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Raymond James: even the Saudis may be close to hitting peak production
Raymond James & Associates(pdf)
After an all-time closing high of $77.03/Bbl on July 14, front-month West Texas Intermediate (WTI) crude oil futures have plunged over 20% (in just over two months) to close recently in the low $60s, after briefly trading intraday below $60. In both dollar and percentage terms, this is the steepest sustained decline since late 2004 when oil fell from the mid-$50s to the $40 level. Recognizing that oil in 4Q06 is likely to average below our $68 forecast, we lowered it last Monday to $62, but we again reaffirm our confidence in our $70 forecast for 2007.
To take a more short-term perspective, we can look at the supply coming from OPEC today vs. a year ago. As shown in the table above [from Bloomberg], total OPEC production in August 2006 was 29.86 MMbpd, down 0.6 MMbpd (or
2%) from 30.46 MMbpd in September 2005. Production in Nigeria, a country in the midst of seemingly perpetual civil warfare in its main oil-producing region, contributed close to half of this decline – and it was clearly not voluntary.
Production was also down from other countries, most notably Saudi Arabia. Maybe this was voluntary, which would be bullish, but if it wasn’t, then it’s even more bullish, for it signifies that even the Saudis may be close to hitting peak production. The bottom line is that OPEC is hardly flooding the world with excess oil. Combined with stagnant production capacity in virtually all non-OPEC countries, oil market fundamentals remain very tight.
Why did oil drop $15/Bbl from its high? It’s an issue of market psychology. ..
(2 Oct 2006)
Emphasis from the original.
THE MARKETS REACT TO PEAK OIL
Industrial Society Rides An Unstable Plateau Before the Cliff
Michael C. Ruppert & Michael Kane, From The Wilderness
Peak Oil has caught the attention of the oil industry and world markets in a big way.2 Recent oil price reductions have led the naïve and the misinformed to believe that either the Bush Administration and oil companies have unilaterally lowered prices for election advantage or that there’s no such thing as Peak Oil. While there may be some truth in the former, the later assumption is wholly unwarranted. And the Bush Administration is simply not powerful enough to accomplish all this by itself. It is certainly craven enough to take advantage of existing facts and manipulate them in terms of timing.
Recent price swings – both up and down – have been predicted as a part of the Peak Oil scenario for years. I saw the first hard predictions of the bumpy plateau in 2002, and they made good sense.
WHAT IS THE “BUMPY PLATEAU”?
Here’s how Colin Campbell described it when FTW contacted him for this special report:
1. Price shock (as the capacity limit is breached)
2. Economic recession cutting demand
3. Price collapse (the market overreacts to small imbalances between surplus and shortage)
4. Economic recovery [followed by increased demand]
5. Price shock (as the falling capacity limits are again breached)
Simply put, everything is triggered by the inability of the planet to increase supply beyond a certain point, regardless of demand. That is the definition of peak. Peak is still peak whether it leads to sharp and immediate fall off or to the bumpy plateau we are now seeing. Campbell also observed, “No doubt the market is heavily manipulated by the likes of Goldman Sachs, who may be selling short or something to talk it down for the mid-term elections. It may be laying the foundations for a financial killing of all time.”
(4 Oct 2006)
Minister: Peak oil and global warming (PDF)
Hon Alannah MacTiernan MLA, West Australian Minister for Planning and Infrastructure, WA.gov.au
Today our civilisation is facing two extreme and paradoxically interrelated challenges: neither of which has received the focus from world leaders that the other challenge – global terrorism – has; although the consequences of these are at least as threatening and probably much greater.
Of course, I speak of peak oil and global warming – and add that I hope when these problems do get to centre stage – that we have more creative and nuanced responses than we have had to terrorism.
…Total oil production may well peak in the next 5 years. This of course may be a positive – as it might inadvertently force us to address the climate change issue – but we cannot underestimate how potentially cataclysmic the loss of this cheap mobility will be.
(10 Sept 2006)
Alannah MacTiernan gave the opening address at the Alternative Transport Energies Conference 10 – 13 September 2006, Perth, Western Australia
64 squares and a grain of sand
Jon S., Peak Energy (Seattle)
…one theme I plan on developing – with full comprehension of rapidly enveloping energy constraints, or “peak oil”, is the need to hitch our wagon to a concept that everybody gets. Peak oil is too wonky, too nerdy, and frankly too depressing for the majority of people to entertain honestly and openly, at least in the short term. I can debunk Daniel Yergin any day of the week, but gosh, he has a Pulitzer. It is an uphill battle – to get people to pay attention.
The concept to connect with is Global Warming, of course. It has brand name recognition, and it is well-nigh undeniable, except by sophists and a few crusty scientists who get carted out by Exxon-Mobil once year to shout “I’m not dead yet!”
The real changes we must make to “solve” climate change dovetail nicely with reasonable responses for Peak Oil. Increased use of renewables. Living arrangements which don’t intrinsically waste energy. I expect it won’t be long before the Chinese government orders the bicycles back in Beijing, by dictate.
(5 Oct 2006)
There’s no need for perceived competition between global warming and peak oil as driving issues for activists and planners. We need to consider both together. Peak oil gives us more incentive to change, because we can see that our efforts at weening ourselves off fossil fuels will benefit us directly in the long run, as energy prices go up. If you’re only concerned about climate change, you may imagine that your efforts will put you at a disadvantage to those who aren’t making sacrifices, and your efforts may seem so diluted as to have little influence. Many solutions to peak oil may prove disasterous for climate though, such as shale oil and coal to liquids, so the two must be considered together. -AF
Peak Oil: Yet another ‘inconvenient truth’
Jean Arnold, Catalyst Magazine
“The glory of the 20th century is now the burden.”
– Kevin Phillips, American Theocracy, 2006
Fossil fuels are involved in nearly all we own, eat, wear, do, and everywhere we go. Rising oil prices, from a growing gap between supply and demand, are rippling through the economy.
As the demand for oil grows, pundits quibble over how many decades of oil remain. But even the most cheerful forecaster does not see a long future for the liquid that fuels our lives. The more crucial question is: How will the depletion play out?
(8 Oct 2006)
A very good and well rounded introduction to peak oil. The PDF version includes sidebars on Cuba and North Korean responses, Hydrogen, City preparedness, lifestyle tips, and lots of links. -AF
Crude Assumptions – The State of the Peak Oil Debate
James Ward, FN Arena
Okay, so by now we’ve all probably heard about “peak oil” – the point at which the world reaches its all-time maximum oil production level and then begins declining, triggering a global economic/humanitarian crisis and proving once and for all that “limits to growth” are real.
Whether you think peak oil is a scientific reality or the wailings of a doomsday cult, as an idea it is very worrying and as a movement it is gathering momentum. It is generally accepted in the petroleum industry that production decline occurs after a given oilfield reaches its peak, and there are many places that have demonstrated that the phenomenon is also real on a regional scale. Countries such as the US, Norway, Venezuela and Australia have all reached their oil growth limits and production is now in net decline in those countries. Common sense then tells us that if all oilfields will eventually peak and then decline, there will inevitably come a point in time when the lost production from declining oilfields begins to outweigh new production from growing ones. That point is global peak oil.
(9 Oct 2006)
Headlines, we have headlines
Various
Just a reminder of other sources of energy news:
ODAC newsletters (issued several times a week)
The Oil Drum. Check out the DrumBeat that appears daily on the TOD. It contains a list of headlines and a forum for online discussion. For example DrumBeat Oct 5.
Peakoil-dot-com About 20 headlines appear on the front page every day.
Gristmill. Articles and pointers to news items, with an environmental slant. Gristmill has been increasing its energy coverage recently.
Jeremy a Paris (Daily Kos) – example of headlines and commentary with a heavy emphasis on energy. Leftist, European viewpoint. Also at European Tribune
Big Gav of Peak Energy (Australia). Indefatigable and idiosyncratic collector of news items on energy, environment, politics, tinfoil conspiracies.
CLARIFICATION: Big Gav himself is eminently sane; he just has a wide variety of interests that he follows, always with a skeptical eye. He tends to cover items that have escaped the net of the other news trawlers. -BA
Life After the Oil Crash: Breaking News. Matt’s news issued several times a week has a broad scope, covering peak oil, climate, geopolitics, economics, corruption, is always interesting and well organised.
ASPO USA Daily Peak Oil News. Compiled by Tom Whipple, a large daily resource with an emphasis on the oil industry and energy opolitics.
(8 Oct 2006)
