Mainstream confronts peak oil – Mar 17

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

Many more articles are availa through the Energy Bulletin homepage

Sleepily eyeing a peak in world oil output
David R. Francis, Christian Science Monitor
Last week the price of crude oil broke new records, running about $110 a barrel. That’s well above the previous record (in inflation-adjusted dollars) reached in 1980 after the revolution in Iran resulted in the nationalization of its oil.

Since tanks of crude are full to brimming, many traders in oil markets suspect that $110 could be the top price for now. But a growing number of oil-market analysts reckon the supply of oil to the world economy has reached a peak or is about to. The discoveries of new oil are now exceeded by the output of old oil. At some point, global oil output will start to decline, as happened in the United States in 1971.

If that is the case, before long $100-a-barrel oil will be regarded as “the good old days,” says Robert Hirsch, a senior energy analyst at Management Information Services, Inc., a Washington, D.C., research and consulting firm.

… The peak for production of conventional liquid crude has or will occur sometime between 2005 to 2016, says Roger Bentley, an advocate of the peak-oil view at Reading University in Britain.
(17 March 2008)

Schlesinger: No Energy Security in Sight
Marianne Lavelle, U.S.News & World Report (journalist’s blog)
James Schlesinger, who was the nation’s first secretary of energy, had a grim analysis of the nation’s current energy predicament this morning at an energy summit in Washington, D.C., sponsored by the National Academy of Sciences. Schlesinger, now a senior adviser to Lehman Brothers and chairman of the nonprofit engineering organization Mitre, predicted that energy prices would continue to rise and declared that the United States would never see energy independence as long as it depended on the internal combustion engine.

… Schlesinger said that he would not get into the question of “peak oil”-whether oil is running out-and added that those who believed it was were ignoring the impact of technological improvements motivated by higher prices. “Some of the arguments about peak oil are theological,” he said. However, he went on to sound much like a peak oiler-pointing out that most of the world’s oil came from super fields discovered decades ago that were now in decline. Also, he noted the National Petroleum Council’s observation that conventional oil production would plateau because of the geopolitical limitations on access to oil.

“But whatever the reason, bear in mind we face a painful transition to the future in which we hit a limitation or a plateau on the ability to produce crude oil, and we might begin to effectively make adjustment now rather than later,” he said. If the world continues on its current path of oil use, we must find and develop the equivalent of nine more Saudi Arabias, Schlesinger said, adding, “I think the probability of being that successful is very low.”
(13 March 2008)

Running on empty?
Hannah Hoag, Montreal Gazette
The latest spike in oil prices doesn’t mean we’re getting down to the last drop. The fact is nobody knows how long the Earth’s reserves will last
—
Depending on whom you listen to, global oil production has peaked, will peak soon, or may not peak for a very long time.

Although the peak-oil thesis has existed since the 1950s, it has gained considerably more attention in recent months with the rising price of oil.

… According to the “peak oil primer” compiled by the Energy Bulletin, an online clearinghouse for information on the topic, the peak in oil production doesn’t signify ‘running out of oil’ so much as the end of cheap oil. “Once we have used up about half of the original reserves, oil production becomes ever more likely to stop growing and begin a terminal decline.”

… Many oil companies dismiss the idea of peak oil. Instead they favour the plateau theory: the leveling off of oil production over many years.
(15 March 2008)
Thanks to Hannah Hoag for the mention. -BA

Oil dependency fuels crisis
David Olive, Toronto Star
Imagine the most hopeful scenario for increasing global oil supplies to keep pace with anticipated demand over the next few decades, and you’ll likely still fall short of projected consumption.

The world oil price hit a new high of $110 (U.S.) a barrel last week, an 11-fold increase over the past decade. In the energy crisis of the 1970s, a soaring crude price spurred the discovery of new reserves and prodded consumers and industry to slash their oil consumption. The oil price collapsed and spent the last two decades of the century in the doldrums.

It’s very different this time.

Consumers haven’t panicked over rising prices, perhaps because they haven’t been confronted with the block-long line-ups at filling stations that marked the “oil shocks” of 1973 and 1979. More ominously, we’ve run out of easily accessible oil reserves.
(16 March 2008)

Global “Oil Shock” Rattles World Stock markets
Gary Dorsch, International Business Times
… On Feb 15th, Fed chief Ben Bernanke played down the threat of spiraling energy and food prices, saying “inflation expectations remain reasonably well anchored,” then signaled another rate cut in March, as an “insurance policy to head off an economic recession.” Since then, the price of crude oil has surged $17 /barrel, and is wrecking havoc on Wall Street and other major stock markets around the globe.

Global investors are plowing money into crude oil, because the longer-term fundamentals are bullish. The International Energy Agency is predicting that global oil demand will rise 2% this year to a record 87.5 million barrels per day. And a growing number of oil investors subscribe to the “Peak Oil” theory that holds to the belief that the global oil supply has already maxed out at 85 million per day.

The “Peak Oil” theory refers to the inevitability of a peak in global oil production. Oil is a finite, non-renewable resource, and once half of the original reserves are depleted, oil production is likely to stop growing and then begin a terminal decline. Of the 65 largest oil producing countries in the world, 54 are past their “Peak Oil” production and are now in decline, including the USA, down 11% since 1971, and the UKs North Sea down 27% since peaking in 1999.

Other big oil producers in decline include Australia, down 26% since 2001, and Norway, down 13% since 2001. The Cantarell oil field, Mexicos largest has also peaked with its output falling to 1.7 million bpd in 2007, down from its peak output of 2.1 million bpd. Thus, global oil demand is expected to exceed supply in the second half of this year, and the oil deficit will only grow wider in 2009, unless the global economy sinks into a sharp recession.
Gary Dorsch is Editor of Global Money Trends
(14 March 2008)
Long article. Contributor driller writes:
I had no time to check if the author’s graphs and statements are correct.
These show impressively strong correlations between the (recent) stock markets and oil price as well as with the dollar/euro ratio. I am somewhat surprised, e.g. because I read elsewhere that in fact there is rather little correlation between oil and euro/dollar (being overstated in the media).

Peak Oil? Industry Numbers Disagree
Keith Johnson, Environmental Capital, Wall Street Journal
The supply of oil, one of the most crucial elements for all energy choices-renewable or otherwise-is a subject of dispute even among the denizens of the industry.

The “peak-oil” debate returned on the final day of The Wall Street Journal’s “ECO:nomics” conference, politely pitting a reluctant oil-industry worrier, Christophe de Margerie, head of France’s Total SA, against Daniel Yergin, head of bullish Cambridge Energy Research Associates. The question they hashed out: What does a $110-a-barrel price say about the supply of oil?

Mr. Yergin’s view: Not much that’s fundamental. Today’s high price is “not about the supply and demand of oil, it’s about the supply and demand of dollars,” Mr. Yergin said, citing a “flight to commodities” by investors skittish about the credit-market crunch. That shift is artificially inflating the price of oil as a hedge against inflation and a weak dollar, he said.

“This is the fifth time we’ve run out of oil,” he deadpanned, recounting past ostensible crises in the industry and talking up his company’s big database of global oil information. “With the data, you don’t see a peak.” CERA currently thinks the new ceiling of global oil production is 105 million barrels a day, and that’s only because personnel and equipment shortages are delaying new projects.

Mr. de Margerie was less sanguine. “There’s a virtual world, and then there’s reality,” he said. The crunch is due to a slate of “above-ground” factors that make it unlikely the world will ever produce the amounts of oil Mr. Yergin or the International Energy Agency think it will, Mr. de Margerie said. That includes sudden and voracious demand from China and India; cost issues that make exploration more expensive for companies; geopolitical barriers that make that exploration untenable; and environmental constraints that hamstring oil production in way they never did before.
(14 March 2008)

Peak oil at ECO:nomics conference on Friday
Matt Kettmann, Santa Barbara Independent
Bacara Conference Comes to a Close with Talk of Ethanol, Solar, Wind, Nuclear, Philanthropy, and Oil
—
The Wall Street Journal’s “ECO:nomics” conference at Bacara came to a close on Friday with the newspaper’s publisher Robert Thompson saying that it would happen again next year with “absolute certainty.”

… OIL

Today, oil prices reached $110 a barrel, which made the “Oil: The End of an Era?” talk one of the more anticipated. Featuring Christophe de Margerie of Total and Daniel Yergin of Cambridge Energy Research Associates, the talk centered on the political boundaries to oil extraction and downplayed any sort of “below-the-ground” limitations that peak oil believers espouse.

“I think that is the main restraint,” said Yergin, whose book The Prize: The Epic Quest for Oil, Money, and Power is considered required reading by the energy industry. “This isn’t meant as a joke,” Yergin quipped in attacking peak oil theories, “but this is the fifth time we’ve run out of oil.” He said the end of oil was predicted way back in the 1880s, yet it’s still flowing.

Margerie said that his “first responsibility is to bring clean energy to the consumers,” intimating that he must overcome any opposition – whether environmental or political – to doing so. “The problem today is not reserves,” said Margerie, explaining that the problem is that environmental protection is something that has become the first priority. To the next generation, he explained, it’s the “wrong message to send that we can live without carbon.”

Thought not a very exciting panel, the oil discussion went on longer than any other, as the conference organizers had to stall in order to give the governor time to reach the stage.
(14 March 2008)
It’s too bad that for the peak oil panel only contained oil industry representatives who dispensed the usual talking points. There are plenty of peak oil speakers who would have livened up things up! -BA

French PM warns that we are running out of oil
Jerome a Paris, The Oil Drum: Europe
Oil: François Fillon says we have to move to other energy sources

“Speaking of gas, we have to get in our minds that there is no other solution to this question than to move to other energy sources because we are facing a forewarned shortage”

(…) “If we tell the French: ‘don’t worry, we’ll find artificial ways to lower the price of gas and you can continue to use gasoline as before’, it’s a lie”, warned the head of government. “We have to put all available money on alternative energy R&D”

(13 March 2008)
Translation from the French: Pétrole: François Fillon prône de “changer progressivement de sources d’énergie”.