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Energy - Dec 7

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Many more articles are available through the Energy Bulletin homepage.


Five Truths About Our Energy Future

Bryan Walsh, TIME Magazine
... when you listen to the gloomy forecasts from peak-oil theorists or hear the sunnily optimistic scenarios of energy executives, keep this in mind: the future is really, really hard to predict.

That's one reason Fatih Birol — the Turkish-born chief economist of the International Energy Agency (IEA) — has one of the toughest jobs in the world. Birol helps put together the IEA's annual World Energy Outlook, a much anticipated report that gathers trends in global energy use and tries to project them into the future. And a lot of those trends are very worrying.

... I sat down with Birol after his talk to go over them.

1. Shifts in Oil Security

For decades now, the U.S. has been the world's No. 1 importer of oil, buying 11 million barrels a day in 2010. That imbalance has cost Americans money — over $300 billion last year — and it has an impact on our foreign policy, putting the U.S. in the position of acting as the world's oil cop. The wars in Iraq and Afghanistan haven't only been about oil, but that's not to say that keeping the crude flowing from the Middle East wasn't an important side effect.

The good news is that thanks both to improved energy efficiency and new sources of crude in the U.S., Americans are beginning to import less and less oil.

2. The Future Is Gas — Unless Industry Screws Up

3. We're Getting Dirtier

If there's one relatively uncontroversial truth in energy, it's that we need to improve efficiency. Wasted energy is wasted money — all the more so at a time when oil prices are high and unlikely to drop.

4. Coal: The Once and Future Energy Source

... coal has generated most of our electricity in the past, it's generating much of our electricity right now — and barring technological or regulatory change, it will generate much of our electricity in the future. "We rarely talk about coal," says Birol. "But over the last 10 years, 50% of the growth in global energy consumption has come from coal."

That fact, more than any other, explains why we're currently on a track for a much hotter world.

5. Energy Access: The Forgotten 2 Billion

For all the worry over peak oil or climate change, there are nearly 2 billion people on the planet who lack any access to modern energy.
(6 December 2011)



Is Oil Fueling the Rise in Political Partisanship?

Tom Therramus, Oil-Price.net
In 2009 I published a chart in an article at Oil-Price.net that showed volatility in the price of oil had risen and fallen in a series of seven spikes during the prior decade. The turbulent year of 2008, when oil jumped to over $140 a barrel, was part of this series. But what was unexpected was just how early in the 2000s the signature of spiking volatility in oil price had gotten under way.

Further digging led to other surprises. It was found that each of the seven spikes in oil price volatility had been followed by knock-on impacts in the stock market, the price of gold and other economic indicators. Moreover, the relationship was not just confined to the 2000s. In another chart (Figure 1) it was shown that oil volatility spikes had closely preceded every US recession and market crash of the last 50 years.

Figure 1 - Historical Oil Price Volatility

Indeed, even the mysterious 1987 "Black Monday" crash, the largest one-day decline in stock market history, appeared to fall in line with the pattern. Charting historical data, it stood out like a "sore thumb" that "Black Monday" had occurred in the wake of a price shock sparked by a collapse of the OPEC cartel in 1986.

The striking coupling between whipsaw changes in oil price and economic turbulence left me wondering about whether this relationship had broader implications. In particular, I was curious as to whether the volatility signature for oil price that had emerged over the 2000s might also be influencing the moods and preferences of American voters.

The US is arguably the most fossil fuel-dependent nation on earth. It is also widely acknowledged that the degree of electoral volatility and political partisanship has increased in the United States in recent years. Could discontent sparked by an uptick in volatility in oil prices be one reason behind why American politics of late seems to have gotten so much nastier ?

To go after this question three US political polls were looked at in relation to volatility in the price of oil between December 1999 and July 2010. These polls were: 1) Presidential approval ratings 2) Congressional approval ratings and 3) Direction-of-the-Country in which potential voters are asked whether they feel that the country is on the "right track" or the "wrong track".

The data for these polls are archived at RealClearPolitics.com and PollingReport.com. The rationale, methods and approach taken are laid out in detail in a wiki that was started in November 2010. Figure 2 summarizes the first of the findings illustrated from the wiki. Here, volatility in oil price between 2000 and 2010 is lined up against volatility in polling data on Presidential popularity.

... In sum, the jagged pattern of volatility in oil price that is now underway could be a process that is as automatic as a heart beat. This rhythmic pattern may be a natural by-product of our insatiable thirst for oil in a finite world, and something over which we may ultimately have limited control.

The prospect that no amount of extra drilling is going damp down spiking oil prices is a message that I do not expect to hear from any politician running for office in the coming Presidential election. All the same, here is a thought that should get the rapt attention of every pol - A "rinse and repeat" cycle in oil price volatility could have become a key determinant of whether you will win your election or not!

For the rest of us, the impact of cycling volatility in oil price on our economy, partisan politics and social fabric is likely to grow in seriousness. Expressions of discontent including the Tea Party, Occupy Wall Street, or even the inability of GOP conservatives to settle on a Presidential champion may be manifestations of this "rinse and repeat" cycle. Adapting to the increasing uncertainty and political unrest wrought by recurring jolts in oil price volatility may be one of larger challenges that we face in coming years.
(11 November 2011)



Peak oil debate losing relevance due to new upstream technology: Repsol CEO

Platts
The debate over whether the world's reserves of hydrocarbons have now peaked and are in decline has lost relevance over recent years as new technology allows oil companies to find and exploit new hydrocarbon sources, the CEO of Repsol Antonio Brufau said Tuesday.

Brufau said progress made in exploring and developing ultra-deepwater areas, unconventional oil and gas sources and the move into remote areas such as the Arctic, have been key to growing global reserves of oil and gas.

"The speed at which technology changes and its consequences have taken us largely by surprise. The peak oil debate, for example, has lost a great deal of its relevance in the past three years," Brufau told the World Petroleum Congress in Doha.

"The possibility that usable resources under commercially viable terms will run out is no longer a concern in the short or medium term," he said.
(6 December 2011)




Has the world reached economic peak oil?

David Strahan, Energy Realities
The price of oil is critical to the global economy, but the complex factors that decide it take some navigation, says David Strahan
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The price of oil is critical to the global economy, but the complex factors that decide it take some navigation, says David Strahan

Whisper it. Oil production in the US is increasing. The country where output peaked in 1970 and then shrank by 40 per cent over four decades, has turned some kind of corner. Between 2008 and 2010, production rebounded by 800,000 barrels per day to 7.5 million barrels per day, and analysts forecast more growth to come. Goldman Sachs predicts that by 2017 production in the US could reach almost 11 mb/d, just shy of its all-time high, restoring the country to its former glory as the world’s biggest producer.

One reason is a sharp increase in production of “shale oil”.

... oil is so useful that nobody cuts back voluntarily, meaning prices must rise to excruciating levels to force rich western consumers to economise. The first “peak oil recession” started in 2009, says Kopits. It took oil at $147 a barrel and the deepest recession since the 1930s to prise oil from the grip of consumers in OECD countries. Since early 2008, OECD oil consumption has fallen by 4 mb/d, while non-OECD consumption – mainly inChina– has gained 6 mb/d. Global oil production rose 2 mb/d during that period, so developing countries have consumed all the additional supply plus that given up by industrialised economies. “China is bidding away the OECD oil supply,” says Kopits, “and recessions are the mechanism by which that oil is being transferred from weaker economies to faster growing economies.”

With China embarking on rapid “motorisation” – car sales in China leapfrogged those in the US in 2010 – the outlook is for repeated oil price spikes and recessions. We appear now to be entering the second peak oil recession, says Kopits, and others will follow. For the time being this is a problem for the west, but prices could rise to levels that are unsupportable even for China. On this view, peak oil is as much an economic construct as a geological one.

Analysts at Deutsche Bank are more optimistic, and predict that a final oil price spike to $175 in 2015 will lead to rapid electrification of transport and relieve pressure on the oil supply. But Kopits is doubtful that we can escape so easily. “Buckle up,” he concludes, “we’re in for a bumpy ride.”

David Strahan is an energy reporter and author of The Last Oil Shock: A survival guide to the imminent extinction of Petroleum Man (John Murray)

This article was commissioned by New Scientist.
(December 2011)
Also at David Strahan's website. -BA

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