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Peak oil, prices, and supplies - July 21

Click on the headline (link) for the full text.

Many more articles are available through the Energy Bulletin homepage


The Impending Peak and Decline of Petroleum Production: an Underestimated Challenge for Conservation of Ecological Integrity

Bálint Czúc, Joseph P. Gathman, Guy R. McPherson, Society for Conservation Biology

Abstract: In the last few decades petroleum has been consumed at a much faster pace than new reserves have been discovered. The point at which global oil extraction will attain a peak ("peak oil") and begin a period of unavoidable decline is approaching. This eventuality will drive fundamental changes in the quantity and nature of energy flows through the human economic system, which probably will be accompanied by economic turmoil, political conflicts, and a high level of social tension. Besides being a geological and economic issue, peak oil is also a fundamental concern as it pertains to ecological systems and conservation because economics is a subsystem of the global ecosystem and changes in human energy-related behaviors can lead to a broad range of effects on natural ecosystems, ranging from overuse to abandonment. As it becomes more difficult to meet energy demands, environmental considerations may be easily superseded. Given the vital importance of ecosystems and ecosystem services in a postpetroleum era, it is crucially important to wisely manage our ecosystems during the transition period to an economy based on little or no use of fossil fuels. Good policies can be formulated through awareness and understanding gained from scenario-based assessments. Presently, most widely used global scenarios of environmental change do not incorporate resource limitation, including those of the Millennium Ecosystem Assessment and the Intergovernmental Panel on Climate Change. Considering the potential magnitude of the effects of peak oil on society and nature, the development of resource-constrained scenarios should be addressed immediately. Ecologists and conservation biologists are in an important position to analyze the situation and provide guidance, yet the topic is noticeably absent from ecological discussions. We urge politicians, corporate chief executives, thought leaders, and citizens to consider this problem seriously because it is likely to develop into one of the key environmental issues of the 21st century.
(July 2010)
Guy McPherson is a frequent contributor to EB. The report itself is behind a paywall. -KS



How Much Does a Gallon of Gas Cost?

Ezra Klein, Newsweek
It seems like an easy question. You might ask if I mean premium or regular, and where in the country I’m buying. Beyond that, though, the price is displayed in giant numbers on most thoroughfares. It’s such common knowledge that we ask politicians to rattle it off to show that they retain some awareness of the world they claim to represent. But as the sludge choking the Gulf of Mexico shows, nothing is easy when it comes to oil—especially the price.

Most of us would call the BP spill a tragedy. Ask an economist what it is, however, and you’ll hear a different word: “externality.” An externality is a cost that’s not paid by the people using the good that creates the cost. The spill is going to cost fishermen, it’s going to cost the ecosystem, and it’s going to cost the area’s tourism industry. But that cost won’t be paid by the people who wanted that oil for their cars. It’ll fall on taxpayers, on Gulf Coast residents who need a new job, on the poisoned wildlife.

That means that the gasoline you’re buying at the pump is—stick with me here—too cheap. The price you pay is less than the product’s true cost. And it’s not just catastrophic spills and dramatic disruptions in the Middle East that add to the price. Gasoline has so many hidden costs that there’s a cottage industry devoted to tallying them up. At least the ones that can be tallied up.

Topping that list is air pollution, which we breathe whether or not we drive. Then there’s climate change, which is difficult to give a price tag because it involves calculations like how much your great-grandchild’s climate is worth; traffic congestion and accidents, which harm drivers and nondrivers alike; and the cost of basing our transportation economy atop a resource that undergoes wild price swings...
(13 June 2010)
UPDATE (July 21). Corrected link location. Thanks to Paul for pointing out the error. -BA


Offshore Oil Drilling and Hurricane Risks

Frank Ackerman, TripleCrisis
It’s time to stop blaming BP – alone. At least four other oil companies hired the same firm to write their plans for handling spills in the Gulf of Mexico. They ended up with nearly identical plans, complete with thoughtful concern about impacts on walruses. The CEO of ExxonMobil called it “unfortunate” and “embarrassing” that the plan included walruses, which have not been present in the Gulf region for millions of years.

On the other hand, according to U.S. Rep. Ed Markey, the oil industry’s standard plan for Gulf spills never mentions hurricanes or tropical storms, which do appear in the region on an annual basis. This makes perfect sense under only one interpretation: the oil companies were certain that accidents never happen. If there are no oil spills, your spill response plan can talk about unicorns, and no one will be the wiser.

We are, unfortunately, wiser now. We are leaving the era of low-risk, conventional energy supplies; for the future, everything depends on how we manage the risks of finding and producing fuel. Last year, 30 percent of U.S. oil production came from offshore wells, almost entirely in the Gulf of Mexico. Since U.S. onshore production is rapidly falling, our dependence on offshore drilling is bound to increase.
Drilling safely and responsibly is sure to raise the cost of producing oil. Hopefully the industry will learn the most obvious lesson from the Deepwater Horizon disaster, and install better blowout protectors on drilling rigs. Although this looks expensive, it is quite the bargain when compared to the alternative of cleaning up a major spill. But the next draft of the spill response plan really has to talk about hurricanes...
(5 July 2010)



BP's Tony Hayward 'set to step down'

Dan Milmo, The Guardian
BP chief executive Tony Hayward is preparing to step down within the next 10 weeks, according to a report this morning, as the embattled oil giant announced plans to sell $7bn (£4.6bn) of gas assets for its Gulf of Mexico clean-up fund.

Hayward was heavily criticised for his reaction to the Deepwater Horizon disaster including the statement, "I want my life back", that led to accusations of insensitivity. The beleaguered chief executive may get his wish soon, amid a growing expectation that the 53 year-old will announce his departure in late August or September.

Quoting sources close to BP, the Times reported that his exit is expected before 1 October if the ruptured well is sealed and his exit could be announced alongside a new strategy being hammered out for the group called Future BP. An insider said Hayward's departure formed part of the group's defence against any attempted buyout by ExxonMobil or Royal Dutch Shell.

Robert Dudley, the American who runs BP's Gulf Coast Restoration Organisation, has been heavily tipped to succeed Hayward.

A spokesman for BP, however, told Reuters that Hayward "has full support from the board and will remain in place".

Speculation about Hayward's future coupled with news about disposals by the oil giant, helped shares in BP open up 10.55p at 398p, a rise of almost 3%.

The Gulf of Mexico spill, which could be discharging 70,000 barrels a day, has featured high on the agenda in a meeting between Barack Obama and David Cameron in Washington this week. Cameron said yesterday that BP should not be blamed for the "completely wrong" decision to release the Lockerbie bomber, Abdelbaset al-Megrahi, amid reports that the oil company pushed for his transfer to Libya in a bid to ease access to oil fields...
(21 July 2010)

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