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Oil Industry Offers Sobering Outlook on Supply
Jad Mouawad, New York Times
It started with a simple question by Samuel W. Bodman, the energy secretary: “What does the future hold for oil and natural gas supply?”
The query was made in October 2005 in a one-page letter sent to Lee Raymond, the former chairman of Exxon Mobil and head of the National Petroleum Council, a federal advisory group representing the oil industry.
After nearly two years, Mr. Raymond has finally delivered his answer.
The result is a colossal 476-page study entitled “Facing the Hard Truths About Energy” that involved 350 participants, suggestions from over 1,000 people, submissions by 19 foreign governments from Australia to Saudi Arabia, and dozens of subcommittees.
The report, which was made public in Washington today, was billed as one of the most comprehensive analyses of the world’s energy challenge.
…Most strikingly, some of the recommendations adopted by the petroleum council also probably far exceed what Mr. Bodman had in mind, or what the Bush Administration is prepared to endorse.
…Although it does not say so explicitly, the subtext of the council’s study suggests that high energy prices might be here to stay.
…Given that the report reflects the views of the oil industry, some of its conclusions would seem hardly surprising – for example, in dismissing predictions from so-called peak oil theorists that the world’s oil deposits are on the decline. Quite the contrary, the industry’s view is that the world’s resources remain abundant.
“Fortunately, the world is not running out of energy resources,” the report says in a 40-page summary. “Coal, oil, and natural gas will remain indispensable to meeting total projected energy demand growth.”
…There were other surprises. The petroleum council said that the United States government should take steps to reduce oil consumption. In fact, the report’s first recommendation is a call for the government to moderate energy demand by increasing vehicle fuel economy standards, the main sources of growth in oil demand around the world, and improve energy efficiency at buildings and homes.
“The world will need better energy efficiency and all economic, environmentally responsible energy sources available to support and sustain future growth,” the petroleum council’s report says.
Perhaps the biggest surprise is that Mr. Raymond, who was well known for his skepticism of the causes of global warming when he was chairman of Exxon Mobil, has given his backing to a report addressing how oil companies should deal with carbon emissions on a global level.
…the bias toward the industry’s view is not a surprise given the history of the council. It was created by President Harry Truman in 1946 to represent the position of the oil and gas industry to the federal government, and recommend policy options, after their successful wartime collaboration.
(18 July 2007)
Also posted at International Herald Tribune.
Nicely written article. Unfortunately, Jad Mouawad misunderstands the peak oil analysis. At the point of peak petroleum production, there are still abundant energy resources – this is not in dispute. However, petroleum deposits will become more difficult to develop and oil will become more expensive. Both the IEA and the NPC reports seem to have come to this conlusion as well, although they are loathe to use the term “peak oil.” -BA
US Oil Indus Urges Energy Efficiency, New Fuels, CO2 Cost
Ian Talley, Dow Jones Newswires
Warning that conventional oil and gas supplies will fall short of meeting accelerating global energy demand, the U.S. oil industry urged the government Wednesday to boost energy efficiency, encourage the production and use of alternative fuels and establish an economy-wide cost for emitting carbon dioxide.
In its report, titled “Facing the Hard Truths about Energy,” the National Petroleum Council said coal, oil and natural gas would be indispensable when it comes to meeting total projected energy demand growth over the next 25 years. However, many of the group’s recommendations focused on policies not traditionally associated with Big Oil.
Wednesday’s report could add political momentum to energy legislation currently under consideration in Congress, including measures to reform fuel- economy standards and boost biofuel production. It also could pressure lawmakers to include more fossil fuel production in the future energy portfolio. Energy Secretary Samuel Bodman requested the report in 2005.
“The world is not running out of energy resources, but there are accumulating risks to continuing expansion of oil and natural gas production from the conventional sources relied upon historically,” said Alan Kelly, who was ExxonMobil Corp.’s (XOM) general manager of corporate planning before he was selected for this project. “These risks create significant challenges to meeting projected total energy demand.”
To mitigate the risks, the report said it will urge “expansion of all economic energy sources,” including coal, nuclear, biomass, renewables and unconventional oil and natural gas such as that from oil shale and tar sands.
… Unsurprisingly, most of the NPC report focused on recommendations for increased access to domestic reserves of conventional oil and gas and the development of unconventional petroleum resources. Given the growing difficulties in accessing global resources as many producers nationalize assets, the NPC also said the government needed to better integrate energy concerns into foreign policy.
But the group also said the government should increase vehicle fuel-efficiency standards to the maximum rate that is economically feasible and encourage more aggressive energy-efficiency standards for industry and buildings.
…The council also warned against notions of “energy independence,” the ideological platform Democratic leaders in Congress have based their energy policies upon.
(18 July 2007)
The last paragraph quoted is out of place in a professional piece of journalism. First, the term “ideological platform” is tendentious (“You have an ideology; I have a values“). Secondly, advocates of “energy independence” are to be found across the political spectrum, including military and intelligence thinkers (for example, several ex-heads of the CIA.) The most vocal critics of “energy independence”, not surprisingly, are oil companies with operations outside the US. -BA
Peak Oil Booklet – Introduction and Chapter 1 – What Is Peak Oil?
Gail Tverberg, The Oil Drum
On June 26, I posted an article titled Peak Oil Overview – June 2006. A number of you made comments. In this post, I take the initial steps toward expanding the June 26 post into a booklet that could be available with links on TOD, as a PDF, and also could be self-published. I say self-published, because I doubt that a regular publisher would want to publish something that is available without charge on the web. Also, I think there would be a long time-delay in getting it published by a regular publisher. The Appendices would provide supplementary material if the booklet is used is a classroom situation, or if a person wants more background.
This post includes a proposed Introduction and Chapter 1: What Is Peak Oil? I would be interested in hearing people’s comments and suggestions. A PDF of Chapter 1 is included at the end of this story.
Introduction
Chapter 1: What Is Peak Oil?
Chapter 2: Is This a False Alarm?
Chapter 3: Consequences of Peak Oil
Chapter 4: What Should We Do Now?
Chapter 5: Where Can We Get Reliable information?
Appendices:
Appendix A: How Oil Is Produced and Traded
Appendix B: Countries Already Reporting Energy Shortages
Appendix C: Rear Admiral Hyman Rickover’s 1957 Speech “Energy and Our Future”
Appendix D: Discussion Questions for Classroom Use
(17 July 2007)
Author Gail Tverberg (“Gail the Actuary”) has explained peak oil and energy issues in a number of clearly-written articles.
Chapter 2 is also posted. -BA
The IEA’S Come-to-Jesus Moment
Chris Nelder, Energy and Capital
Q: What’s the difference between an oil analyst and a used car salesman?
A: The used car salesman knows when he’s lying.
That’s a variation on the old joke about computer salesmen, but it can apply just as well to oil market analysts–such as the roughly 150 energy analysts and statisticians who work for the International Energy Association (IEA), the Paris-based agency that advises 26 OECD nations on energy.
On Monday this week, they had what I would consider a “come-to-Jesus moment,” walking before the whole world to the front of the tent, admitting their unworthiness and publicly confessing their sins.
The confession was in their bombshell “Medium Term Oil Market Report,” which looks at the global oil market over the next five years. And it was stark:
Despite four years of high oil prices, this report sees increasing market tightness beyond 2010 . . . It is possible that the supply crunch could be deferred–but not by much.
That was enough to set blogs and presses and email systems afire the world over. I was deluged with emails and phone calls about it. So I checked it out.
It’s a decent piece of work, 82 pages with lots of good charts and data. It was also a welcome break from the delusional projections that the IEA has made for its entire 30-year existence, consistently predicting that supply will magically meet whatever the demand was projected to be.
Because for the first time, the IEA admitted that they have some doubts about oil supply keeping up with demand.
Their chart really says it all…
(13 July 2007)
Contributor Janaia Donaldson writes:
When the IEA admits we’re “plateauing,” something is happening.
The Greening of Entertainment Tech
Mark Fleischmann, Digital Trends
Some of you are really going to hate this column.
Lately I’ve been thinking a lot about my future. More specifically, I’ve been thinking about what an energy-scarce future might mean for my career as a writer and my chosen subject matter. I write about the audio/video universe: surround sound, big-screen television, and all the other products and issues that attend them. These things are products of an expansive age of cheap energy, an era when bigger is better, whether it’s your 7.1-channel audio system, your 60-inch TV screen, your McMansion, or your SUV.
There is ample evidence suggesting that this happy-go-lucky age is beginning to wind down, largely due to something called peak oil.
…Rash Predictions
Manufacturing will go local. Sure, most electronic products are made in Asia, but when fuel prices raise the cost of shipping beyond a certain level, much of that manufacturing will move back. It may be awhile before an iPod is made in the U.S. but speakers are obvious early candidates. They’re big, expensive to ship, made from fairly mundane parts and materials, and people can build them in their soon-to-be-empty garages (many hobbyists actually do). A generation or two ago, most audio and video equipment was still made in the U.S. Anything they can do, we can do, if economic conditions warrant.
New TV technology will keep the boobs tubing. Energy efficiency is not as big a factor in TV design as it should be. But when the need is upon us, we’ll find ways to save watts. …
(18 July 2007)
