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Peak oil, prices, and supplies - June 26

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Many more articles are available through the Energy Bulletin homepage

Which Matters Most? The Size of the Tap or the Tank?

Kurt Cobb, Scitizen
Energy optimists are fond of citing very large numbers for worldwide fossil fuel resources such as oil and natural gas. But they conveniently leave out the critical variable. How fast can we actually produce these resources?
Global economic growth is inextricably tied to growth in energy supplies, especially oil and natural gas. As the economy grows, the rate of production for basic fuels must grow to accommodate that expansion. If it doesn't, growth can slow and even stop. Can the rate of production for oil and natural gas keep pace with the demands of a growing global economy?

To respond by saying that we have a huge amount of oil and natural gas left in the ground misses the point. The key issue is how fast that remaining underground inventory can be extracted and turned into usable fuel. In other words, it is the size of the tap that matters more than the size of the tank.

Four central factors determine the rate at which oil and natural gas can be brought to the surface and processed: 1) the characteristics of the reservoir, 2) the size and efficiency of the infrastructure including trained personnel, 3) the availability of external inputs such as energy and water used to process the raw product, and 4) the ability to dispose of associated wastes.
(22 June 2009)

Peak oil: myth or reality?

Lionel Badal, Seeking Alpha
... For many years, Peak Oil was ignored by officials from oil companies and governmental agencies such as the IEA[23]. They repeatedly argued production was not at risk. However, over the recent years and in light of indisputable facts, we have seen a radical change in the discourse of the IEA[24] and leading oil companies such as Shell[25], Chevron[26] and Total[27]. While they do not use the same rhetoric as the early whistleblowers of the ASPO, they nowadays acknowledge the world is going to face a serious supply crunch within the next few years.

... Similarly, Stephen Harvey (Director of the Oil and Gas Office at the Energy Information Administration, US Department of Energy) kindly accepted to read my degree’s dissertation on Peak Oil and International Relations. And apparently he seems to believe that we are now at global Peak Oil:

“There are many compelling arguments regarding the increased difficulty in reaching oil reserves which may well result in a future view of historical production that looks sort of like a bell curve. And, it is quite plausible that the peak of that curve is around now.”[31]

To the desolation of many, the debate has not been closed. Indeed, a few voices continue to sponsor, actively and loudly, the vision that oil production does not face any danger. Amongst them, we find three notorious voices, namely the CERA oil consultant, the OPEC cartel and not surprisingly in regard to its notorious poor record of scientific objectivity, the oil company, Exxon Mobil. In fact, a 2006 article from The Wall Street Journal suggested that Exxon Mobil and Saudi-Arabia coordinated their attacks on the Peak Oil advocates[32].

... However, there is also a major difficulty for policy-makers to access independent and objective information on Peak Oil; the IEA is now working to educate policy-makers on the issue, but time is running out. In fact, it took 30 years for Climate Change to become accepted as a scientific reality, the debate on Peak Oil may have started too late. By the time policy-makers, the media and most of all, the public are fully aware of the seriousness of the situation and willing to act, oil shortages will be a reality. In addition, by the time people are aware of the crisis, it will be increasingly difficult to mitigate the crisis as oil production will not stop its irreversible decline.

This article is based on arguments developed in my degree's dissertation: "How the Imminent Decline of Global Oil Production will affect International Relations" (BA International Relations, University of Exeter, UK)

Lionel Badal is a student in international relations at the University of Exeter, UK. Mr. Badal is currently conducting research on Peak Oil in order to write his degree’s dissertation, which will analyse its impact on IR. Amongst his interviewees, we can find Matthew Simmons, the former energy advisor to George W. Bush, Dr. Yves Cochet, the former French environment minister and several prominent geologists and geophysicists.
(23 June 2009)

German-language "Global Oil Briefing No.5" now online

Dr Steffen Bukold, Energy Comment (Germany)

Dr. Bukold writes:
In its current edition, the 32-page newsletter covers inter alia the developments in current trends in oil prices, oil speculation, oil markets and oil politics. A 12-chart feature compares the Peak Oil Model to its competitors. It is currently available in German only, but an English version can be provided if there is some demand.

Mehr Lemminge als Bullen: Der Ölmarktkommentar

Der letzte Ölmarktkommentar Anfang Mai schloss mit den Worten: "Das Frühjahr 2008 hat der Ölwelt gezeigt, dass ein Preisanstieg nicht aufzuhalten ist, wenn die Finanzinvestoren erst einmal in Schwung gekommen sind." In der Tat waren Mai/Juni 2009 ein Déjà-vu-Erlebnis: Der Ölpreis kletterte unbeirrt von 55 auf 73 $/b und ignorierte alle negativen Fundamentaldaten aus dem Ölmarkt.

Die Hausse ist ähnlich verwirrend wie ein Henne-und-Ei-Problem: Die Ölhändler schauen auf die Aktien; die Aktienmärkte orientieren sich an den Bonds, am Ölpreis und am fallenden Dollar; die Devisenhändler orientieren sich dann wieder an den Aktien und am Ölpreis; die Bondhändler schauen sich alles zusammen an und erklären die Wirtschaftskrise für beendet, was wiederum dem Sentiment an den Rohstoffmärkten Auftrieb gibt.

Der Ölpreis stieg also, kreierte eine positive charttechnische Situation und rief damit die Hedge Fonds auf den Plan, die bis Mitte Juni die größte Long-Position seit Januar aufbauten. Hier wird vor allem auf Trendfolgesysteme gesetzt, anders ausgedrückt: Sie springen auf den fahrenden Zug auf und verstärken damit die Stabilität des Trends. Anfang Juni wurde diese Strategie durch eine bullische Prognose von Goldman Sachs "geadelt": Bis Ende 2009 soll der Ölpreis demnach auf 85 $/b steigen.

Die Ölexperten bemühten sich, aber entdeckten nur wenige Daten, die den Trend aus fundamentaler Sicht erklären könnten. Immerhin: Die Crack Spreads im Benzinmarkt sind hoch und die Nachfrage hat das Vorjahresniveau erreicht Anders als bei Mitteldestillaten und Rohöl sind die Benzinlager nicht überfüllt.Zweites Argument: Die US-Rohöllager schrumpfen leicht.

Das reicht offensichtlich nicht aus, die stärkste prozentuale Ölpreishausse seit
zehn Jahren zu erklären.
(23 June 2009)
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From About Us
Wer und was ist EnergyComment?
EnergyComment ist unabhängig und an keine Einzelinteressen oder Lobbygruppen gebunden. Die Artikel bemühen sich um eine unvoreingenommene, klare Analyse und Kommentierung der Ereignisse. Gründer und Leiter von EnergyComment ist Dr. Steffen Bukold. Er hatte sich in den 80er und 90er Jahren mit den Themen Verkehr, Infrastruktur und Finanzmärkte beschäftigt. Seit 2004 konzentriert er sich auf das Thema Öl. Als Forscher und Berater war er viele Jahre in den Niederlanden, Belgien sowie Frankreich tätig und lebt nun in Hamburg.

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