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Peak oil, peak gold - March 3

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

Many more articles are available through the Energy Bulletin homepage.


Is the World Tottering on the Precipice of Peak Gold?

Richard A. Kerr, Science
Worldwide, gold production has hardly budged in the past decade. It's not for lack of demand. Gold may not fuel economies the way oil does, but gold for jewelry—its primary use—has been much in demand, and that demand will likely increase. Investors' interest could be intense for years longer. But to judge by the mining industry's modest success of late in finding new deposits of gold, production will not be much higher in the next decade. Miners and analysts agree that most of the easy-to-find, easy-to-develop gold has been found. To discover still-hidden deposits and at least maintain production, let alone increase it, miners will need continued high or even higher gold prices, revolutionary new technology, and the cooperation of often reluctant host countries.

... The golden age seems to be over. “It's becoming harder and harder to find” gold, concludes minerals analyst Michael Chender, CEO of Metals Economics Group in Halifax, Canada. “There's a general sense that most of what's easily available has been found and picked up.” Andrew Lloyd agrees; the industry “has increased exploration, but they're not finding a lot of new deposits, especially the large ones,” says the spokesperson for the world's largest gold mining company, Barrick Gold Corp., headquartered in Toronto,
Canada. “The industry as a whole is really struggling to keep up with demand.”

How the struggles of the gold mining industry will play out depends on whose crystal ball you are consulting. Those who have been predicting that the world's production of oil will shortly peak, if it hasn't already done so, are pessimistic about gold's prospects as well. Applying a standard peaking analysis to the history of gold production, retired oil geologist Jean
Laherrère concluded in 2009 that 2001 was the peak and that production would soon plummet.

Some analysts and explorationists are considerably more optimistic.

Vol. 335 no. 6072 pp. 1038-1039
DOI: 10.1126/science.335.6072.1038
(2 March 2012)
The rest of the article is behind a paywall. Suggested by EB contributor Michael Lardelli, who writes: "[The journal] Science is getting rather peaky - another peak resources article in Science by Kerr."


Heinberg: End of growth not end of the line

Bennett Hall, Corvallis Gazette-Times
Cheap, readily available fossil fuels drove unprecedented economic expansion over the past hundred years, but the tank is starting to run dry — and if we want our economy to run smoothly again, we’re all going to have to get out and push.

That was the wake-up call delivered in Corvallis Wednesday night by Richard Heinberg, senior fellow of the Post-Carbon Institute and the author of “The End of Growth: Adapting to Our New Economic Reality.”

He spoke to more than 200 people at the Corvallis High School auditorium in an appearance sponsored by the Corvallis Sustainability Coalition and a number of local businesses and organizations focused on social change.

... The oil bonanza that sparked the explosive industrial growth of the 20th century also touched off a fundamental economic shift, Heinberg said, to a consumer-based society that depended on easy credit, an ever-expanding money supply and neverending growth.

... We’re used to the boom and bust business cycle, Heinberg said, but this time we may not bounce back because the once-bountiful supplies of fossil fuels and other raw materials are rapidly growing scarcer and more expensive.

The result, he predicted, will be the spread of sovereign debt crises like the one now gripping Europe.

“We are going to be seeing the same thing here,” he said. “I hate to think of it, but the United States is now on the road to looking a lot like Greece is looking now in a few years.”
(1 March 2012)



Bill O'Reilly is Misinforming Americans About Oil Supplies

Robert Rapier, The Oil Drum
Last week I was interviewed by Alan Colmes from Fox News Radio on the topic of gas prices. During the interview, he mentioned an idea that Bill O'Reilly has proposed, and that is to address gasoline prices by discouraging U.S. oil companies from exporting their products. The critics of Bill's proposal have generally focused on the notion that "We can't tell the oil companies where to sell their product."

However, there is a far more fundamental issue, and that is that the basic facts of his proposal are based on an erroneous assumption. Let's first have a look at the proposal, in his own words:

O'Reilly: We began covering the skyrocketing oil prices last Friday with Lou Dobbs. He was candid, saying because of the mild winter, there is plenty of oil and gas in the U.S.A. So supply and demand here should dictate lower prices.

With all due respect, Bill O'Reilly has a fundamental misunderstanding about oil supplies. There is not "plenty of oil and gas in the U.S.A." He has mistakenly translated net exports of finished products like gasoline and diesel into "plenty of oil and gas in the U.S.A.", as I explain below.
(1 March 2012)



Those who argue that there will never be a final "oil crisis" fail to recognize resource limits.

Andrew Miall, The Mark News
This is Part 2 in a three-part series focusing on fossil-fuel dependence and the intersection of energy and the environment. Part 1 discussed our dependence on fossil fuels to meet our energy needs due to its unmatched efficiency as an energy source. Part 2 discusses the finite nature of oil and gas, and what that means for the future of our energy economy.

... There are those that doubt the “peak oil” hypothesis, suggesting that increasingly expensive sources (such as from the Arctic) will be funded by rising prices, to the point that other energy sources, including renewables, will become more economic and widely used. Under these conditions, they argue, there will never be a final “oil crisis.” However, this ignores the limits to renewable sources and the finite nature of all Earth materials. Eventually, we will just run out. Some specialists suggest that some of the great fields in Saudi Arabia are already showing signs of depletion, including the presence of water in the produced oil (which occurs when groundwater rises to replace oil as it is pumped from the top of a pool). When it becomes clear that this is indeed happening, we can expect a rapid increase in the world oil price, which could damage global economies, and will not help with the necessary orderly transition to other energy sources.

News of discoveries in the Gulf of Mexico, offshore Brazil, and the far eastern provinces of Russia, tends to suggest that there is a lot of oil left to be found. But we are running out of new places to look. The Arctic has been described as a vast energy storehouse, with some estimates placing reserves at 90 billion barrels of oil. But this represents only about 1,000 days’ worth of global consumption, and at least half of it lies within the territorial limits of Russia, whose government is quite willing to use oil as a political weapon. In fact, only about seven per cent of predicted remaining reserves are located in areas open to development by the international oil giants. The remainder is controlled by sovereign oil companies, many of whom (such as Iran) are hostile to the West.

What about the deep offshore? For one thing, it is extremely expensive to explore there, with the cost of drilling a single well often reaching $100 million. Furthermore, the thick blanket of sedimentary rocks from which petroleum is derived typically thins to nothing a few tens of kilometres offshore – oil will not be found in the middle of the world’s oceans.

Andrew Miall Former president, Academy of Science, the Royal Society of Canada; professor of geology, University of Toronto.
(29 February 2012)
The first part of this series is also online: Facing the Facts on Fossil Fuel

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