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The Cheap Oil Mirage
James Howard Kunstler, Clusterf*ck Nation
The American public is understandably happy to see the bottom fall out of the oil futures market. But temporary circumstances are only sending them another false signal that everything is perfectly okay on the oil scene. And it only reinforces the foolish belief that when prices go up it is solely because corporate finaglers tweak them up on purpose. In fact, these days it’s the other way around: often prices go down because corporate finaglers are tweaking the markets, dumping positions, playing shorts rather than acting like real oil users bidding on real contracts for delivery for real purposes like making gasoline. When oil goes up, as it certainly will again, it is primarily because of geology — what’s left in the ground — and secondarily because of geopolitics — where it’s left in the ground (and what’s happening there).
The supernaturally warm winter temperatures have also played a part, keeping inventories high while the home furnaces idle. (Last week it was 70 degrees in Albany, NY.) There is surely some demand destruction in the background. Third World nations are increasingly dropping out of the bidding (meaning their generators quit making electricity and their trucks stop running). And a contracting US economy may also play a part. But even these circumstances may not overcome the supply problems in the real oil world. Here’s what’s going on:
As a baseline, it helps to understand that the four largest super-giant oil fields of the world are now in decline. They have been responsible for producing 14 percent of the world’s oil supply. They are now old and tired (thirty years is old in the oil world) and they are in depletion. These are The Cantarell field of Mexico, the Burgan field of Kuwait, the Daqing field of China, and the granddaddy of them all, the Ghawar field of Saudi Arabia.
(15 Jan 2007)
Strategic Choices for Managing the Transition from Peak Oil to a Reduced Petroleum Economy (PDF)
Sarah K. Odland, Columbia University
My interest in Peak Oil management is the logical outgrowth of more than 20 years working as a geologist and project manager, followed by 10 years as a business manager and university administrator. The more deeply I looked, the more I became convinced that the whole Peak Oil issue needs to be framed as a strategic management problem. Here we are, facing a situation where the decisions we make now, whether by informed choice or default, will determine the kind of life available to us and our children 30 years down the road. Yet, there is very little reliable public data on which to base decisions, almost no public discourse, and no viable long-term national energy policy or planning. A manager’s job is to plan a course of action and allocate available resources to achieve a desired outcome, often in the face of incomplete or contradictory information. By that definition, Peak Oil is a quintessential management problem.
The exact timing of Peak Oil is extremely difficult to predict because the publicly available data on remaining oil reserves is astoundingly poor. Much of the “data” is crafted specifically to meet political and financial requirements. Essentially, companies and countries keep two sets of books. There is no data transparency or verification. Knowing any data I used would be suspect and immediately obsolete, I decided to generate all my graphs and tables from a single, commonly cited source – the Annual Statistical Review of World Energy, published in July 2005 by British Petroleum (BP).
(June 2006)
130-page thesis for an MBA degree. Readable, with abundant references. It probably could be turned into a publishable book. -BA
The URGE To Use Renewably Generated Electricity, Efficiently
Big Gav, Peak Energy (Australia)
Another potpourri of energy-related articles from Big Gav, plus some politics thrown in for good measure. The theme today seems to be a studied technological optimism… but as always with Big Gav, labels don’t seem to apply. -BA
(15 Jan 2007)
Inflation and building big things (Audio)
Jason Bradford, The Reality Report via GPM
Inflation and building big things: the case of the Willits bypass and the prospects for alternatives. What is behind cost increases for construction, will they continue, and if so what does this mean for our transportation future?
While the details on the show are mainly local, the show begins by placing the discussion into a broader context. It draws, in part, from a press release dated Nov. 16, 2006, by The Associated General Contractors of America:
“According to AGC’s Chief Economist Ken Simonson, since early 2004, the financial viability of all types of construction projects has been jeopardized by sudden, steep, and generally unanticipated price spikes affecting numerous key materials,” said Massie. “No construction segment has been affected as much as highways.”
(1 Jan 2007)
New Book: The Battle For Barrels
Peak Oil Myths & World Oil Futures
Duncan Clarke, Global Pacific & Partners
This Treatise on the fashionable global angst over The End Of Oil and Civilisation is based upon in-depth enquiries into Peak Oil, showing why this popular concept and its selected evidence are flawed. The book demonstrates that the predicted Doom and Gloom based on these ideas is misplaced.
The world’s oil future will be wholly at odds with Peak Oil’s ultra-pessimistic scenarios due to global upstream realities and industry fundamentals that will determine most-likely crude oil supply trajectories. Peak Oil’s dismal views contrast with commercial drivers to exploit large world resource endowment, consistent reserve growth, new oil field developments en route, and exploration dynamics that together will shape future crude oil supply growth.
The Book decodes concepts inside and around Peak Oil’s foundations and the alleged truths asserted by these new conventional wisdoms. It disputes the excessive claims of future diminishing world oil patrimony and aggravated views of near-term oil and energy crises.
Peak Oil’s pessimistic geotechnical paradigms are at odds with most industry views. Their rejection of the discipline and findings of Economics is a cardinal weakness that leaves unaccounted both the economic and geopolitical forces that drive key decisions of oil reserves, exploration, development and production. As a result the explicit, implied, and heavily-dramatised post-peak socioeconomic, political and human dramas that some forecast with unbridled certainty for the early 21st Century, are false images for the near-term world oil future. In a nutshell, the world is not up the proverbial creek without the necessary paddle.
Much of the public is unaware of these fatal weaknesses. This has allowed Peak Oil to capture public relations high-ground in global debate. The Battle For Barrels provides fresh, comprehensive and seasoned analytical insights, with polemical reflections on the Peak Oil debates (including on its architects, adherents, allies, activists, and even critics), to counterpoint these alarmist ideas..
The book deconstructs the Peak Oil model and its pre-ordained determinism, explaining why its morbid outlook on reserves and discovery potential does not reflect a world terrain still much unexplored and under-exploited. The real circumstances and complexities that shape the present and likely oil future are elaborated, with new insights on the world oil game. Hence the global angst aroused by Peak Oil, the passions evoked, plus the apocalyptic meanings held by its diverse constituencies, can be seen as excessive and built on shallow foundations. There is no “skeleton in the oil kitchen”, such that human ingenuity and imagination cannot resolve future dilemmas. The divergence between Peak Oil Theory and the real oil word is stark. The essential crisis inside Peak Oil reflects a condition alike some Twilight In The Mind.
(book release Feb 2007)
If anyone is pessimistic about the ability of a small group of peak oil researchers and activists to influence public opinion, take heart from author Duncan Clarke’s statement that “… Peak Oil [has captured the] public relations high-ground in global debate.” -BA
Dave Cohen at the Oil Drum has issued a challenge to:
debate this Duncan Clarke person anytime, anywhere on the “issues [we] ignore”.
About the author Duncan Clarke from Global Pacific & Partners:
With over 25 years in global oil and gas, and Founder of Global Pacific & Partners as a leading private Advisory Group in worldwide petroleum, Duncan Clarke has acted as Advisor to numerous companies and Governments in Africa, Asia, Latin America, Europe, North America. He is Author of [several books and] is the architect of the world’s largest knowledge-base on global oil and gas (Michaelangelo Strategy Databank), and is a Member of AAPG, Seapex, IAEE, Association of International Petroleum Negotiators, and other professional investment bodies. He is a Graduate with Ph.D
You can order the book for 28 pounds from Peak 21 or for 10 pounds at Amazon-UK.
UPDATE: Mobjectivist is ready for the challenge:
If nothing else, the book will provide good target practice. At last we get a live one, not some fake little vanity press book (see Corsi, et al).
UPDATE 2: Carl Etnier writes:
A book like this has many predecessors, with Julian Simon’s “The Ultimate Resource” probably the first one that received widespread attention. A more recent book that sounds very similar is “The Bottomless Well,” by Huber and Mills. It seems not to be discussed in any depth by articles posted at Energy Bulletin though it is mentioned in passing on four occasions
I wrote a review of it last year that appeared in the Vermont Peak OIl Network online newsletter.
