Peak Oil – Sept 17

September 17, 2006

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Whither oil prices?
Dave Cohen, The Oil Drum
Since early August, oil prices have fallen considerably. ..Combined with the Jack-2 Test Well, the dropping prices have served as fodder for those debunking peak oil claims.

In June of 2006 Stuart Staniford argued convincingly that oil prices were not in a bubble. His article is recommended background reading and includes an excellent description by John Kenneth Galbraith of speculation in the markets. Here’s the last part of Stuart’s analysis. ..
(15 Sept 2006)
Discusses whether recent falls in oil price provide evidence for a price bubble, a shrinking risk premium, or economic recession, and what might be the consequences of a prolonged pull back in prices.


OPEC sheds ceiling in favor of flexibility

Platts
OPEC ministers meeting in Vienna September 11 pledged to ensure that oil supply and demand remained in balance, but shied away from any formal mention of the group’s 28 million b/d output ceiling.

Despite a sharp drop in oil prices over the past five weeks, OPEC had been widely expected to agree a rollover of the ceiling. But, unusually, the formal communique issued after the talks avoided any reference to the ceiling.

And while several ministers leaving the meeting said they had agreed to maintain the status quo, OPEC’s Nigerian President Edmund Daukoru said that output quotas no longer applied. “We stopped thinking of quotas a long, long while ago, and if the conference wants to return to quotas, we will do what is necessary to balance demand and supply against prices,” Daukoru said after OPEC ministers ended their formal meeting.
Asked to clarify that this meant that there was no quota, Daukoru said: “There is no quota, no, either up or down.” ..

Earlier September 11, ahead of the meeting, Iran’s Hamaneh said he did not want to see crude prices move below $60/barrel, although he did not specify a crude grade. Venezuela’s Energy Minister Rafael Ramirez, quoted by state-run oil company PDVSA, said US benchmark West Texas Intermediate “should not fall below $60/barrel.” UAE Oil Minister Mohammed Dhaen al-Hamli, quoted by official news agency WAM before his arrival in Vienna September 9, said $70/barrel was “a good level for US crude, the equivalent of $65/barrel for the OPEC basket.”
(12 Sept 2006)
See also OPEC wants prices to stay above $60 a barrel.

As prices tumble, doomsayers hold fast to prophecy
Shawn McCarthy, Globe and Mail
It’s been a tough week for peak-oil theorists — those limits-to-growth doomsayers who argue the world’s crude oil supply has begun an inexorable decline that will force prices ever higher. ..

But Kenneth Deffeyes, a leading peak-oil theorist from Princeton University, has seen nothing that shakes his conviction. On the contrary, he said he can point to the precise month when global crude production peaked: December, 2005. ..

Prof. Deffeyes noted that data from the U.S. Energy Information Administration indicates world crude oil production peaking at 85.1 million barrels a day last December and then declining to 84.3 million barrels this past June. ..

In the United States, the Department of Energy has asked the National Petroleum Council, an industry information group, to investigate peak-oil claims. In Australia, a senate committee has concluded that the government there should plan for an imminent decline in world oil production, while Sweden hopes to end its oil dependency by 2020.
(16 Sept 2006)


Tags: Education, Energy Policy, Fossil Fuels, Oil