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Have We Reached Peak Oil?

Peak Oil effectively arrived the day the Saudis had to start drilling offshore. Energy-in to oil production is rising while energy-out is falling. Maximum human wealth = maximum expenditure of energy. You can reshuffle the deck somewhat by making efficiencies but expanding population and declining net energy means that someone somewhere is getting poorer.

Tar sands barely washes its face on ERoEI. Shale is a complete non starter and CTL is like eating your own legs so you can save up for a bus ticket - how desperate would you have to be?

Take the fossil energy subsidy out of manufacturing and installing wind and solar installations and they're still OK but not, like, a solution to the energy hole opening up under our feet. The mice are arriving when we need the cavalry.

How did we get into this mess? Oh yes, human ingenuity and Econ 101. Pardon me for not wishing to rely on the same self-regarding and complacent ideas that brought us here to lead us out.

Will New Finds Mean the End of Peak Oil?

Invest in fossil fuels. Andrew McKillop argues that the world needs to spend up to $14 trillion between 2010 and 2020 to cover developing new gas and oil fields and building out renewable energy infrastructure to cover for declining oil flows (and gas flows too, by the end of the decade).

Fossil fuels are the ONLY investment opportunity.

But don't expect to get rich.

How Institutions Manipulate the Price of Oil

My prediction is that US-based commentators will cease referring to 'Peak Oil' theory as 'old and tired' around the time that Mexico stops exporting, which is not that many years way now.

However, the point that price is not a proxy for availability remains valid. The fact that the run up to last year's price spike began in earnest when the credit crunch hit and culminated coincidentally with the bursting of the greatest financial bubble in history, when even the criminanciers were flailing around wildly, tells me that $150 was not the result of orderly price discovery in a transparent market.

On the other hand, the idea that oil would drop down to 30 bucks and we could all live happily ever after, if only GS and their henchmen would only go away, is simply nuts. $30 is less than the cost of production for a great deal of existing oil supply, let alone the (wholly inadequate, by the way) forthcoming supplies from deep water, polar and unconventional.

There are plenty of signs pointing to a physical supply crunch in the 2013-2016 timeframe, even allowing for the recession to be deeper and longer than most expect. If it happens, oil could spike to $120 or to $300 - who knows? The price itself will be decided by a whole range of factors, from the state of the dollar to geopolitics to our old friend manipulation.

The way things are going, the price may not even be in dollars.

China's Economic Ascendancy (Part 2)

@ Cameroni

"[if] there were absolutely no inbound shipments of goods, supplies and materials...the US economy could carry on and function with only minor inconvenience."

Really? When it operates an economy almost entirely based on car-dependent suburban sprawl but has only enough domestic oil production to meet a quarter of its daily needs?

Or are you looking ahead to some future time when the US has significantly reduced its oil dependence? In which case, the other countries in question would have plenty of time to make their own manoeuvres, probably rendering this point moot.

And, after saying the US is just fine on its own, you add: "It also suggests where the conflicts in the future lay though. China is now directly challenging the US for control of strategic resources."

But if the US is such a paragon of self-sufficiency, why would it need to fight China for strategic resources?

I happen to think that the US _is_ well-placed to prosper in a less energy-rich world where there will be lower levels of international trade and slower-growing, more diversified economies. But then, so is China.

Peak Oil as a Function of Earth's Volume

Is this article a subtle ploy to expose the weakness of cornucopian beliefs about future fossil energy supplies? The cubic volume of the planet is irrelevant to how much oil there is. Oil formed in discrete locations at certain times under specific conditions. We pretty much know where any remaining exploitable oil traps are likely to be found.

At the rate the world uses oil, even a couple of elephant-sized discoveries would make little difference to the mid-Century deadline for conventional oil to be mostly depleted.

As for "evolution and creativity", weren't Passenger Pigeons the most common bird in the US until Man set out to show his mastery over finite resources?

China May Have the Lead in Developing the Next Generation of Cars

Hmm. Let's see whether I get this. There's a looming problem of energy scarcity, or cost, or insecurity, or maybe all three. What do we do? I know, we'll build cars with TWO propulsion systems, with all the weight and complexity that entails!

Whatever happened to the old engineers' dictum "simplicate and add lightness"?

That's not a criticism of this article. China has great potential, just like the Japanese did 40 years ago. But if they put it into hybrids, they'll waste it.

It would be nice to have the problem that hybrids are the solution to (which is, how do we keep doing what we do today, only just a little bit more cleanly and efficiently). The problem is that "doing what we do today" _is_ the problem and PHEVs are part of it, not part of the solution.

Iraq Production, Conservation Could Keep Oil Price in Check for Years

<i>"So why don't you put all of your smarts together and explain to the poor simpleton how Oil which is no longer coming out of the ground is depleted?"</i>

It's a question of looking at the right thing through the right end of the telescope...

Let's do the math. Say total oil production is 86mbd and producers cut back by 2mbd.

You'd still have 84mbd of ongoing production depleting at, say, 6%. After one year the supply from existing wells would be down by 5mbd.

If we generously apply a "negative depletion rate" of 6% to the 'saved' oil left in the ground, that would give us an 'extra' 120,000 barrels rescued from depletion. Big deal, as they say.

As Jim says, depletion is baked-in while supply and demand countermeasures are largely conjectural. My own view is that, in the really big picture, we are already tipping into an irreversible decline in net energy that will subvert all efforts to maintain the long term economic patterns of the last 200 years. Except in nominal terms, oil prices may _never_ go as high as they did in 2008 again.

Oil will become steadily more valuable but it will become ever harder for anyone in the so-called advanced economies to profit from its rising value, due to their slow asphyxiation by the draining-away of net energy.

Is the Second Great Depression Imminent?

Hey, I've got a process to extract ready-refined motor fuel from grass seed (and a bridge to sell you) if the price of oil goes high enough!

Situation we're in now seems pretty analogous to the 1980s. Recession is setting in and we're quickly seeing a glut of oil with concomitant low oil prices. BUT, in the 80s there was a shed load of easy-to-recover oil lying around. Now there ain't. Man, we're burning a load more oil than we were in the 1980s just so we can keep a _world in recession _ going. Trying to make a recovery from this starting point won't work like last time.

I love the folks who reckon we can simply segue into some high-tech, alternative fuelled dreamworld when that oil stuff starts to get inconvenient. What do they think holds up the real world - the grubby, just-getting-by one inhabited billions, which supports the pampered lifestyles of those of us lucky enough to need Financial Sense - marshmallows?

Right now the US, the UK, Iceland, Spain and a load of other economies are broke or going broke. Sure these are big, grown up countries whose credit is normally good but they've borrowed a lot of money against...well, what else...the future energy they need to do work to produce *actual stuff* rather than 'service economy' vapour clouds. Except they can't afford the energy. Even at under $40 a barrel, job losses are mounting, consumption is falling, tax revenues are dropping and exchequers are emptying out. $75 a barrel is too high right now, meaning that new more production will be cancelled next year.

I'm starting to think that oil will only hit $200 or $300 a barrel in a hyper-inflationary or total dollar collapse situation, when there are Zimbabwe levels of money-printing going on. Otherwise, there doesn't seem to be enough firepower left in the OECD economies to push oil past $100 without their being suffocated.

It's not when oil is rare and precious and expensive that you need to worry about civil disorder; it's when it is cheap and relatively plentiful but the people are nevertheless unable to afford it because of the greed and short sightedness of financo-corporatist Governments over the last 25 years.



Is this the start of the long emergency? My gut feeling says there will be another price spike sooner than most people think, as the sheer size of the fiscal stimuli being applied by Governments injects some life into the patient.

Forget $100 a Barrel - Oil Will Plummet to $30

Can we have some consistency here? In your "new oil is plentiful" article you refer to all the new oil that is supposedly economic to extract from ocean deeps, polar wastes, etc, because of high oil prices. Now you say that the market's knowledge of the existence of that oil will help drive the price down to $30. So it won't be extracted. And presumably, the price of oil will then rise again on the resulting scarcity.