favor Short-Term Slip in Crude Prices

Until a couple year ago, there was always more supply of light crude than there was demand. It was like a rope which always had slack. For a number of natural and artificial reasons, that has changed. Statistical arguments that do not recognize that fact are bogus. The more you pull on the rope now, the tighter it gets. Until someone begins to remove artificial inhibitions on potential oil supplies, or until high price destroys enough demand, the rope will tighten, price will climb and arguments based on the statistical behavior of prices during times of surplus supply... will fail.

Oil Bears Outnumber Bulls; Don't Expect $4/Gallon to Be a Tipping Point

China just announced an 8% y-o-y increase in consumption. If that trend persists, and if Mexico, Russia, Iran and Kuwait have peaked, just where do you think the oil is going to come from to meet the needs of emerging markets?

Crude Oil Inventories

Let's see.... Russia announces they have peaked, Mexico warns that they will not be able to maintain export levels, the Saudi's repeal claims of ever getting to 15 Mbpd, and have stated that even when they arrive at 12Mbpd of capacity, they would rather not produce at that level.

Meanwhile, China's oil imports are 8% higher than same time last year, and total emerging market demand now exceeds USA demand.

Maybe I am missing something. How do these facts amount to the popping of an oil bubble? Got news for you. It ain't the sound of a bubble. It is cavitation as the HMS Hubbert's Peak leaves the harbor. And the itinerary plans only to minimize the wake while passing the Iraq production buoy before heading out to open sea where the she turns into a hydroplane.

Commodity Forecasters See Prices Declining

"Bespoke Group" ??? More like science fiction theatre!

An Energy Policy that Makes Cents (and Sense)

Mike, 134716 here. Need to inject a correction. Here is the link I intended concerning Brazil's offshore prospects.

www.searchanddiscovery...

My apologies for any confusion caused by the incorrect link above.

Great discussions!

Pass the salt!

An Energy Policy that Makes Cents (and Sense)

1.) Proton-beam-induced fission of Thorium - how the world can have lots of electricity for 200,000 years:

en.wikipedia.org/wiki/...

www.inesap.org/bulleti...

einstein.unh.edu/FWHer...

2.) Voluntary driving at 55 mph on Illinois tollways it is unsafe. People come racing up on your arse and swerve away that the last second. The best compromise is to drive in the right lane of the interstate (I-90 for me) until you come upon a semi driving as slowly as you want to go. Then follow a polite distance behind. That way, everyone sees the slower semi and begins to plan to pass that larger, more visible vehicle; they therefore tend not to ride right up onto your bumper before doing so.

FYI, I have seen no evidence that truck drivers are slowing down. The only trucks I have seen driving at their legal, 55 mph limit are fleet trucks belonging to the Frito-Lay company. They go 55 and I happily follow behind them whenever I see them - which is on four occasions in the past two weeks.

I drive an ancient (1990), decrepit Geo Metro 5 spd, 1.0 liter on my 200 mile per day commute across the corn tundra of Illinois. I get 53 mph by driving slower than the legal speed limit whenever it is safe to do so. Why can you not buy a car today that gets this kind of gas mileage? Does anyone really think that they would not sell?

3.) Future automobiles: Yes, the Chevy Volt is nice to see, but it would also be nice to see a cheap, low-tech option similar to the Geo Metro using a small engine, possibly a diesel, with a super-aerodynamic shape. Such a car built today could probably be sold at the same price as a Chevy Aveo and get 75 mpg on the highway. A low price will do wonders to encourage rapid adoption and rapid reductions in overall consumption.

4.) Since nukes will be part of the solution, Canada and the USA should jointly fund the development of nukes designed to drive Fischer-Tropsch plants to convert their coal into liquid fuels, and also to wash and crack tar sands. Nukes are ideal for making the steam required for both of these operations. Nukes therefore make alot more sense than burning precious natural gas in order to produce liquids from the tar sands.

4.) There will be two Hubbert's Peaks. The first one is happening now due to the largely artificial restriction on supplies of crude that would have flowed from Iraq had Iraq not been isolated over the past 20 years. Had Iraqi fields been modernized and developed in parallel to fields belonging to its neighbors, there would be 10 million bpd more oil production capacity today than there is. But were that the case, none of the neighboring nations with peaking or post-peak fields would be raking in the gigabucks than they are raking in now. In fact, no one in the oil biz would be making quite as much money as they are today and no one would be seriously pursuing alternatives either for that matter. Enough said about the first peak.

The second peak is the real one and it might lie 20 years or more in the future AFTER all the deep oil lying in oceanic waters is developed. See these links:

www.geotimes.org/june0...

www.searchanddiscovery...

The past six months of news coming from Brazil confirms what an intelligent observer might gather from the combination of the two links above. Such an observer would then consider what the Brazilian news likely implies for the rest of the GOM, West Africa, the Canadian Scotian shelf, the vast areas around the Falklands. Yes, the oil is deep and it will not be as cheap to extract as Arabian oil has been or as Iraqi oil will be. But it is nonetheless very likely there in massive quantities, and possibly also in very light sweet grades, and in gas condensates that are so coveted by refiners.

On the basis of the probable availability and the probable production from these deepwater sources, I would venture to guess that the real, future Hubbert's Peak will be north of 100 million bpd and possibly as high as 150 million bpd if the CO2 problem proves to not be a problem, or if some kind of massive sequestration (like seeding ocean algae blooms with iron and phosphorus proves practical and beneficial.

www.sciam.com/article....

www.futurepundit.com/a...

www.climateoptions.org.../

news.bbc.co.uk/2/hi/sc...

news.bbc.co.uk/2/hi/sc...

One possible spin-off of fertilizing the ocean is that fisheries might thrive if the creatures at the base of the food chains thrive. OTOH, we could screw up big time and create a climatological disaster like the one foreseen in Greg Benford's book Timescape

Fundamentals Suggest Oil's Headed Much Higher

1.) Natural gas trails petroleum in its rate of worldwide depletion. Given the development of LNG infrastructure, Methane can pick up some of the burden that petroleum has traditionally carried. (Natural gas also emits less CO2 per BTU of output than heavier molecular weight hydrocarbons... so natural gas is truly sort of a "green" fuel.)

2.) Electric cars and 2nd gen hybrids like the Chevy Volt. Since the USA uses a disproportionate amount of oil to fuel transportation, advanced hybrids will gradually shift demand away from oil and towards natural gas, and eventually toward grid based electricity.

3.) Grid based electricity can be sourced from all economical alternatives including wind (already as cheap as coal), solar, and nuclear. Nuclear reactors can be run on mixtures of Uranium and Thorium. While Uranium can last for 25-50 years against accelerating demand, Thorium can last almost forever - longer than it will take to develop more-or-less permanent solutions.

see:
www.cavendishscience.o...
www.divainternational....

4.) Shifting the automotive fuel sources away from petroleum and towards various combinations of natural gas and electricity will preserve the precious liquid fuels for those markets where replacement is far more difficult: trucking, shipping and air travel. These will likely mostly rely on liquid fuels for the next 1/4 century.

So, what solutions seems likely to reward investors?

Look for the best-of-breed companies (like Transocean) that drill for offshore oil and natural gas. And note that natural gas drilling will remain a growth business long after offshore oil nears its peak 20 years or more from now.

Advanced batteries for hybrid automobiles and light trucks. Note that Exxon Mobil has formed a partnership to manufacture membrane materials for Lithium ion batteries. This indicates they have read the writing on the wall and are preparing for the future.

Ceneral Motors. (Yikes!) Yes. GM. I have owned four GM autos and light trucks that have gone over 200K miles. (One went double that and my present S-10 has an engine as tight and efficient at 220K miles as the day I bought it.) I really do not think that anyone builds a better vehicle for a customer who wants to extract from it the maximum useful life. So what does this have to do with the price of oil? The Chevy Volt. It will offer a choice of engines used only to spin a generator, which charges a battery. If GM builds into the Volt the same quality I have enjoyed for a million low-cost miles, they may once again dominate their industry. Instead of the old expression: "What's good for GM is good for America...", the new saying might be "What's good for America... is good for GM."

Alternative fuels, like this one in particular: www.ls9.com/
This company might take ethanol one step further - and produce gasoline directly from plant matter. Use a Google alert to constantly scan for news of IPO's of companies like this that may hit technology jackpots.