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We must all act together

Gordon Brown, The Guardian,
The oil crisis is a global problem requiring global solutions. And the Opec cartel has to play its part

The global economy is facing the third great oil shock of recent decades

… As every country faces increased costs, it is now understood that a global shock on this scale requires global solutions. This is why the UK is arguing that at the top of the economic agenda for the forthcoming G8 summit in Japan should be a global strategy for addressing the impact of higher oil prices.

The cause of rising prices is clear: growing demand and too little supply to meet it both now and – perhaps of even greater significance – in the future.

… While the world will always seek new sources of supply, and we must continue to reduce barriers to investment, our strategic interests – reducing energy costs, increasing our energy security, tackling climate change – all now point in the same direction: decreasing dependency on oil, through substitution with other energy sources and through energy efficiency. And what we do to change the balance for the medium and long term can have an effect in the short term because it can give greater certainty about future supply and demand, and create a more stable market.

… But, as we manage this transition to a low-carbon economy, we must also do more to help the oil market operate more efficiently. Globally, producers and consumers share common interests in market stability. So instead of Opec going its own way, there should be an enhanced dialogue between producers and consumers about the advance of nuclear, coal and renewables and about greater energy efficiency – as well as about future oil reserves.

With greater transparency on both sides, oil producers and consumers should gain a better understanding of trends in supply and how they affect the price of oil.
(28 May 2008)
Much in the op-ed sounds reasonable. A good first step might be for the UK government to demand more rigorous estimates of price and supply. For example, the government might support the International Energy Agency in its recent concern about future oil supplies.

As it is, a UK government agency is using $70/barrel as a worst case for 2020 in its planning. Not a propitious start for a realistic energy policy. (See Why planning for $200 barrel oil is so important by Rob Hopkins.)

A more accurate view of future supplies (for example, considering “peak oil”) might make it possible to override the natural inertia and self-absorption of the electorate. Britain’s commitment and common purpose during World War II is a model for what is needed.

Words are Failing for ‘Oil Analysts’

James Kingsdalec, Energy Investment Strategies
… As I pointed out recently, many oil exporting countries could produce more oil if it were not for “resource nationalism policies” – which I call “hoarding” – or violence or apparent incompetence. I say “apparent” because some countries, like Venezuela, could be feigning incompetence to hide a deliberate strategy of hoarding. Moreover, many oil importing countries are hoarding in a manner called “strategic petroleum reserve.”

But the victory of group 2 in the “peak oil” argument [who blame speculators and “above-ground factors”] should not end the discussion. Even though the Hubbertian “peak” is not yet here, we seem to have reached some other sort of peak, which simply has not been adequately defined and named in the public square, but which puts a cap on the flow of oil that the world is going to produce just as surely as will ultimately be the case when we reach the geologically possible peak that Hubbert defined and named “peak oil.”

I’m not sure what to call the peak we have now reached. Maybe it should be called “Peak Practical Production.” Or “De Facto Peak Oil.” Or just, “Th..Th..That’s All, Folks.” It is a mixture of things. A lot of it is oil fields around the world that in fact have peaked. You know the names by now. The fields in some 38 or so countries have peaked in the Hubbertian sense. A lot of it is countries – or national oil companies – that have decided not to produce in certain fields.

… The mixture of all these human and natural phenomena which together result in an effective peak in global oil flow, as clearly defined in the chart above, needs a name. Let me call it De Facto Peak Oil. (If anyone has a better name please let us know it. We need one.)
(28 May 2008)
Also at iStockAnalyst.

I’ve become a fan of James Kingsdale’s posts. According to his bio, he originally wanted to be a writer. His carefully constructed opinion pieces show it. His website has other articles that are worth a look. -BA

How Will Local Governments Respond to Large Increases in Energy Bills?

Debbie Cook, The Oil Drum: Local
TOD editor Professor Goose:
This is a guest post by Debbie Cook, Mayor of Huntington Beach, CA, and candidate for California’s 46th Congressional District. Debbie has been a peak oil activist for many years; in this post Mayor Cook provides some interesting energy and peak oil-related things to think about from a local government perspective.

Robert Rapier posed an interesting hypothetical yesterday as to how individuals would respond to gasoline at $100/gallon.

However, from my position for the last three years, the question has been “how will local government respond to large increases in energy bills?”

I am the Mayor of Huntington Beach, California, a full service city of 200,000 residents, 27 square miles, 1200 employees and 8.5 miles of beach. We have nearly 200 police vehicles, 3 helicopters, 15 fire engines/trucks, 7 ambulances, 1 HazMat vehicle, and 1 medical decontamination unit. In addition there are hundreds of miscellaneous vehicles and trucks for public works, marine safety, building department, water department, and administration. All said, we consume 495,000 gallons of gasoline/diesel/jet fuel per year. For every $1 fuel goes up, it is a half million dollars out of our general fund budget.

… There are countless services that local government provides to residents: streets, curbs, gutters, tree trimming, sewers, street sweeping, water, parks, community centers, emergency services, senior services including meals on wheels. All of these are energy intensive and mean local government is extremely vulnerable to supply disruptions and high costs. As budgets get squeezed, you can speculate as to which services will be the first on the chopping block.

I have spent the last three years educating elected officials and policy makers about the peaking of world oil production with only limited success. I have been as frustrated as my fellow peaksters as to the lack of response or attention this critical issue has received from all levels of government.
(27 May 2008)

Russia worried as oil production slides

Fred Weir, Hindustan Times
Russia’s government has proposed urgent measures to halt a slide in oil production, which threatens to undermine the country’s petroleum-fuelled economic boom.

“All the proposals have been accepted and will be submitted to parliament at the end of this week,” Deputy Finance Minister Sergei Shatalov told journalists after the Presidium, a group of the most powerful ministers created by Prime Minister Vladimir Putin, met to discuss the crisis on Monday.

News of falling oil output has hit Moscow political circles like a bomb, because energy exports now make up over 30 per cent of Russia’s gross domestic product and account for almost 70 per cent of government revenue..

. . . Russia’s oil output fell in the first quarter of this year, causing some experts to warn that the country has reached the limits of supply and will not be able to continue meeting deliveries to oil-thirsty consumers in Europe and Asia.

“Russian oil production has peaked and may never return to current levels,” Leonid Fedun, vice president of Russia’s largest private oil company Lukoil, told journalists recently.

The new measures were welcomed by oil companies on Tuesday, but some experts warned that it could be too little, too late.
(27 May 2008)

Immer neue Preisschocks

Andreas Halbach, Steffen Judzikowski und Hans Koberstein; Frontal 21 ZDF (Germany)
Autofahren nur für Reiche

Die ungebrochene Rekordjagd bei Öl- und Spritpreisen ist nach Einschätzung von Wissenschaftlern erst der Anfang einer zukünftigen Preisspirale. “Die weltweite Ölförderung hat mit großer Wahrscheinlichkeit das Fördermaximum bereits überschritten und wird weiter zurückgehen”, erklärt Werner Zittel von der Energy Watch Group. Dies sei die Hauptursache des steigenden Ölpreises.

Bis zum Jahr 2030 werde die weltweite Ölförderung auf die Hälfte sinken, stellt Zittel fest. Gleichzeitig wachse der Verbrauch und verknappe damit zusätzlich die zur Verfügung stehenden Rohölmengen. Erdöl und damit auch Benzin, Diesel und Kerosin würden so immer mehr zu Luxusgütern. Zittel ist Mitautor einer Studie der Ludwig-Bölkow-Stiftung, die das unabhängige Energieforschungsprojekt Energy Watch Group (EWG) gegründet hat.

Internationale Energieagentur: Ölpreise bleiben auf Dauer hoch – Chefökonom Birol: “Das Ende des einfach zu fördernden Öls ist erreicht”

Die Internationale Energieagentur (IEA) in Paris warnt angesichts der aktuellen Entwicklung auf den Rohölmärkten vor ernsten Konsequenzen für die Weltwirtschaft. “Es wird immer schwieriger, die Balance zwischen Angebot und Nachfrage zu halten”, erklärte Fatih Birol, Chefökonomen der IEA, gegenüber Frontal21. “Wenn wir die Produktion nicht erhöhen und die Nachfrage senken, dann wird es sehr ungemütlich in den nächsten Jahren.

(27 May 2008)
There is a video of an interview with Fatih Birol available here. The interview is in English, but dubbed in German.

Das Manuskript des Beitrags (PDF)

At the Energy Watch Group site:
Erdöl-Studie vom Mai 2008. I’ve been told an English translation of their May 2008 oil study will be posted soon. -BA