Peak oil, prices, and supplies - Aug 28
The 150th birthday of the discovery of oil is also celebrated in a suite of articles in Foreign Policy, featuring Daniel Yergin, and receives a briefer nod on the Oil Drum. -KS
Michael C. Lynch and “the false threat of disappearing oil.”
Kevin Reitman, The Oil Drum
Energy analyst Michael C. Lynch's op-ed piece “‘Peak Oil’ Is a Waste of Energy, published in the August 24th edition of the New York Times, has naturally garnered much attention from those in the peak oil community itself. Lynch's dim estimate of predictions of declining supplies of energy is evident from the title of his piece, and those familiar with views espoused by him in the past weren't surprised by this new batch of commentary:
A careful examination of the facts shows that most arguments about peak oil are based on anecdotal information, vague references and ignorance of how the oil industry goes about finding fields and extracting petroleum. And this has been demonstrated over and over again: the founder of the Association for the Study of Peak Oil first claimed in 1989 that the peak had already been reached, and Mr. Schlesinger argued a decade earlier that production was unlikely to ever go much higher.
Indeed forecasts of the demise of oil in the past have often been far wide of the mark, as documented in Lynch's own 1998 piece CRYING WOLF: Warnings about oil supply...
(27 August 2009)
The New York Times on Peak Oil - Don't Worry, Be Happy
Gabriel Rotello, The Huffington Post
For those who follow the debate over Peak Oil - the idea that world oil production is peaking or is about to peak, and will then decline with disastrous results for the global economy - this has been a banner year for the Peak Oil side.
First, oil prices spiked to record levels - just when many Peak Oilers predicted they would - and helped stagger the economy. Then prices declined dramatically, as Peak Oilers also predicted, but began skyrocketing again even though demand for oil was off sharply - as they also predicted. Based purely on foresight, the Peak Oil side has been scoring touchdowns left and right.
On top of that, a steady drumbeat of scientists, analysts and industry executives who once pooh-poohed the idea of Peak Oil have been jumping on the bandwagon.
For example, a recent survey of American oil and gas company CEOs showed that 48% now believe we are at peak oil today, or will reach it in a few years. Top analysts at places like ConocoPhillips and Royal Dutch/Shell have been writing memos warning that "after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand..."
(27 August 2009)
Oil: the Long Goodbye
Foreign Policy Special Report, lead article by Daniel Yergin
On a still afternoon under a hot Oklahoma sun, neither a cloud nor an ounce of "volatility" was in sight. Anything but. All one saw were the somnolent tanks filled with oil, hundreds of them, spread over the rolling hills, some brand-new, some more than 70 years old, and some holding, inside their silver or rust-orange skins, more than half a million barrels of oil each.
This is Cushing, Oklahoma, the gathering point for the light, sweet crude oil known as West Texas Intermediate -- or just WTI. It is the oil whose price you hear announced every day, as in "WTI closed today at …." Cushing proclaims itself, as the sign says when you ride into town, the "pipeline crossroads of the world." Through it passes the network of pipes that carry oil from Texas and Oklahoma and New Mexico, from Louisiana and the Gulf Coast, and from Canada too, into Cushing's tanks, where buyers take title before moving the oil onward to refineries where it is turned into gasoline, jet fuel, diesel, home heating oil, and all the other products that people actually use.
But that is not what makes Cushing so significant. After all, there are other places in the world through which much more oil flows. Cushing plays a unique role in the new global oil industry because WTI is the preeminent benchmark against which other oils are priced. Every day, billions of "paper barrels" of light, sweet crude are traded on the floor of the New York Mercantile Exchange in lower Manhattan and, in ever increasing volumes, at electron speed around the world, an astonishing virtual commerce that no matter how massive in scale, still connects back somehow to a barrel of oil in Cushing changing owners.
That frenetic daily trading has helped turn oil into something new -- not only a physical commodity critical to the security and economic viability of nations but also a financial asset, part of that great instantaneous exchange of stocks, bonds, currencies, and everything else that makes up the world's financial portfolio. Today, the daily trade in those "paper barrels" -- crude oil futures -- is more than 10 times the world's daily consumption of physical barrels of oil. Add in the trades that take place on other exchanges or outside them entirely, and the ratio may be as much as 30 times greater. And though the oil may flow steadily in and out of Cushing at a stately 4 miles per hour, the global oil market is anything but stable...
(24 August 2009)
sent in by EB reader Calvin Sloan, who wrote:
"I just wanted to let yall know that in the new edition of FP there is a large section on oil. You can here from Yergin etc. A lot of very interesting articles."
150 Years of Plenitude: The Story of Oil
Morgan Downey, The Oil Drum
Exactly one hundred and fifty years ago, on August 27, 1859, the first commercial oil well in the US began producing. The subsequent petroleum bounty has enabled and defined modern civilization.
This post is a status update in honor of the day--on how far we have come and our immediate challenges.
People have used oil obtained from the ground since at least 4,000BC. In the Middle East, crude oil that seeped to the surface was used to waterproof boats and as an adhesive in the construction of buildings and roads. Crude oil was also refined in minor quantities for lamp and heating oil in ancient China, though this technology never made it directly to modern times. By 600AD, the Byzantines used crude oil to produce a flame-throwing weapon known as Greek fire.
The modern oil industry began as a result of the search for inexpensive lighting. Until 1859, most people obtained artificial light by burning animal fats in the form of beeswax candles or whale oil. Whale oil shed the purest light of all available fuels, and became a luxury product. Overfishing led to a decline in the whale population (click here to see a cool whale video today) and a sharp increase in whale oil prices.
In order to take advantage of the high prices of illumination, a group of investors hired a railroad conductor named Edwin Drake to head to a location close to where traces of crude oil had been observed on the surface. After a nervous few weeks in rural Pennsylvania, Drake struck oil on August 27, 1859. The 69 foot deep well on a salt dome rock formation yielded around 15 barrels a day. Others quickly followed Drake and drilling soon spread across the region.
The petroleum that flowed from this well in what became known as Oil Creek, near Titusville, Pennsylvania, started the modern oil industry we know today (oil had been produced in other parts of the world, but the Titusville well kicked off industry on a large scale)...
(27 August 2009)
From the Oil Drum:
Morgan is author of the book ‘Oil 101’.