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Oil watchers: fear Saudi consumption

Camilla Hall, FT beyondbrics blog
…Earlier this week Javier Blas, FT commodities editor, described how demand for oil in the Gulf state has surged by 75 per cent in the last ten years as economic growth and domestic subsidised prices boosted consumption.

Now Jadwa Investment, a Riyadh-based investment house, has more to add to this worrying picture. The numbers are not quite so scary – Jadwa projects that domestic oil consumption in the kingdom will reach 6.5m barrels a day by 2030, compared to Falih’s 8.3m — but for Saudi watchers there are some concerning projections.

Brad Bourland and Paul Gamble at Jadwa forecast the kingdom’s breakeven oil price to be over $320 per barrel by 2030. The breakeven price is defined as the rate at which actual government revenue will equal actual government expenditure. That compares to around $84 a barrel this year…
(21 July 2011)

The scourge of ‘peak oil’

Dahr Jamail, Aljazeera
…Optimists estimate that peak oil production and global availability will decline beginning in 2020 or later, and don’t see a crisis happening that would affect major changes in lifestyles of oil-consuming nations.

A study published in the Energy Policy journal, however, predicts that demand will surpass supply by 2015 unless sustained economic recession constrains demand.

The IEA says that production of conventional crude oil already peaked in 2006, and economic indicators show that, through the first two quarters of 2008, the global economic recession was made worse by a series of record oil prices.

Both production and discovery of new oil fields appear now to be relatively stagnant compared with recent decades, and world oil generating levels reached a plateau several years ago, reports the IEA.

Richard Heinberg, author of ten books related to peak oil and its impact on our economic, food, and transportation systems, believes peak oil is a function of the dominant principles of resource extraction.

“Many people believe it’s about running out of oil, and it’s not,” he told Al Jazeera. “It’s about finishing off the low-hanging fruit.”

Oil is an energy dense, portable resource, and the energy that has been expended finding and extracting it is minute when compared to the energy it produces.

But Heinberg argues that we have likely already reached the maximum production limits for oil.

“Prices are almost at all-time highs, global output of oil has been stagnant for six years, and look at the cost of the BP disaster in the Gulf of Mexico,” he said. “The cost of producing oil has increased dramatically in the last decade, both financially as well as the cost to the environment.”

Meanwhile, world demand for crude oil grew at nearly two per cent each year between 1994 and 2006. In 2007, global demand peaked at 85.6 million bpd, but decreased in 2008 and 2009 by a total of 1.8 per cent, reportedly due to rising fuel costs.

Despite the lull, world demand for oil is projected by the IEA to increase more than 21 per cent over 2007 levels by 2030, from 86 million bpd to 104 million bpd, due largely to increases in demand from the transportation sector.

According to the US Energy Information Administration, current world oil consumption is approximately 88 million bpd, enough to fill roughly 5,500 Olympic-sized swimming pools each day…
(25 July 2011)

Peak oil – are we sleepwalking into disaster?

Dean Carroll, Public Service Europe
Governments and oil companies have been silent over the ramifications of fossil fuel depletion, but we have now reached the moment for urgent debate on a future without cheap oil

Like climate change, peak oil is often perceived by the more pessimistic analysts as one of those apocalyptic conundrums where we are already past the tipping point – meaning that any solutions human ingenuity can deliver will simply mitigate the worst-case scenario. Certainly, oil-field discoveries have been in sharp decline since the 1970s. And there is a consensus that peak oil has already been reached, at some point between 2004 and 2008. This does not bode well at a time when huge emerging nations like China and India are experiencing energy-hungry industrial revolutions. China’s economic growth was 11 per cent last year and in India, it reached 9 per cent. Increased demand could soon outstrip depleted supplies.

But unlike climate change, politicians seem unwilling to encourage public debate about the ramifications of peak oil. There has been no shortage of government-commissioned reports into the problem, but most have been kept from public view – Britain and the US, for example, have maintained the cloak of secrecy by not publishing many findings. This could be because politicians are concerned that doom-laden messages – like the prediction that ordinary families will only be able to use their cars for emergencies within 10 years because of spiralling fuel prices – will cause panic and civil disobedience on the streets. Or, a more cynical view, might suggest that governments and oil companies are so deeply entwined – in some cases like Saudi Arabia and Iran they are, indeed, the very same thing and we all know about the intimate connections between BP and the political world here in the UK – that educating citizens on the need to move towards conservation and away from consumption would damage business and tax revenues and possibly, even, the foundations of capitalism itself.

Although, to frame the debate on acting to combat peak oil in a ‘capitalism versus socialism’ prism – as many also do with climate change, suggesting a red tinge to the green movement – does us no favours. Such dialogue will not result in the necessary progressive policies to reduce consumption or encourage research and development in vital green technologies to replace diminishing fossil fuels. Instead, it will lead to adversarial and polarised discussions – with the end result being that no significant action is taken. A new research group at Keele University, in the UK, led by Professor Bulent Gokay and Dr Farzana Shain is attempting to create a more mature approach, especially among young people. Working under the title Facing the future: peak oil and children – the group, which has been asked to become part of – aims to consider issues including consumption habits and creating positive change in the future.
(22 July 2011)