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Oil peak theorist warns of chaos, war
Shawn McCarthy, Globe & Mail
WASHINGTON — Matt Simmons sounds the alarm like the Cassandra of the oil industry, warning that crude production has peaked and that looming energy shortages could derail global growth and even spark armed conflict.
As a prominent “peak oil” theorist, the veteran oil industry financier paints a grim picture of a world facing resource scarcity. Still, it doesn’t take a “peak-ist” to conclude that the global oil producers will find it increasingly difficult to keep up with growing demand.
He squared off yesterday against other experts who argue that the world has yet to reach the physical limits of oil production. But while they disagreed on the extent of the problem, the panelists at a U.S. Department of Energy conference in Washington concurred that future crude production will be constrained by physical, economic and political factors that add up to tight markets and higher oil prices.
Despite oil prices that have topped $100 (U.S.) a barrel, there was little sense at yesterday’s conference, put on by the Department of Energy’s Energy Information Administration, that high prices would spark either a boost in oil output or a sharp fall in global demand.
… James Schlesinger, who was the United States’ first energy secretary 30 years ago during the oil shock of the late 1970s, warned of a new crisis looming.
… “At some point during the decade immediately ahead, we will hit a plateau, and this will have a tremendous shock both economically and politically,” Mr. Schlesinger said.
(7 April 2008)
Simmons was on a panel discussing peak oil at the EIA conference Apr 7-8. Speeches and presentations from the conference are not yet posted at the EIA site.
C-SPAN broadcast the keynote addresses by Energy Secretary Samuel Bodman, former Energy Secretary James Schlesinger and Daniel Yergin of CERA. I thought Schlesinger was especially good, describing the connection between global politics and oil. He talked about a coming plateau in oil production, and made a mildly critical comment about EIA’s method of estimating oil production (i.e., by making estimates according to oil demand rather than oil supply – See Gail Tverberg’s How Realistic is EIA’s US Domestic Oil Supply and Demand Forecast?. -BA
Kazakhstan may impose oil duty from 2008
Raushan Nurshayeva, Reuters
Kazakhstan may impose an oil export duty as soon as mid-2008 to stabilise domestic supplies, a senior government official said on Monday, in a development likely to worry potential newcomers to its oil business.
Officials have said that Western oil and gas companies’ existing operations in the Central Asian state will not be affected by the export duty as their production sharing agreements will not be changed.
New agreements, however, will stipulate flexible oil tax regimes including liability for the export duty.
… The Caspian oil producer set alarm bells ringing last year with a row with Western oil majors over the Kashagan field and by passing legislation empowering the government to break oil contracts with producers.
(7 April 2008)
Analyst commentary at original. A hotbed of Export Land Model (ELM) analysis is the daily DrumBeat at The Oil Drum. Links are regularly posted to articles such as this one, which show evidence that oil exports will decline faster than widely believed, since internal oil consumption will increase in oil-producing countries. Jeffrey J. Brown (westexas) writes on the ELM and monitors it regularly. -BA
Australia’s own ‘peak oil’
Transport & Logistics News (Australia)
Resources and energy minister Martin Ferguson has warned the country’s growing dependence on imported energy could reach critical proprtions, speaking at the Australian Petroleum Production and Exploration Association conference in Perth.
“With only about a decade of known oil resources remaining at today’s production rates, Australia is looking down the barrel of a $25bn trade deficit in petroleum products by 2015,” Mr Ferguson said.
“… it is vitally important to encourage exploration in our frontier basins because they are the most likely places where a big new oil province may be discovered.
(8 April 2008)
Sweet in we mouth
Mary King, Trinidad & Tobago Express
In July of last year I wrote a series of articles linking Peak Oil (the increase in demand over foreseeable supply of petroleum) to our Government’s revenue, tourism, food prices and availability, and in general the impact of the Government’s fiscal policy on inflation and the Central Bank’s open market response to this profligate spending.
In summary Peak Oil has increased tremendously the US dollars available to our Government and by spending most of it in TT dollars we have been able to “proudly” increase our GDP at the expense of contracting the Dutch Disease. Though the disease does not by itself drive inflation the fact is that the TT dollar is tied to the depreciating US dollar and there is the escalating cost of imports – particularly food; we are witnessing now inflation bordering on ten per cent.
But Peak Oil has forced the price of oil upwards, that commodity now fluctuating at about US$100 a barrel (and natural gas and its products also), resulting in the search by oil-importing countries for alternative sources of energy. In particular we have seen a continuous shift to the use of ethanol which has had an impact on the price of food.
First, land that has traditionally been used for agriculture – growing food – is now being used progressively for growing crops from which ethanol can be made. Secondly, corn (a food crop) is also being diverted away from its uses for food and animal feed towards ethanol.
… What the Minister failed to understand is that high unproductive Government spending, in a society unable to put to productive use this money, translates into mark-up inflation. Our food import bill is of the order of TT$2 billion per year. We may be able to grow a bit locally but we will still have to import at high prices the rest.
(7 April 2008)
IEA Chief Energy Economist Birol Says Oil Prices to Stay High
Fred Pals, Bloomberg
World oil prices are likely to remain high “for many years to come” as demand increases and national oil companies lack an incentive to increase production, the chief economist of the International Energy Agency said.
“The current drivers of demand are different” while higher oil prices no longer represent “an incentive” to produce more oil, Fatih Birol said at a seminar in Brussels today. Resource- rich nations and their national oil companies get enough revenue and see no need to increase production to ease prices, he added.
(7 April 2008)
