Peak oil – May 12

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

Many more articles are available through the Energy Bulletin homepage

ASPO President Kjell Aleklett has started a blog
Kjell Aleklett, Aleklett’s Energy Mix
Kjell Aleklett, president of ASPO-International, has started a blog. The blog text is written in Swedish but some of the blogs will be translated to English by Michael Lardelli, who lives in Adelaide, Australia. Michael has lived in Sweden for some years. The English text will follow the Swedish text in the blog.

Vienna and OPEC (May 12)

… will OPEC and the office in Vienna be a center of power in the future? My view is that their importance will decline and that they will not be. Rather, individual nations will try to be their own centers of power.

The role model for OECD is The Railroad Commission of Texas:

“The East Texas oil field´s discovery sparked a boom in production that sent prices plummeting. After a lengthy battle, the Railroad Commission won the right to limit the production of oil to keep the price of oil from falling too low. Because of this regulation, the commission was important to the national and international energy supply until the 1970s. It also served as a model in the creation of OPEC.”

Few know that in the free market’s promised land, the USA, an oil cartel operated until 1970. When the USA reached Peak Oil in 1971 the Commission lost its influence once there was no longer any reason to regulate production. Many of the nations in OPEC have already passed Peak Oil and that means that they cannot fulfill their production quotas. Within 10 years no one will care which quotas particular nations have and, if the OPEC office in Vienna still exists, no one will care about its press releases. As the “The Railroad Commission of Texas” lost its influence so too will its successor, OPEC.
(May 2008)
ASPO International.

The End of OPEC
Jim Kingsdale, Seeking Alpha
Churchill’s assessment applies to the current oil situation: this is the beginning of the end of OPEC. That much is obvious; the more interesting question is “why?”

OPEC was founded in 1960 to protect the interest of its members, major oil exporting nations. That interest is to stabilize world oil prices at levels that balance their competing objectives to maximize both long term oil demand and the short term oil price. The idea was to keep enough oil off the market during glut periods to elevate the price and insert enough oil onto markets and lower prices during crises to prevent a global recession and to subvert movements toward substitutions for oil.

The cartel has struggled with both tasks. They have had some successes and some failures in keeping short term prices high. But since prices broke out of the $30 ceiling in 2003, OPEC had had little success in containing the price rise. Now analysts are increasingly questioning whether OPEC is able to contain oil prices. Whether they can or not will soon become evident. Regardless of whether OPEC can lower oil prices in the near term, it is clear that soon enough OPEC will not have that ability.

Let me digress for one moment to address the concept of Peak Oil, because I need to use the term.

… Why will OPEC end? Well, clearly once they are known to have no power they will have no reason to exist. But even before that, I suspect they may wake up to the fact that OPEC no longer benefits their members. While their powers have diminished to nearly zero, they are increasingly being blamed for the rise in oil prices that is starting to become a serious problem for the global economy and is already a disaster for the world’s poor.
(11 May 2008)

Peak Oil and what it means to Long Island (audio)
WRHU Radio (Hofstra University, Hempstead NY)
Are we prepared for the end of the oil age and what does it mean to Long Island?

Interview with Isidore Doroski, Chairman of the Riverhead Town Energy Advisory Committee and currently head of the inspection program of wastewater treatment plants in Suffolk County.

Produced by Radio Hofstra University (WRHU).
(October 2007 interview)
Isidore Doroski is a very articulate spokesperson and covers all the bases during this long interview. Article covering another talk he gave: Cuthbertson Sponsors Peak Oil Seminar (8/21/07).

Contributor Isidore Doroski writes:
I was interviewed in my house. Note that this interview does not necessarily represent the opinions or viewpoints of Riverhead Town officials or that of the Riverhead Town Energy Advisory Committee.

Low supply means it’s the end of the road for cheap oil
Suhail Arain, Scotsman
… Most of the world’s large oil basins have been discovered and exploited. The remaining reserves are often difficult to get at, frozen in the Arctic or submerged beneath deep oceans, and tend to be smaller than previous discoveries. As a result, new production has failed to keep pace with the rate of depletion. This gap is only likely to widen.

Half of the world’s current oil production comes from 500 fields, most of which are fairly mature and past their point of peak production. The most accessible oil comes out of the ground first, so future production from these fields is more challenging. While there are a number of new projects scheduled over the next seven years, they won’t make up for declines in production at existing fields.

… So are we witnessing the end of cheap oil? In the short term, prices can be affected by geopolitical concerns and an element of speculation.

But unless significant new reserves are found – and can be extracted relatively easily – the comparatively low prices that OECD countries have paid to fuel their lives may be a thing of the past.

Suhail Arain is investment director, US equities, at Scottish Widows Investment Partnership
(11 May 2008)
UPDATE (May 13) Contributor Doug Low writes:
The article was published in yesterday’s Scotland on Sunday (what the Scotsman newspaper is called on a Sunday). The article itself is an excellent one, but unfortunately it was on page 8 of the Business and Money section, so I am not sure that anyone outside the Peak Oil community, and perhaps a handful who read the SOS’s business section, actually saw the article.