Peak oil – June 23

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

Many more articles are available through the Energy Bulletin homepage

Experts Say Oil Likely To Go And Stay Up
Marc Kramer, The Bulletin (Philadelphia)
Like every American, I want to know why the price of oil is up, will it ever go down and what can take its place? My personal feeling is that the price of oil is up because traders, not usage, are driving up the price. I recently interviewed Brian Hicks, co-author of Profit from the Peak, about what we can expect of oil pricing going forward and what business opportunities will arise because of high costs. Mr. Hicks is the managing editor of Energy and Capital and The $20 Trillion Report. Mr. Hicks writes a weekly column for Wealth Daily concerning high-profit opportunities in the ever-tumultuous geopolitical environment.

Kramer: Why did you and Chris Nelder write Profit from the Peak?

Hicks: Chris and I have been students of Peak Oil for over 5 now years. We consider it to be the most significant crisis facing the world this century. There have been many books written about Peak Oil mainly presenting the negative consequences of the end of cheap oil.

But being inherently optimists, we wanted to present the other side of the issue … the opportunity. We believe that every crisis contains the blueprint for its own solution, and PO is no different.

The world is undergoing an epic energy shift. What happens today will impact our world for decades to come. And right now, the investment community is funneling billions of dollars into renewable and alternative energy. Some estimate that between $50 and $100 trillion has to be spent to solve this problem. Early investors are going to make a fortune. And we want to be there profiting the entire way. That’s why we wrote the book.
(20 June 2008)

Energy Future: A Significant Period of Discomfort
Thilo Kunzemann (ed), Allianz
Energy expert Robert Hirsch says the world would need 20 years to prepare for peak oil. But declining global oil production could just be a few years away. Read how we can prepare and ultimately “beat” this problem.

Q: You were the lead author of a groundbreaking 2005 study on future oil production and declining reserves. How is the situation three years later?

Hirsch: Today, the situation is worse, and the reason for this is that it is now obvious that world oil production is already on a plateau. It has reached a high level, and has leveled off. The point at which oil production will decline is probably not far away.

If the world started (to implement solutions) 20 years before the peak oil problem, we would have stood a very good chance of beating the problem and could have avoided significant negative consequences for our economy. As it turns out, we now don’t have 20 years; we don’t even have 10. It wouldn’t surprise me at all if oil production begins to decline within the next few years.

… Q: Why do you think peak oil is such a taboo?

Hirsch: The thing that is foremost in people’s mind when it comes to energy is climate change. People have pushed hard and governments have taken actions to cut down on the emissions of CO2. But in many cases, decisions are opposite to what we need to mitigate the problem of declining world oil supplies.

… A lot of this is bad news, and I think it is important that people face up to bad news, get prepared, and dig in to work the oil problem. I have faith in humans. We will beat this problem, but we are in for a significant period of discomfort.
(20 June 2008)
Robert Hirsch was on CNBC today: Plans for fixing the energy crisis (video). He said that $500 a barrel oil is a real possibility within the next three to five years. He advocates the use of coal and downplays global warming. -BA

The Millennium Institute T21 model shows the US economy “cracking” (Great Depression II) at $315 to $350/barrel. Reduced demand drops oil prices back to $200/barrel despite lower supplies. However modeling such cascading economic failures is suspect.

Hirsch’s Long View vs. Saudi’s Short View: How to Invest?
Jim Kingsdale, Energy Investment Strategies
If I were asked to recommend an energy advisory team for the next President I’d start with Robert Hirsch. Hirsch is a defense planning expert who has headed up major consulting assignments for the Defense Department among other clients and in 2005 published a major study of the impacts and potential mitigation of Peak Oil. It famously forecast that a successful transition from oil dependency would need to start 20 years before oil production peaked.

In the interview below published on a web site operated by Allianz, the German financial giant, Hirsch outlines the problems of Peak Oil as he sees them today. He believes the crisis will be upon us within a few years, which is consistent with the predictions by other experts such as Simmons, Skrebowski, and Maxwell as I have previously reported, all of whom believe oil production will begin declining within a few years.

What Hirsch adds uniquely is a more nuanced vision of the limits to our economy’s ability to cope with peak oil. Hirsch’s discussion of the economic constriction and great weakness in financial markets that he expects will constrain our normal capacity for remediation of the problems is particularly sobering because of his expertise in evaluating exactly such macroeconomic questions.
(21 June 2008)
Kingsdale can’t resist this quip his website: “Oil and Gas: What mortals these fuels be.” Article also appears at Seeking Alpha.

Oil, oil everywhere? Well, just maybe
Sarah Barmak, The Star
An English industry insider says we’ve grossly underestimated our reserves. Could he be right?
—
Ask him about oil, and Dr. Richard Pike has a rather sunny outlook. Oil and gas, he says confidently, will be around well into the next century.

Pike can maintain his optimism because he knows something no one else knows. He believes that a simple mathematical error – the sort made by first-year university statistics students – is causing much of our panic over a worldwide oil shortage.

It’s an error that oil companies, riding high on skyrocketing crude prices, may want you to believe.

“This might be hard for some of your readers to take,” he warns. With oil at $132 a barrel yesterday, tensions over gas prices are at a boiling point. But listen, he says: at 1.2 trillion barrels, we have grossly underestimated the world’s proven oil reserves. If he’s right, we likely have double the amount of recoverable oil that we think we have in the ground, or perhaps even more.

… The idea that oil firms could be fudging their numbers to raise prices is not new, points out Paul Roberts, author of The End of Oil. But the idea that anyone could keep an extra trillion barrels of oil secret is hard to accept.

“There are so many people, so many players looking for precisely that. Countries will move the moon and stars to get to that oil if it is there,” says Roberts.

“If you and I are having this conversation, they’ve been having it for years. At some point the conspiracy theory breaks down.”
(21 June 2008)

Dr Richard Pike: on proved reserves, peak oil and carbon dioxide (video and text)
Chris Vernon, The Oil Drum: Europe
Below the fold we have a video of Dr Richard Pike, CEO The Royal Society of Chemistry, discussing his belief that there is twice as much oil in the ground as major oil producers would have us believe.

Pike spends his time explaining how the 1.2 trillion barrels of proved reserve does not tell the whole story, putting to one side for a moment questionable OPEC revisions, of course this is true.

After explaining how there is likely lots more oil, Pike then states “oil will peak pretty soon” due to limited infrastructure. This isn’t a very helpful debate though. At the extreme, with infinite infrastructure we could extract all the oil in one afternoon. A little more realistically, if we managed through some Herculean global effort akin to a wartime mobilisation, to double the oil infrastructure over the next decade we’d surely sail through 2020 at 100mbpd. This isn’t the point though.

Yes there may be an “oil shortage myth” but debunking that myth doesn’t debunk the limited flow rate fact.

Yes there is lots of oil but that is only one aspect of this multivariate problem. Reality is a function of geology, infrastructure, capital, labour, geopolitics etc.

The connection he makes between proven & probable reserves and carbon dioxide is important though. The peak oil problem is more to do with flow rates than the ultimately recoverable reserve (URR). The CO2 problem is more to do with URR than flow rates.
(21 June 2008)
Video at original.

PEAK OIL & THE MEDIA How bad can the NEWS get?
Vancouver Peak Oil
Panel Discussion 7pm-10pm – Sat. July 12th

How bad can the NEWS get?

Skyrocketing prices at the gas pump.
Food shortages worldwide.
Economy going into recession.
Tar sands an environmental disaster.
Global conflict over oil and other scarce resources.

There is one thread that ties it all together into one Big Picture: ENERGY.

Are the MEDIA in Vancouver telling you the whole story?

Join us for a panel discussion with some of Metro Vancouver’s top
journalists about how the media is (and isn’t) reporting on the imminent
global energy shortage that’s going to change our lives, and what our city
can do to prepare. Brought to you by Vancouver Peak Oil and friends.

Panelists will include:
Barbara Yaffe from the Vancouver Sun
Charlie Smith from The Georgia Straight
Rex Weyler from the Tyee and Vancouver Peak Oil Executive

What is the Vancouver Peak Oil Executive?
The VPOE is a small working group set up within Vancouver Peak Oil specifically to network with government, NGO’s, foundations, citizens’ groups and the media, so as to build awareness of the potential effects on the metro Vancouver area of an imminent shortage of oil and other critical natural resources. This working group is currently in the planning stages of a Vancouver Peak Oil Task Force, as well as a series of evening panels featuring representatives from local media, government, NGO’s and the business community to discuss how to get our region ready for Peak Oil.
(11 June 2008)

Do High Petroleum Prices Mean We’ve Reached ‘Peak Oil’?
Jasmin Malik Chua, Live Science via Fox News
With the cost of crude oil surging to record highs, a heated battle of blame is in full swing, with a lineup of suspects that includes the oil industry, Congress, commodity speculators, environmentalists and developing countries in Asia.

Meanwhile, predictions that we’ve reached a peak in oil production or will very soon – dismissed only a few years ago as being alarmist and without merit – are receiving more serious consideration.

The problem is, nobody really knows how much oil is down there.
(20 June 2008)

Primer: Peak Oil
Kenneth Stier, CNBC
… So far, there is no definitive indication that production is headed southward, much less that any decline is permanent. Saudi Arabia, for instance, recently demonstrated its heft by bringing on excess capacity.

To be sure there are warning signs. Global production fell last year (by 0.2 percent), while consumption continued to grow (by 1.1 percent), and peak oil proponents (which includes an international association) say this squeeze will really bite by 2010.

Skeptics insist oil remains a cyclical business, where the question is always how much oil at a certain price. By this reckoning, today’s high prices will eventually lead to more supply – through more exploration, enhanced recovery and development of “unconventional” oil.

Geological variables are just part of the supply equation. Human factors – politics, taxes, investment levels, and that 80 percent of the world’s oil is state-controlled – can be equally important.

It’s no wonder, then, that passions can run high in the peak oil debate, sometimes to a pitch that makes it a challenge to bring rival camps to share a stage. That’s where a cyber soapbox comes in handy. Here we present two opposing views from long-sparring rivals.

[Matthew Simmons and Michael Lynch]
(20 June 2008)