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The Behavioral Aspects of Peak Oil: Basic Contingencies
Lyle Grant, The Oil Drum
In behavioral terms, peak oil is an aversive consequence. The Hirsch report’s crash program is an avoidance response that will prevent the worst of the aversive consequence from occurring. Meeting the challenge of peak oil is therefore a problem of engaging in successful avoidance responding.
Peak oil is an especially difficult problem due to (a) the nonrecurring nature of peak oil, (b) the delay of the aversive consequence, (c) the variability in the predicted date of peak oil, (d) the predicted aversiveness of peak oil, and (e) the nature of avoidance responding.
…In addition to these basic contingency-related issues in solving the peak-oil crisis are the following challenges: (a) the resistance to change of established patterns of energy use, (b) the history of false signals of oil depletion, (c) the history of technological advancement, and (d) the aversiveness of delivering peak-oil messages.
…Risk Management Contingencies
Hirsch et al. (2005) recognized the lack of a clearly predictable fixed date for peak oil and therefore characterized the problem as one of risk management. A risk management approach acknowledges that either the proponents of an early peak (e.g., within 0-20 years) or those of a late peak (e.g., more than 20 years) may be correct and offers a course of action that produces an optimal combination of the least aversive and the most reinforcing consequences.
…Unfortunately, at this time the problem of peak oil is not conceptualized in terms of risk management. Instead, discussions of the issue are typically framed in terms of who is “right” and “wrong” regarding the imminence of peak oil. This mode of conceptualizing the issue, along with the problem of resistance to change, has led to placing an implicit high-stakes bet on the behavioral alternative that carries the maximum risk, which is our current course of inaction on peak oil.
Note: This piece is a summary of a longer article available here (opens pdf file [24 pages]).
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This is a guest post by Lyle Grant, a Professor at Athabasca University’s Centre for Psychology and co-author of Principles of Behavior Analysis. Since discovering the issue of peak oil his work has largely concerned the psychology of sustainable living.
(19 June 2007)
In the comments section below the article, Dr. Grant wrote:
One seemingly small but important thing we can all do is to send messages of support to those who are leading efforts to publicize peak oil, including those who maintain The Oil Drum. This use of positive reinforcement, a key concept in my field, can be surprisingly effective. In this connection, thanks to those of you who have sent supportive comments today.
Clock Ticking On Global Oil Supply
Roman Kupchinsky, Radio Free Europe / Radio Liberty
The debate over how much readily accessible oil remains on Earth has been revived with the release of a new report that suggests there is enough to last about 40 years.
But critics say British Petroleum’s 2007 “Statistical Review Of World Energy,” released this month, is far too optimistic.
In 2003, a team of scientists from Sweden’s University of Uppsala presented evidence that purported to prove that the world’s oil reserves are up to 80 percent less than predicted. They claim that production levels will peak by 2013.
Colin Campbell, a former chief geologist and vice president of BP, disagrees with the company’s latest oil-reserve estimates. He recently explained in the “Independent” that he believes the production of regular oil, the kind which is easy and cheap to extract, peaked in 2005. By his estimates oil will become a rare commodity by 2011.
(19 June 2007)
Interesting to have peak oil appear at a U.S. government-sponsored site. (SourceWatch) -BA
Pay Attention To the Oil Price Naysayers
Tim Iacono, Seeking Alpha via Yahoo! Finance
The folks over at The Oil Drum are a persistent bunch. As the years go by and it continues to look as though Steve Forbes’ post-Katrina prediction of $35 oil will forever fail to materialize, the forecasts by the crew at TOD appear increasingly likely to prove more accurate than predictions from most Wall Street types and nearly every big oil company and energy agency.
The Oil Drum (and other sites like it) in 2007 may turn out to be kind of like the housing bubble blogs back in 2005 when they screamed to the rest of the world that there was a problem but no one wanted to listen. The screaming at TOD is markedly less shrill than what’s found on many housing bubble blogs, but not heeding their warnings will likely be even more disastrous than ignoring the housing naysayers a couple years ago.
A case in point came early Monday after Euan Mearns had a good look at the latest news from BP (NYSE: BP – News) – specifically their Statistical Review of World Energy. Judging just by the sound of the title of his retort – Lies, damned lies and BP Statistics – he obviously didn’t like what he read.
(20 June 2007)
Crude-oil benchmarks’ ties go awry
Oxford Analytica, The Hill
The traditional relationship between regional crude-oil benchmarks has gone awry as changes in trade flows have created new pressures on the existing pricing system. The resultant stresses are prompting both reform and opportunity.
The main regional benchmark for the Americas is the New York Mercantile Exchange’s (NYMEX) futures contract for light crude oil, against which physical delivery can be made at the pricing hub of Cushing, Okla. While six domestic U.S. crudes and five foreign crudes can be delivered against the contract, the main physical stream that dominates the supply at Cushing is West Texas Intermediate (WTI). All the deliverable crudes are light and sweet (low sulfur).
In Europe, the Intercontinental Exchange (ICE) provides a successful cash-settled Brent futures market, while the main physical benchmark is the physical crude Dated Brent, as reported by pricing agency Platts. Dated Brent also comprises light sweet crudes, but ones that are heavier and sourer than the basket deliverable against the NYMEX futures contract. In Asia, the Platts-reported Dubai price is the main benchmark. There is no established futures contract, although two competing contracts were launched May 23 and June 1 respectively. Dubai is a heavy sour (high sulfur) crude.
Light sweet crudes produce a higher proportion of light clean refined products. As a result, it is rare historically for WTI to trade at a discount to Dated Brent, while Dubai typically trades at a large discount to both. The relationships between the regional benchmarks, expressed through their difference in value as the Brent/WTI spread and the Brent/Dubai spread, govern the flow of crudes internationally. For example, if Brent is cheap in comparison with WTI (i.e., the Brent/WTI spread is wide) then spot cargoes of crudes priced off Dated Brent will move to the U.S. Gulf of Mexico instead of to European markets.
However, the relationship between regional benchmarks has become inverted, owing to a logistical bottleneck at Cushing.
…A good benchmark needs to be liquid, have a wide range of both sellers and buyers, have no restriction on its tradability (for example destination restrictions), no bottlenecks in its supply and delivery infrastructure and should have easy terms of entry to the market. In addition, prices should be formed in a transparent manner through a robust methodology. If any one of these conditions is weak, the benchmark is more open to manipulation. Confidence in the benchmark drops and pressure for change rises.
Oxford Analytica is an international consulting firm providing strategic analysis on world events for business and government leaders. See www.oxan.com .
(19 June 2007)
Contributor Bill Brooks writes:
In addition to currency standards (barrels in US dollars or Euros,)the choice of physical references for trading can alter pricing. As some oil-rich regions wane and others increase, price volatility will increase.
Research president discusses the economic threat of peak oil
Ali Moore, Australian Broadcasting Corporation
ALI MOORE: So how do we mitigate this threat?
DR ROGER BEZDEK: The mitigation of peak oil is required on both the demand side and the supply side. On the demand side we have to make the world stock of vehicles much more fuel-efficient as soon as possible. We also have to introduce policies and incentives that will make the world’s population less dependent upon driving vehicles and automobiles. Increased use of mass transit, rail system, smart growth, what have you. On the supply side, we have to pursue all of the supply options that are out there for liquid fuels, including oil shale, oil sands, colder liquids, renewable technologies, biomass, bio-diesel, electrical vehicle, plug-in electrical vehicles, et cetera. So a massive effort is required both for the supply side and the demand side to address the problem. ..
ALI MOORE: Have you done economic modelling of what it would mean and would any industry sector be immune?
DR ROGER BEZDEK: Yes, we have done extensive modelling and there’s virtually no industrial sector that would be immune. They would all be impacted to a lesser or greater degree.
ALI MOORE: At the same time, though, we’re not seeing it reflected in investment trends are we? We’ve just seen a private equity group try to buy our national airline for $11 billion, and if any sector is exposed to the threat of peak oil, you’d have to say aviation is?
DR ROGER BEZDEK: Indeed and I think there’s a real market failure here that people simply are not aware of the impending problems here and many of these investment decisions, several years from now, may look very foolish in retrospect. ..
(19 June 2007)
