Saildog

The Global Oil Scam: 50 Times Bigger than Madoff

What a load of garbage.

Stephen Schork: More Upside in Oil

I have no idea who Schork is, but he hasn't a clue about oil production, or about Peak Oil that he supposedly doesn't believe in. There is no dispute that high prices will enable oil to be found. That is not the point. Finding it is not producing it. Production is what matters; and it cannot be increased from the 85m barrels per day range we have been in since 2004. Note also it doesn't matter why it cannot be increased. Whether the reason is geology, politics, lack of investment, war or what ever. It doesn't matter. Peak Oil is now a past tense term and I suppose 10 years from now, when production will have drifted down by 5 or 10m bpd that Schork and his ilk will still be arguing that production can be lifted.

International Energy Association: Forced to Eat Their Optimistic Data on Future Oil Supply?

Max was 9.9mbpd during the first Gulf War


On Nov 11 06:47 PM OFWHAP wrote:

> @Oilfinder
>
> At what point has Saudi Arabia ever produced 12.5 million barrels
> per day? They have been SAYING that they plan to produce that for
> 2009, but I have yet to find data that they have ever produced numbers
> that high.

International Energy Association: Forced to Eat Their Optimistic Data on Future Oil Supply?

What a load of tosh.

KSA has likely passed peak; and either cannot or will not increase supply. It doesn't matter which, the extra production will not happen.

As for Brazil, Africa and Iraq, you can believe what you like, but I am not nearly so sanguine. Technology, lack of investment, politics and war are more than not likely to intervene.

You mention The UK, Mexico and Norway as representative of declines, almost in passing. Decline rates average at least 5%, or over 4mbpd every year. That is a new KSA every 2 years just to stay even, a statistic the IEA itself has quoted. How many new KSA's are there?

As I say - complete tosh. Peak Oil happened over the period 2004-2008.


On Nov 11 01:37 PM OilFinder wrote:

> The IEA is not being pessimistic on future oil supply.
> Once you start adding up production plans you'll see why:
>
> 1. Iraq - Proudction will increase from the current 2+ million barrels/day
> to around 10 million barrels/day by 2020. That's at least +7 million
> barrels/day in new supply.
> www.ft.com/cms/s/0/5bc...
>
>
> 2. Brazil - Production will increase from the current 2+ million
> barrels/day to around 5.7 million barrels/day in 2020. This does
> not include discoveries made and gone into production in the interim,
> of which there will be many:
> www.thaindian.com/news...
>
>
> So far we're at +10.5 million barrels/day
>
> 3. Angola - Figures from already-announced plans show an increase
> in production by 1.2 million barrels/day by 2015. This does not include
> discoveries announced in the interim or recent discoveries whose
> production plans have yet to be made.
> www.reuters.com/articl...
>
> So far we're at +11.7 million barrels/day in new supply.
>
> 4. Saudi spare capacity is currently around 4 million barrels/day:
>
> www.thenational.ae/app...
>
> And the former chief reservoir engineer at Saudi Aramco says they
> can sustain 12-14 million barrels/day output for 50 years:
> www.saudi-us-relations...
>
>
> So we're now at + 15.7 million barrels/day in new supply. Conservatively.
>
>
> 5. Canadian oil sands production will double by 2020. This is an
> addition of 1.6 million barrels/day:
> www.bloomberg.com/apps...;sid=aAXd0jJuIIoA
>
>
> Subtotal is now 17.3 million barrels/day in new supply by 2020.<br/>
>
> 6. Non-Nigerian West African coast. Recent discoveries off the coast
> of Ghana and Sierra Leone indicate a large new oil province opening
> up. The Ghana discovery will begin production late next year. There
> *will* be other discoveries in this area. Let's assume 1 million
> barrels/day production from this province by 2020.
> www.ogj.com/index/arti...
>
> blogs.wsj.com/environm.../
>
> investors.hyperdynamic...
>
>
> Subtotal is now 18.3 million barrels/day in new supply by 2020.<br/>
>
> I could go on with more examples. Reaching 20 million barrels/day
> by 2020 would be easy. I might even get to 25 million barrels/day,
> especially if we make some reasonable assumptions about new discoveries
> off the coast of Brazil and Angola.
>
> Now, what about declines?
>
> Let's be extremely pessimistic and assume production from Mexico,
> the UK and Noway falls to ZERO. This loses you about 7 million barrels/day,
> but we're still ahead by at least 11 million barrels/day. At this
> point you would have to lose the entire production of Russia to get
> to a measly +1-2 million barrels/day, but of course that won't happen.
> And production from the UK, Norway and Mexico won't fall to zero,
> either.
>
> I could write a much longer exposition on this, but you get the point.
> The IEA is not being optimistic. Heck, they might even be *pessimistic*.

Crude Oil and Gasoline Prices: Like Déjà Vu All Over Again

This is article was written by somebody not well acquainted with oil production. All the usual stuff is in their about price, markets and technology; and its all rubbish, since oil production has already peaked. Now the rules are different. With a supply curve that is completely inelastic, price is determined by demand only; and that in turn is driven by economic activity. The oil price and economic activity will settle into a new relationship that will remain tightly bound. As oil production drifts down and absorbs ever more inputs, our economies will shrink accordingly. Of course it will be patchy and variable around the world. Some places with energy resources will do better and others without will do worse. But overall, Business As Usual is finished. Welcome to The Longest Recession.

Global Populations to Accelerate Demands for Fossil Fuels, Renewable Energy

Unfortunately no combination of nuclear, corn, used french fry oil, wind, "clean coal" (stupid oxymoron) or any other "source" of energy can replace oil.

Efficiency and conservation will help a lot, but the greatest danger comes from the markets. How will the capital markets react to high prices?

Hidden Risk for Canadian Oil Sands: Environmentalism

With and EROI of 3 at maximum oil from tar is not really a viable source of energy. It is dependent on conventional oil (supporting the economy more generally) and gas directly. If these two commodities are ever revalued the tar sands industry will die. In the mean time the environmental cost is horrific.

Some of the posters above equate environmentalism with anti-capitalism. No doubt the there are some environmentalists who are socialists. But environmentalists care about the environment, they are not usually arguing against the economy per se. They argue that just because something hasn't been monetized that it means that it is free. If the environmental costs of the oil from tar sands operations were fully internalized it is very doubtful that the operation would exist at all. No capitalist can argue that costs shouldn't be internalized; and the costs can be determined reasonably accurately using techniques such as contingent valuation. They just aren't being counted right now.

Higher Gas Costs Lead to Consumer Pullback, Even as Spending Rises

Well, there is a surprise!

Welcome to the world post Peak Oil folks. Oil prices will kill off recovery - for ever.

Obama's Energy Bill: A Recipe for Economic Destruction

Oh Dear

Gerard Jackson has crawled out from under his stone. The real issue here is that Jackson thinks Global Warming "is garbage". He also thinks Peak Oil "is garbage".

Both are real risks that need proper management. Obama's bill is a long way from perfect, but it is a start at attempting to deal with an energy crisis that is all too real, whatever Jackson and his band of Austrian school economists think.

His arrogance is breathtaking. The academies of science of all the G8 nations and of India and China have endorsed Global Warming theory and called for rapid action. Just who does he think he is?

Oil Volatility Will Keep Killing the Economy in Waves

The most sensible comment I have yet seen from outside the Peak Oil community. This man "gets it", he clearly understand the thermodynamic and scalability issues we face.

Where it is perhaps weak is on the political and economic fronts. The fossil fuel lobby will kill this and the economy will never recover because the oil trap has sprung and we can't get out. Lower prices mean less investment, a better economy means higher prices, but that kills the economy and we revert to lower prices. The last sentence implies a cyclical economic pattern, but I doubt we will even get that.

We need both an energy and a financial surplus to achieve this. Now we have neither and we never will. Maybe it can be done. I will not be holding my breath. On the other hand if a major new oil province is found in a friendly place maybe we will be clever enough to use it wisely. Again, I am not going to hold my breath.

Rising Oil Price Could Slow or Kill Economic Recovery

I agree on the low hanging fruit theory. But increasing supply from the harder to get fruit is more expensive in both monetary and energy terms.

NG certainly can/will substitute for oil, but is less energy dense, is less transportable, will require a new distribution network and anyway is subject to its own peak. Just ask the UK. In addition it will not substitute well for diesel and jet fuel, and is also required for fertlizer production.

However it is not the physical limitations that worry me. It is the impact of high energy prices in the economy and the consequent problems in the capital markets. I am concerned that our current complex economy is not viable without cheap and growing supplies of energy.

At a macro level if a greater and greater proportion of economic output is devoted to procuring energy, less is available for reinvestment. And this most certainly will stifle growth!

That is unless we get real smart real quickly. But I see no evidence
of that.


On Apr 10 10:55 PM old trader wrote:

> Saildog,
>
> No, I don't think that oil is "just another commodity", and recognise
> that there're many factors that play into its pricing. I am a believer
> in what is currently termed the "Peak cheap oil" theory...i.e., all
> the low hanging fruit has been plucked from the tree, and additional
> supply will cost increasing more.
>
> I also find it a bit puzzling as to why NG for use as transport fuel
> is not visible on the radar scream of oil dependency solutions, since
> its old, proven technology, with definite green benefits, in terms
> of pollution.

Rising Oil Price Could Slow or Kill Economic Recovery

Old trader - it seems your view is that oil is just another commodity that the world holds an infinite supply of. Not so. Oil is all about physical flows and these are impacted not just by geology, but also by economics, politics and several other factors such as an aging workforce and obsolete plant.

Then there is the interaction between what is a vital commodity with a wholly inelastic supply curve (higher prices do NOT equal more supply) and the capital markets. The higher prices last year (along with lax banking regulation) led directly to this recession/depression. It is unlikely production will ever exceed levels achieved since Q4 2004. According to Liebigs law of the minimum oil is now the limiting factor. Our economies will languish in lock-step with oils decline.

That is unless we get real smart real quickly. But I see no evidence of that. And BTW I am no tree-hugger.


On Apr 10 10:08 AM old trader wrote:

> Btw, before I get jumped on by the tree-huggers who believe alternative
> energy is the only answer, please recall that most, if not all, "green"
> alternatives are only economically viable when compared to higher
> oil prices. Do some reading, and it isn't hard to see how many projects
> have been scaled back/put on hold because they're not profitable
> when oil is at $40/bbl. (unless they receive heavy government incentives).

Rising Oil Price Could Slow or Kill Economic Recovery

There is a great deal of assumption in here based on the thinnist of thin evidence.

1. The current rally is a bear suckers rally. A major down-leg is due in the autumn.

2. There is nothing wrong with economic growth per se; however economic growth based on ever increasing resource use (especially oil) is finished.

The world is rapidly moving toward zero or negative population growth, the reduction and rapid elimination of fossil fuel use; and relocalization. We still have some time to mitigate the pain of this transition, but it is rapidly disappearing. The later we leave things the worse the transition will be.

Spending what little time and wealth we have left on propping up the banks, AIG and GM is wasted effort.

Our remaining resources could be used to build a vibrant economy that is based on conservation, renewable energy and rearranging our living arrangements around highly local concepts - walk/ride to work, local food and factories and more close knit communities.

Why Is Oil Trading at $53 When Supply and Demand Is So Bearish?

The article would have been better had the author learned something about energy.

Why Are Gas Prices Still So High?

I am always amazed by how people irrationally explain oil prices. Go back to school and do Econ 101, especially elasticity. It really isn't difficult.