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BP economist: World’s oil is plentiful
Known reserves have risen for last 15 years
Joe Hanel, Durango Herald
DENVER – The world has plenty of oil left, although China has a growing appetite for all sorts of energy. That was the message a senior BP economist had at a Thursday presentation sponsored by the Denver Chamber of Commerce.
Mark Finley, head of energy analysis at BP’s London headquarters, walked the group of about 20 through BP’s annual Statistical Review of World Energy, which was released this month. Drivers might wince at high gas prices, but it’s a sign of a well-functioning oil market, not a crisis, Finley said.
“The world’s not running out of oil,” he said. The world has enough reserves to pump oil for 40 years at the current production rates, assuming no new oil sources are found, according to the BP review. “Reserves have risen 15 years in a row, and I think that’s the picture to take out of here,” Finley said.
BP is well-known locally as the dominant gas producer in Southwest Colorado. It started publishing the statistical review 56 years ago, and the booklet has become a well-regarded source for energy companies.
… The first three audience questions reflected concern about an outside-the-mainstream theory called Peak Oil, which says world petroleum production might soon begin to fall.
Randy Udall of Carbondale helped found the U.S. chapter of the Association for the Study of Peak Oil. In a telephone interview, he praised BP for putting together such a useful booklet, but said the company is too willing to believe what foreign governments say about their oil reserves.
“Probably the single greatest flaw is it tends to give the impression that the global energy situation is well-managed and under control,” Udall said.
Sixty percent of the world’s proven oil reserves are in the Middle East, according to the BP review, but none of the governments there have allowed audits of how much oil they actually possess.
Kuwait, for example, lists the same reserves as it did 10 years ago, despite a decade of heavy production, Udall said.
Finley admits that BP has to rely on official government numbers, because no other reliable data exist. Critics of Saudi Arabia, which has the world’s largest oil fields, have questioned how much the kingdom can increase its production.
Luxurious home available near Durango Colorado
“Our inclination is to give the Saudis the benefit of the doubt,” Finley said. “They’ve delivered in the past when they needed to.”
(29 June 2007)
It doesn’t ring true, that hard-boiled oil executives, accustomed to the Machiavellian world of oil politics, should “give the Saudis the benefit of the doubt.” You don’t get to the top of a tough business by making touching gestures of faith, when a mistake could have catastrophic consequences for your business. -BA
Peak Oil Theorists Gush Obfuscation!
Raymond J. Learsy, Huffington Post
I know its too much to expect that determined peak oil theorists like ASPO co-founder Steve Andrews will suddenly admit they’re wrong-no matter how many times their predictions of doomsday come and go without the world coming to an end. Sometimes all you can do is to shake your head at the stubborn denial. But Mr. Andrew’s rejoinder here on the Huffington Post, to my “Peak Oil is Snake Oil!” piece of 6/25/07 requires some untangling to get at the pertinent facts.
The first thing that happens is that ASPO simply changes the text of their argumentation, whereby reference to flawed geological studies by the likes of Hubbert and Coleman are conveniently bolstered by geopolitical observations that have little or nothing to do with the purported “science” of peak oil.
…Fifty years ago when Hubbert made his predictions that worldwide output would peak in 2000, as did many others since that first well in Pennsylvania, with varying peak dates along the way (and set forth at length in my book, “Over a Barrel: Breaking the Middle East Oil Cartel”). He had no way of knowing what impact the new technologies would have on exploration and production. Today’s peak oil spinmeisters have no such excuse!
(29 June 2007)
Learsy does not provide any new insights about peak oil. However he does provide a wonderful opportunity to explain the issue to a new audience. I’m not sure why his column appears in the liberal Huffington Post. According to his biography:
Raymond J. Learsy is the author of the book Over a Barrel: Breaking the Middle East Oil Cartel. A graduate of the Wharton School, he made his life in the fast-paced, risk-filled world of commodities trading, beginning in 1959. In 1963, he started his own firm and over twenty years expanded from the U.S. into Canada, the United Kingdom, Luxembourg, Brazil, and Pakistan, trading in an array of bulk raw materials and commodities, shipping to customers worldwide. In the 1980s, he shifted gears as a private investor, from 1982 to 1988, served as a Reagan appointee to the National Endowment for the Arts. Currently, he is a member of the Woodrow Wilson International Center for Scholars. Learsy’s richly-informed analysis of the international oil trade, OPEC, and its impact on the American and world economy has been featured in the National Review Online and the New York Times.
Unrest Grows Amid Gas Rationing in Iran
Nazila Fathi and Jad Mouawad, NY Times
Unrest spread in Tehran on Thursday, the second day of gasoline rationing in oil-rich Iran, with drivers lining up for miles, gas stations being set on fire and state-run banks and business centers coming under attack. . .
…The anger posed a keen threat to President Mahmoud Ahmadinejad, who was elected two years ago on a platform of bringing income from oil to the nation’s households. Instead, even though Iran is one of the world’s largest producers of crude oil, it has been forced to import about 40 percent of its gasoline at an annual cost of $5 billion to make up for shortfalls in its archaic refining industry.
Some analysts said the decision to ration gasoline was intended to prepare for the possibility of more United Nations economic sanctions as a result of concern over Iran’s nuclear program.
…Saeed Leylaz, an economist and political analyst in Tehran, said, “The high gasoline consumption has made Iran very vulnerable, and this is a security decision now.”
“We are importing gasoline from 16 different countries,” he said. “The country would be on the verge of collapse if they suddenly decide not to sell us gasoline. The government has to find a way to lower the consumption.”
In Washington on Thursday, leaders of a bipartisan House panel, led by Representative Mark Steven Kirk, Republican of Illinois, and Representative Robert E. Andrews, Democrat of New Jersey, proposed legislation intended to punish any company that provides Iran with gasoline or helps it import gasoline after Dec. 31. Such a company could lose its access to American customers through sanctions.
The Iranian government had planned for a year to ration gasoline but had postponed the move, fearing unrest. Iran offers the highest subsidies for gasoline in the region, buying foreign gasoline for slightly more than $2 a gallon, according to official figures, and offering it for 34 cents a gallon.
. . .Longstanding discount prices have encouraged gasoline consumption in Iran, where many people believe that the vast oil resources make cheap gasoline a basic right.
“There is no reason why we should pay the same price as people outside Iran do,” said Amir Aram, a carpenter in Tehran. “We have all this oil beneath our feet and have to wait for hours in line to get our ration.”
(28 June 2007)
BA: The article shows why oil is much more than an economic commodity. In times of political tensions, states use oil supply as a weapon, as the United States is threatening to do now.
Contributor Jeffrey J. Brown writes:
This article precisely illustrates why it will be so difficult for oil exporting countries to curtail domestic demand in favor of foreign consumers, and it therefore also illustrates why net oil exports will decline much faster than overall world crude oil production declines.
He also points to a recent PIW headline “that says a lot in a very few words”:
Petroleum Intelligence Weekly Headline (6/22/07):
Iraqi Crude Exports Rise to US, Drop Sharply to Asia in June
“Which is fine,” he writes, “as long as US troops are willing to die to keep the oil flowing.”
Canada Energy Round-Up
Stoneleigh, The Oil Drum: Canada
News headlines related to peak oil, from a Canadian perspective.
(29 June 2007)
Negawatts On Demand
Big Gav, Peak Energy
News headlines related to peak oil, from a Australian perspective.
(29 June 2007)
ENERGY INDUSTRY
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