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The end of the petroleum age (Heinberg on ABC-Australia) (video and transcript)
Kerry O’Brien, The 7:30 Report, Australian Broadcasting Company
Richard Heinberg, what are the forces at work behind the Saudi decision to call the OPEC meeting, and what is the likely impact?
RICHARD HEINBERG, GLOBAL OIL EXPERT: Well, I think the Saudis are genuinely concerned about the economic impact of high oil prices. I think when prices were back in the range of $80 to $100 a barrel and the producers were very happy because they were earning lots of extra income. But now, with prices hovering up around $135 to $140 dollars a barrel, it’s clear that this is having really serious effects on, for example, the airline industry, which is really not prepared even to exist with oil at these prices. And we’re going to see a major consolidation of the world airline industry as a result of this. It’s also having impacts on trucking and many independent truckers in the United States for example are going bankrupt with high diesel prices. So, this is a level of impact that could proverbially kill the goose that’s laying the golden egg for the oil exporting countries. They don’t want to see that happen and that’s why they’re calling this meeting.
KERRY O’BRIEN: How big a boost in production will it take to force a significant and sustained drop in the price of oil?
RICHARD HEINBERG: Well, we would be needing something on the order of several million barrels of oil a day of new production in order to significantly lower the price. No one seriously thinks that that level of new production is in the cards or is available.
… KERRY O’BRIEN: So, when Saudi’s and other oil suppliers blame speculators for the high price of oil, are they right?
RICHARD HEINBERG: I think speculation is playing a fairly minor role in what we’re seeing. After all, why would one choose to park one’s investments in oil futures contracts unless there were signs that supply was not going to meet demand? In effect, it’s the fundamentals that are driving this speculation. Now, it’s possible that we could see volatility in the price to the point that the price could fall back to perhaps even $110 a barrel. I think it’s extremely unlikely that it would fall less than that because if that were to happen, a lot of producers who are now producing very expensive oil because of the high prices that otherwise wouldn’t be produced. They’ve reopened old oil wells that didn’t used to be economical. Well, if the oil price falls very much, they’re going to close those questionable wells back down again, then supply will again fall and then that will push the price right back up again. So, while we may see considerable volatility in the price as a result of this speculation, over the long run, the price has no way to go but up.
(19 June 2008)
At The Oil Drum/ANZ, Phil Hart writes:
It might be too little, too late, but this is some of the hardest hitting journalism we’ve seen on petrol prices. Kerry O’Brien at the ABC 7:30 Report is clearly no peak oil sceptic.
Monday night he put Kevin Rudd in the hot seat on petrol prices, and you got the impression that Kerry was not playing by the rules of engagement anymore. In that interview, he invoked Richard Heinberg, then on Thursday night he interviewed Heinberg himself.
Submission to the Select Committee of the Legislative Council on the
Impact of Peak Oil in South Australia. (PDF)
Michael Lardelli, Beyond Oil – South Australia
… In the short time, if any, remaining to us before a major oil price/supply crisis hits Adelaide I would ask the committee to consider what it means for our community to be resilient in the face of this stress and what we should, and should not do, in order to increase this resilience.
To understand the resilience of a community or population faced with change in resource availability we need to understand Liebig’s Law of the Minimum – that growth is controlled not by the total of resources available, but by the scarcest resource. This means that a community can only be resilient when supplies of the resources and services required for its functioning/survival are at levels well above the minimum needed. This ensures the existence of a buffer of reserve capacity upon which the community can fall back.
… At the moment Adelaide’s growing population is maintained by transport and food provision services that are virtually totally dependent on oil. We already see how our limited water supplies are calling into question the long term sustainability of the current population. (The proposed solution – a desalination plant at Port Stanvac – will require additional energy generation over and above the large amounts that are already required for pumping and purification of water in South Australia.) We urgently need to know what Adelaide’s sustainable population will be at oil/energy availability levels much lower than those existing today. This question needs to be answered using a scientific approach that considers current and future resource availability.
… Recommendation: In light of the above, the most fundamental and important recommendation that the Select Committee can make to enable South Australia to cope with higher fuel prices and the other resources challenges of our future is to encourage the growing of food within and immediately surrounding settlements (e.g. Adelaide). There is no more energy efficient and water efficient way to grow food than when it is grown by gardeners for their own and nearby community’s use (using e.g. drip irrigation techniques). The SA government should ensure that priority is given to provision of energy and water resources required for this local food production above all else.
(16 May 2008)
Peak Oil, Deglobalization and Ecolomics
Richard Embleton; Oil, be Seeing You
… As we approach a serious confluence of peak oil, other resource peaks, global warming, a global freshwater crisis, a global food crisis, a global soil crisis, all exacerbated by massive human overpopulation, can ecolomics [ecology + economics] serve as the catalyst to achieve a general understanding of the catastrophes that lay ahead of us? Can it help build a momentum of public support for the programs that will be needed to mitigate the impact of these crises on human society? Will ecolomics succeed in getting people to finally realize, especially those in power, that the environment is not a servant of human economics nor can economics function independent of the environment but must be, in fact, a subset of it?
… If oil prices continue to rise because of increasing supply-side issues is the repatriation of industries to the OECD countries a reasonable or even workable response? The daily barrage of financial news coverage of steadilly rising oil prices assaults us with an endless litany of excuses, none of them touching on the reality that the underlying reason is declining global oil supplies. We may have already seen the global peak in oil production, as long ago as spring 2005. Increases in all liquids since that time have largely been the result of non-conventional oil like tar sands and deep water, alternatives like ethanol, coal to liquid, gas to liquid and coal bed methane. For much of this year, and in some cases earlier, countries like the U.S. have been dipping into their strategic petroleum reserves. And globally oil production and consumption have surpassed new oil discoveries since the early 1980s, global production and usage now four to five times greater than new discoveries.
… Repatriating the industries that are generating products abroad and shipping them to countries like the U.S. does not, however, eliminate the problem. If fuel costs are rising because supply can no longer keep pace with demand, repatriating those industries and the production energy they consume is simply going to change the geographic location of that energy consumption. If there is insufficient oil to meet demand, where is the extra oil going to come from to power the industries that are being repatriated? To build the industrial infrastructure that those industries will need? To supply the transport energy for the importation of the raw materials needed by those repatriated industries? All of the industrial energy consumption that was exported through offshoring under globalization will again have to be met at home. The nations repatriating industries are going to be facing increased domestic oil and other energy demand at the same time that global oil supplies, the reason for the repatriation, are diminishing.
(18 June 2008)