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Peak oil - July 11

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Economist profiles Matt Simmons
The only way is down

The Economist
The high priest of “peak oil” thinks world oil output can now only decline
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FOR a man who believes that the world as we know it is coming to an end, as least as far as energy is concerned, Matthew Simmons is remarkably cheerful. He magnanimously excuses The Economist’s poor record of predicting the price of oil: our suggestion in 1999 that oil would remain dirt cheap was conventional wisdom at the time, he says soothingly.

He also shrugs off our more recent scepticism about his belief that the world’s production of oil has peaked: he, too, hopes that “peak oil” proves to be a myth, he says. But over a 40-year career in investment banking, Mr Simmons adds, he has learnt never to rely on wishful thinking.

Most of the world’s oil analysts, he believes, are far too optimistic about how long existing fields will last, the prospects for new discoveries, technology’s ability to unlock new sources and to extend the life of existing ones, and so on. He prefers to rely on data rather than daydreams.

And according to the American government’s own numbers, the world’s oil output has been more-or-less flat since 2005.
(10 July 2008)
Sympathetic profile. -BA



Saudi oil: A crude awakening on supply?

Steve LeVine, Business Week
The Saudis say they can ramp up production to 12.5 million barrels a day. But a field-by-field breakdown obtained by BusinessWeek shows that's not likely
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Saudi Arabia's ability to calm panicky oil markets has been waning for years. With oil prices doubling since last summer, to more than $140 a barrel, Saudi King Abdullah on June 22 convened an extraordinary meeting (BusinessWeek.com, 6/22/08) of OPEC members, international oil industry CEOs, and foreign leaders in an effort to calm the markets. The kingdom's message was clear: Saudi fields can pump oil to market quickly, if demand warrants.

However, it appears that for at least the next five years, and possibly longer, the Saudis are likely to produce less crude than promised, according to fresh data on the kingdom's oil fields obtained July 9 by BusinessWeek
(10 July 2008)



Giant oil field to raise Saudi output

Andrew Walker, BBC
The desert sun is beating down. The temperature is 44 degrees Celsius. And yet there are men working in the baking heat.

Not all that energetically, perhaps, but they are working nonetheless. For them, there is no escaping on board the visiting air conditioned bus. Instead, simple shelters provide scant, yet welcome, relief.

Welcome to Khurais in the Saudi Arabian desert, 160 kilometres east of the capital Riyadh. It is described by the national oil company, Saudi Aramco, as the largest oilfield development in the history of the industry, containing 27 billion barrels of oil.

... There is also a bigger and longer term question about Saudi Arabia's oilfields.

It is what's called the "peak oil" hypothesis. That's the idea that the world is at or close to the maximum level of sustainable oil production it can achieve. The geologists, economists and analysts who take that view argue that Saudi Arabia's reserves are not as plentiful as they tell us.

Looking round this hot sandy construction site it's impossible to tell. But in Saudi Arabia they insist the oil will last for decades.
(10 July 2008)



Interview: Caltex chief executive Des King

KGB Interrogation, Business Spectator
Robert Gottliebsen: Do you agree that the forecasts of the so called peak oil analysts are right and that outside of Iraq the Middle East can’t lift production dramatically, so there’s going to be an oil shortage for a long time?

[Text of the response is a little confused, but the anwer appears to be "Yes."]

... So we need all the energy sources we can get. That is, more coal, more biofuels, more nuclear energy, more wind, more solar, and these are all based on projections by the National Petroleum Council. This was a joint industry and government university study that was released in the States recently.

RG: And so the oil shortage is not going to go away. It’s going to be there for the next 20 or 30 years.

DK: That’s right and I think what is going to happen, the demand for energy is going to outpace the production growth in oil.

RG: How important are the hedge funds do you think in taking advantage of this and boosting the price immediately?

DK: That’s difficult for us to assess. We certainly are a big buyer of oil - Caltex doesn’t produce any oil. We actually purchase approaching 240,000 barrels a day and it’s difficult for us to say. I mean, many have speculated that there is something in there related to funds. There’s probably a tension premium there too with uncertainty about oil producing countries so it’s very difficult for us to speculate. We just certainly hope the price of oil comes down but some have said that there is a reasonable percentage due to speculation. Part of it could be the fact that the US dollar is so weak and people are trying to look for other sources of investing but we certainly hope from our standpoint and consumer standpoint that the cost of oil does come down. I think what the recent run up in the price of oil has told us is the era of cheap energy is over.
(11 July 2008)




Prediction: oil will correct to $70-$80 over 3 years

Energy Tech Stocks
New Prediction From ICF Energy Analyst Kevin Petak: Oil Will Correct to $70-$80 But Will Take Up To 3 Years

Everyone has an oil price prediction nowadays, but few are made by analysts as knowledgeable as Kevin Petak of ICF International, a consulting company that specializes in energy policy and markets. Petak models where energy markets are headed next - and how soon they’ll get there.

Petak’s models are telling him oil prices will “correct” down to the $70-to-$80-a-barrel range, but not nearly soon enough for price-pressured consumers and countries. He told EnergyTechStocks.com that a “depressed” economy will eventually drive prices down, helped out by the psychological uplift of the arrival of plug-in electric hybrid vehicles (PHEVs) starting in 2010.
(11 July 2008)

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