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Peak oil - Feb 20

Click on the headline (link) for the full text.

Many more articles are available through the Energy Bulletin homepage

Weak oil theory

Terence Corcoran, Financial Post
After months of shadowboxing with the fanciful spectacle promised by Peak Oil Theory -- conventional world reserves are running out and prices will soar -- now time to move on to another, more realistic perspective. A number of analysts are gearing up for a major oil-price correction, one that could drive a barrel of crude back down to a level that better reflects oil's long-term price: US$30.

Yesterday Russia announced a reduction in its expected average price down to US$55. This is unlikely to be the last Russian reworking of its oil price outlook. For a variety of reasons, the world price of oil is heading lower. Whether it will hit US$30 would be guesswork, but the band of oil-price skeptics keeps growing.

Weak Oil Theory, to coin a concept, holds that the long-term price trend for commodities is generally down. The history of world oil prices over the last 60 years is mostly flat, averaging maybe US$20 a barrel in constant dollars, except when the world has been cast into military conflict. The real driver of rising oil prices is geopolitical mayhem brought on by war, terrorism and other horrors created by governments.

Left to market factors, the price of oil would tend to drift lower as new technology increases the supply, not just of oil itself but also the supply of energy that can be extracted from a barrel of oil.
(20 Feb 2007)

Saudis' cutbacks raise oil concerns
Some question country's reserves

Michael E. Kanell, Atlanta Journal-Constitution
Drivers who remember those $3-a-gallon days of the past two years, be warned.

Oil prices are up and the world's biggest producer has been cutting back - a recipe for those prices to keep on climbing.

But whether they are still arching skyward by the time summer driving starts depends largely on just why Saudi Arabia has been pumping less crude.

No one outside the kingdom really knows for sure, but some oil experts think the Saudis' oil reserves may not support increased production.

Official Saudi explanations for production cuts cite the recent dips in global prices, arguing that a little shrinkage in supply will help stabilize the market. So when demand accelerates this summer, a little boost to Saudi production would keep prices from soaring.

But what if the Saudis cut back because they had no choice?
(20 Feb 2007)
Reporter Michael E. Kanell is peak-oil aware. Maybe that's why his article has more depth than the usual energy coverage. -BA

The Big Chill

James Howard Kunstler, Clusterf*ck Nation
One of the farmers who organized the Pennsylvania Association for Sustainable Agriculture's annual meeting put it nicely: "The ethanol craze means that we're going to burn up the Midwest's last six inches of topsoil in our gas-tanks."

The American public is in chill mode in more ways than one. We are finally freezing our asses off in the Northeast after a supernaturally mild December and January, and the heating oil trucks are once again making the rounds of the home furnaces (and running down their inventories). But we're also chillin' on the concept that there is an energy problem per se. The public is convinced that we are one IPO away from attaining the sovereign rescue remedy that will permit us to continue running our Happy Motoring utopia.

The public is bombarded daily with feel-good news about new bio-engineered bacteria that can turn sawmill refuse into high-test gasoline, cornucopias of miracle diesel beans, lithium batteries that will take you from Hackensack to Chicago on a single charge, and still (despite all the evidence against feasibility) hydrogen-powered SUVs. The public is convinced that we will enter a nirvana of "energy independence" just-in-time -- the same way that WalMart miraculously restocks it's shelves.

The truth is, we will never be energy independent as long as we remain a car-fixated society.

...I blame the Democrats. The Democrats are supposed to represent the reality-based faction of the general public. They should be able to do the math without getting sidetracked by Jesus-haunted visions of WalMart running on biodiesel. They should be willing to tell the public the hard truth before it's absolutely too late to make some collective decisions that would lessen the hardship in the circumstances we face -- like allocating some federal funds to passenger rail, or reforming codes, incentives, and subsidies that favor suburban sprawl, or replacing the FICA taxes with a gasoline tax (as proposed by oil man Jeffrey Brown of Dallas), or by aggressively promoting local agriculture.
(19 Feb 2007)

WSJ blog on energy!

Staff, Wall Street Journal
First entry - Feb 15

Welcome to the Energy Roundup, a new blog, where editors will compile and analyze the day’s news in the energy sector, including oil, alternative energy sources and the politics and policy of energy.

This blog replaces the Oil News Roundup, a popular feature on the site that began last April, when the price of oil was more than $70 a barrel on the New York Mercantile Exchange and well on its way to a July peak of more than $77 a barrel.

Since then, oil has fallen to less than $60, and there are indications the oil market may be due for a long breather, if not a bear market. But energy will remain a hot topic for the foreseeable future, and’s Energy Roundup will endeavor to be an invaluable source for readers who want to know all they can about it.

- Mark Gongloff

Blog Roll -Feb 20

Writing on his blog, The Cost of Energy, Lou Grinzo counters the argument of those who cite the earth’s large, untapped oil reserves to say peak-oil theory is bunk. Peak oil is a flow concept, not a reserves concept, and it refers to that point in history when we produce oil at the greatest rate. If you have an oil field the size of the moon but you can only produce a couple of million barrels per day from it (for whatever combination of geological, political, or other reasons you care to make up), then that doesn’t change the basic notion of peak oil,” he writes.

Blogs We’re Reading:

- Mark Gongloff
(15 and 20 Feb 2007)
Welcome to the energy blogosphere, Mark Gongloff, and other WSJ staff! -BA

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