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Peak oil - July 20

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

Many more articles are available through the Energy Bulletin homepage


Peak oil - when? (online survey)

School of Engineering, Case Western Reserve University

Are you an oil-thoughtful person?
Then tell us what you think about the following BiPSA statement:

World-Wide Oil Production Will Peak by 2010 or earlier

You are cordially invited to click on the above link, and fill up the BiPSA form for your answer. You will receive an electronic acknowledgement of your vote, as well as our final report.

Background: Before oil wells run dry they hit a peak production point followed by a steady decline. In the past oil experts successfully predicted the peak point for US oil wells (Dr Hubbard). Today's experts disagree on when the world-wide peak would hit us. That global peak point will mark an irreversible decline in oil availability, at a time when world wide oil consumption is on the rise. If no alternative to oil is ready when the peak occurs, the world would be catapulted into a violent catastrophe of unprecedented dimensions. In order to manage our alternatives rationally we first need to know when the peak will pay us its visit. And since highly respected experts vastly disagree, we need to handle this disagreement rationally. And hence:

The Challenge: To process the vast spectrum of peak-oil opinions towards our best estimate todate.

In other words, we need to integrate the diverging opinions in a well balanced manner to extract from them our best estimate for the present. The key phrase here is "well balanced". It's not a one-man-one-vote regimen. On would weigh more his physician's council than his barber's advice when it comes to some medical condition. Similarly the oil-thoughtful people should be counted more in this opinion-calculus. This challenge was tackled academically by Gideon Samid, resulting in the BiPSA methodology. Accordingly the peak-oil dilemma is represented as a cascade of binary questions for which the relevant community is responding with a binary answer supported by a body of arguments. The binary answers are integrated using the BiPSA arithmetic, and the arguments are forwarded to the voting community to refine, or reconsider their opinion for the next BiPSA round.

In this site we shall run the binary questions, and provide a forum for discussion, debate, and mutual persuasion. Our future plans include:

  • a global conference on "Peak-Oil When?"

  • a discussion blog
  • featured online debates between opposing points of view
  • a clearinghouse for peak-oil-when resources
  • a repository of the key arguments for and against any peak oil opinion
  • the current BiPSA questionnaires
  • the latest BiPSA report on the best estimate todate

(July 2007)
If you are concerned about peak oil, this survey provides one way to express it.

Suggestion to BiPSA: It's great to see plans for another active peak oil site. However -rather than re-inventing the wheel, why not integrate your efforts with what other people are doing? Instead of trying to tackle every task yourselves (which quickly becomes overwhelming), focus on the niche for which you are uniquely suited and establish co-operative allliances with other sites and groups. -BA


The Global Thirst for Crude Is Set to Rise

Syed Rashid Husain, MENAFN - Arab News
DAMMAM, 20 July 2007 - The world has changed immensely and so has the energy world. Seventy-five dollars a barrel no more boggles the mind. Some even predict that triple figure prices are only a matter of time.

Goldman Sachs is already pointing out that the price of US crude oil is to top $90 a barrel this autumn, increasing to $95 by the end of the year, if OPEC (the Oil and Petroleum Exporting Countries) keeps oil production capped at current levels. Despite all this, the global thirst for crude is set to rise.

The International Energy Agency (IEA) now predicts the global demand to go up by an average of 2.2 million barrels a day next year - up from 1.5 million barrels a day this year. The total global consumption is set to touch 95.8 million barrels a day by 2012, from 86.1 million bpd in 2007, assuming an average global GDP growth of 4.5 percent per annum.

This means that "either we need to have more supplies coming on stream or we need to have lower demand growth," said Lawrence Eagled, head of the IEA's Oil Industry and Markets Division. Lowering market demand growth would mean slowing the global economic growth. No one would seem ready to compromise on that. The other option is to increase supplies. And here is the logjam...

In the meantime, the US National Petroleum Council - a board of high-level US oil industry executives - released its study, entitled "Facing the Hard Truths About Energy," which was conducted at the behest of US Energy Secretary Sam Bodman. As per the report's executive summary, though the world is not running out of oil, there are "accumulating risks" to securing supply through 2030.

...OPEC's current production is around 31 million barrels a day. The IEA projects its capacity could rise to 38.36 million barrels a day over the next five years. It is here that the energy fraternity needs to stop by and ponder!

With the global reliance on OPEC growing, is it worthwhile and beneficial to continue with the political rhetoric of reducing dependence on oil or specifically on the oil from this energy-rich region?

"Today's policy announcements (about reducing dependence on oil) could translate into scarcity of supplies in the future," warns Mohammad Al-Hamli, OPEC president and UAE oil minister. If the demand is unclear, it would be unwise and wastage of badly needed funds for the developing nations of OPEC with limited resources to invest heavily in oil production, he underlined at an energy conference. "Security of demand is key issue for us," he stressed.

In fact, it is not a key issue for OPEC member states alone; it is an issue of global importance, of shared responsibility. The growth of this fuel-driven civilization depends on continued availability of fossil energy resources, for many more decades to come.
(20 July 2007)


Singapore, Dubai, Hong Kong Suited to a Peak Oil World

Dan Denning, The Daily Reckoning
Has the stock market priced in the prospect of a peak in global oil production? No, says money manager and CFA Robert Rodriguez in a paper called "Absence of Fear". We took his paper and fired off a series of questions to our US-based colleagues. What would the market look like if Peak Oil was priced in? Dan Amoss, the editor of Strategic Investment, chimed in.

"Peak Oil is most certainly not reflected in equity values. The few hundred billion in capital controlled by those in the room isn't managed as if oil/oil services are in a once-in-a-generation bull market. If the market immediately acknowledged the investment implications of Peak Oil, the majors would trade for 25x earnings rather than 7-10x earnings."

...Some economies are better prepared to deal with structurally higher energy costs than others. None are totally prepared. The ones that will do best fit into a model that's been described as "digital feudalism". Huh?

Small city-states like Singapore, Dubai, and Hong Kong are much more suited to the challenge of a peak oil world than large nation states. City-states operate on a scale where problems are more solvable. They are dealing with millions, not tens or hundreds of millions.
(20 July 2007)
The Daily Reckoning is a "freewheeling Web site for libertarians, gold bugs and doom enthusiasts of every stripe."


Are Democrats the Peak-Oil Party?

James Pethokoukis, U.S. News & World Report
"We have to understand how weak [Iran] is," explained Sen. Joe Biden last month at the Democratic presidential debate in Nashua, N.H. "They import almost all of their refined oil. By 2014, they are going to be importing their crude oil." If Biden really meant to say what he said, that places him firmly in the camp of those analysts who believe in "peak oil" and predict that global oil production will soon decline even as demand continues to rise, with the results being ever higher oil prices and shortages.

Peak oilers contend that the Middle East oil reserves are vastly overstated. Some, the minority to be sure, even think that global oil production will fall so far, so fast, that western civilization will have to return to some sort of pre-industrial way of life. Here are some choice predictions from one well-known proponent of the theory, James Howard Kunstler: ...

Clearly, the members of the National Petroleum Council, a federal advisory group representing the oil industry, are not believers in peak oil. "Fortunately, the world is not running out of energy resources," concludes a new report. "Coal, oil, and natural gas will remain indispensable to meeting total projected energy demand growth. "But the report does advocate that the United States do the following to meet a continuing rise in energy demand over the next quarter century:

...My take: Between fears of global warming and higher energy prices, energy looks certain to be a major issue for the first time in a presidential election since 1980. Democrats already seem to have realized and are formulating specific plans, like Hillary Clinton's idea of a $50 billion energy research fund, or a similar $10 billion "New Energy Economy" fund that John Edwards is proposing.

The GOP isn't quite there yet as far as addressing this as an issue with specifics. Rudy Giuliani, as part of his website's "12 commitments," merely says, "I will lead America towards energy independence." Mitt Romney advocates spending "more research dollars in power generation, fuel technology, and materials science. It is in new technologies that we will find solutions to our environmental and energy needs."
(19 July 2007)
James Pethokoukis is more optimistic about the Democrats than most peak oilers. Except for a handful, most Democratic and Republican politicians are clueless about peak oil. Nor have they digested the implications of climate change. -BA


What happens to Kenya when oil is $100 a barrel?

(Original head: "The Crude Awakening")
Bob Wayne Bell , Business Daily (Nairobi, Kenya)
In the May 2003 edition of The Atlantic Monthly magazine, former CIA operative Robert Baer, in an influential article about America's relations with Saudi Arabia, raised an important question that disaster planners in Kenya may not have considered.

For instance, what would happen to the Kenyan economy today if crude oil prices shot up to $100 a barrel and what would spook the global energy markets enough for such an eventuality to materialise?

According to experts in the Kenyan energy industry that Business Daily spoke to, crude oil at a price above $100 would cripple the local economy and it would take one surprisingly possible event as the suicide terrorist attack on USS Cole--the missile destroyer that was attacked by Al Qaeda on October 12, 2000 as it harboured in the Yemeni port of Aden-- demonstrated.

As Mr Baer argues in his book, Sleeping with the Devil, it would only take a possible terrorist attack on two of Saudi Arabia's important oil export terminals to stop the two million barrels of surplus oil that the House of Saud so graciously keeps floating to stabilise prices in the international oil markets-in exchange for protection by America-for nearly two years.

If this surplus was taken out of the market, the US Strategic Petroleum Reserve would run out in two months and crude oil price could rise from the current level of $75.65 to $150 per barrel.

It would not take long for African economies such as Kenya's to suffer from severe shocks that could immediately impoverish millions in the emerging middle class.

During the 1973/74 oil crisis, Kenya was almost impervious to its economic effects. It had gone through a coffee boom after frost hit the farming fields of Brazil, leaving Kenya as the market leader.

Dr John Akoten of the Institute of Policy Analysis and Research, a Nairobi based independent think-tank, says the coffee-boom and the less competitive global market largely insulated the country from its effects.

...[Now] With international oil companies playing a reduced role globally, no boom in agricultural exports, a more competitive global market, and a lack of energy reserves or alternative energies, Kenya's economy could severely suffer in the wake of energy terrorism.

"Such a scenario can reduce economic growth or possibly lead to negative growth, depending on the situation," says Dr. Akoten.

ImageMr Mohamed Baraka, the Managing Director for the oil company Gapco Kenya, adds that at $100 per barrel, it would have devastating effects on our economy.

"Food production and transportation costs will go up fanning inflation. Government efforts to create jobs and rebuild infrastructure will fail."
(20 July 2007)


Yergin interviewed about NPC report
(Audio)
Susan Leigh Taylor, KCBS
Study Suggests Global Energy Consumption Will Rise

SAN FRANCISCO, Calif. (KCBS) - We're going to use a lot more energy in the coming decades.

KCBS' Susan Leigh Taylor reports that a new study by the National Petroleum Council for the Department of Energy predicts that worldwide energy consumption will increase by more than 50% over the next 25 years.

But, as Taylor points out, don't be deceived by the National Petroleum Council connection. 65% of the 350 experts that participated in the study came from areas other than the oil industry. The year-and-a-half long project produced a number of recommendations for managing our increased energy consumption.

"The very first set of recommendations were actually related to higher fuel efficiency in automobiles, new standards for the digital equipment in our homes and things like that, in other words saying that energy conservation or efficiency is a very big part of the picture," explained Daniel Yergin, vice chair of the study and author of the award-winning book "The Prize, The Epic Quest for Oil, Money and Power."

Yergin believes other wide-ranging recommendations address managing carbon and global warming as well as alternative fuels.

Yergin insists the study delivers exactly what its title says: "The Hard Truth."
(19 July 2007)
See original for link to the audio interview.


CIBC predicts $100 oil by end of next year

Alberta Index
CIBC is predicting the price of crude oil will hit US$100 by the end of 2008 on rising world demand and a growing supply gap.

In a special report, the bank said "triple digit" oil prices might become permanent as major oil-producing countries in the developing (non-OECD) world reduce exports to meet soaring demand at home.

"The situation is intensifying the world's oil supply gap which shows no sign of being filled anytime soon by new supplies or by rising prices that normally choke demand," said Jeff Rubin, chief economist and chief strategist at CIBC World Markets.

"All of a sudden, major oil-producing countries are becoming major oil consuming countries. One has to look no further than price to see why," he adds, pointing to Venezuela, Iran and other Middle Eastern countries where gasoline is sold at 20-80 cents a gallon, a fraction of the world price.

"That cheap and abundant gasoline is fuelling "some of the fastest growth in domestic demand anywhere in the world."

The report states that declining oil production in developing countries coupled with increased consumption by newly-empowered consumers in those markets is eating into export capacity and will reduce crude oil exports by as much as 2.5 million barrels a day between now and the end of the decade.
(19 July 2007)


In Case You Don't Have Enough to Worry About Already

Mark Vaughn, AutoWeek
As Joni Mitchell said, you don't know what you've got 'til it's gone. Right now, we have a lot of fun cars and plenty of time to enjoy them. These are the good old days.

But they won't be around forever, so enjoy every last minute. We're all heading for hell on a hydrocarbon.

A couple of months ago, I attended a conference on the future of transportation. The Art Center College of Design's summit on "Designing Sustainable Mobility" (AW, April 23, 2007) was about the future of transportation-the distant future. While most of the speakers at the two-day gathering were optimistic about solving the world's transportation problems-there were many presentations about more efficient and environmentally friendly mobility-I left the affair feeling bamboozled. I now think that my (and your) only salvation is to move to Saskatchewan and raise organic goats on a self-sufficient, solar-powered yogurt farm.

And I don't even like yogurt.

Click on this link pr.caltech.edu/periodicals/CaltechNews/articles/v38/oil.html and start packing your bags. On that link, Dr. David Goodstein, a physics professor at Caltech and one of the presenters at the summit, lays out our future pretty convincingly. His book, Out of Gas: The End of the Age of Oil, goes into even more detail.

"Our civilization might very well collapse because it's so dependent on oil," Goodstein said at the presentation.

He makes a pretty good argument that not only is there not much oil left in easy-to-extract form, but the popular alternatives aren't going to last forever, either. Natural gas can power a car cleanly, but its supplies will run out not long after the oil dries up. Hydrogen is terribly inefficient to produce.

...As if that weren't enough, I also spoke to physicist and engineer Dr. Paul MacReady, founder of Aerovironment (www.avinc.com). MacReady is the guy who did the GM Sunraycer and Impact electric cars and the Gossamers Albatross and Condor airplanes and who is currently working on any number of projects involving extraordinarily efficient ways to use sunlight to power airplanes. Four of his planes are in the Smithsonian.

Of the many points MacReady made, the one that hit me hardest was this: The current human population of the earth is 6.5 billion and is expected to go up to 9 billion by 2050.

"Our planet can sustain maybe 2 billion," MacReady said.

So we have 4.5 billion too many guys walking around right now, and we're making more of them every day. And every single one of them is going to want a BMW and a stucco house.

So what's the answer? This is where my opinion comes in. I don't see an answer. How are we going to whack 4.5 billion guys? "Hey, look over there!" "Where?" Smack! After a while, they'd get wise. Ask for volunteers? I don't want to volunteer, and I'm guessing you don't, either. And I like my own stucco house and my minivan, and I hope someday to buy a Lancia Appia, so I'm one 4-billionth of the problem.

If we magically made every car on earth a Prius and had every household in the industrialized and soon-to-be-industrialized world install tankless water heaters and solar roofs and grow tomatoes in the backyard, we'd still have 4.5 billion too many guys and climbing.

It's not the fault of the automobile or even our automotive lust. It's not your SCCA T2 Camaro or the Austin-Healey Bugeye Sprite you keep in the garage and drive only on Sundays. People need and, in our cases, love cars. The current world economic model depends on internal combustion to work, and that in turn depends on plentiful gas. Nobody lives on the farm anymore.

Maybe the question is how smooth we want to make the transition from gasoline to whatever's next, whenever that transition really gets under way. And for that, we need science guys, lots of money and the will to change.

Or we just move north and start farming again.

Anybody with the answer, please fill it in below.
(17 July 2007)
Another automotive columnist who "gets" peak oil. Why is it that these writers seem to understand the concept intuitively, while economists and political writers struggle? Warren Brown of the Washington Post has written a series of hard-hitting columns. Jim Motavalli wrote an article on peak oil for E magazine. LA Times auto writer Dan Neil has written a column about peak oil (End Times). -BA

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