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What happens next?
David Strahan, UK Independent
Never mind speculation, forget the weak dollar. To understand the soaring oil price you need only glance at figures from the US government which show that global oil production has been essentially stagnant – at just under 86 million barrels per day – since early 2005. Despite soaring demand, production outside OPEC has been persistently disappointing as international oil companies struggle to maintain production from ageing fields, while OPEC has been unwilling or unable to raise its output. The result is $135 per barrel – for now. To many this suggests that global oil production has already reached its geological limits, or ‘peak oil’.
If supply is constrained, then the variable that will control the price is demand. Since the economy seems to be moving rapidly into recession, conventional thinking would suggest that falling demand for oil should soon bring the price down again. But few traders are betting on that, because oil market dynamics have changed.
Oil price collapses
Fuel subsidies could suddenly be scrapped, dousing demand. Cost pressures have forced Malaysia, Indonesia and Taiwan to cut them, but China is hardly strapped for cash. Opec producers are under no pressure to abolish subsidies; as the oil price rises they get richer. Prospect: very unlikely.
Peace could break out in Iraq, the long-disputed oil law agreed, and international oil companies start work on the world’s largest collection of untapped oil fields. Prospect: vanishingly unlikely
(25 May 2008)
Appeared as part of a larger article in the Independent (UK). Standalone version is on Strahan’s blog.
Stopping Oil’s Assault
Reid Kanaley, Philadelphia Inquirer
Ever-rising fuel prices are a monstrous supply-demand problem. Here are five possible solutions.
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What would it take to stop the madness of rising oil prices?
Shocking increases in crude-oil costs – which spiked above $135 a barrel at one point last week – are now pushing airlines and truckers to the brink, forcing many consumers to say they are staying home this holiday weekend, and recharging fears of recession in the face of $4-a-gallon gasoline.
It’s a supply-demand problem on steroids. Here are five possible solutions, along with the outlook for each.
Solution No. 1:
Reduce world demand for oil.
Outlook: Very unlikely. But oil supplies haven’t changed much over the last five years, so why not simply throttle back demand? Well, who isn’t trying? Hybrid cars and fluorescent bulbs help. But as the saying goes, the genie is out of the bottle. Oil demand, particularly from China, continues to skyrocket.
(25 May 2008)
Oil markets will ignore congressional machinations
Carl Etnier, Barre Montpelier Times Argus.
The world oil markets have shrugged off Congress’ quixotic attempt to brake oil price increases, and they’re likely to do the same to Congress’ newest gimmicks.
Vermont Rep. Peter Welch helped initiate legislation to suspend additions of oil to the U.S. Strategic Petroleum Reserve. In a letter promoting this step, Welch and other Democrats commented, “Although we recognize this action should not be taken as a means of reducing prices in the long run … acting now can have temporary benefits that would go a long way towards helping American families who are being squeezed.”
Welch’s legislation passed and was signed, albeit reluctantly, by President George W. Bush. On May 16, the U.S. Department of Energy announced that it would not sign contracts to add more oil to the Strategic Petroleum Reserve, ending additions in July, after current contracts expire. Oil closed that day at about $120 per barrel, up $5 from the previous week. By last Wednesday, the price of July oil futures had jumped to a new record of over $134 per barrel. So much for Welch’s hope of “temporary benefits.”
The Vermont Legislature also caught quixotic fever. In its waning days, the Vermont House and Senate passed a joint resolution supporting Welch’s legislation, with strong tripartisan support. Rep. Al Perry, D-Richford, was one of the few who were skeptical of the initiative (and perhaps the only Democrat). He commented that the reserve was established for a purpose, and that purpose still exists. Besides, he said, halting additions to it “wouldn’t amount to a hill of beans.”
Why was Perry right? Let’s look at what the reserve is and how it works.
Carl Etnier, director of Peak Oil Awareness, blogs at vtcommons.org/blog and hosts radio shows on WGDR, 91.1 FM Plainfield and WDEV 96.1 FM/550 AM, Waterbury. He can be reached at EnergyMattersVermont(at)yahoo.com.
(25 May 2008)
Peak Oil and Off Grid (audio)
Susan Barnett, WAMC News (Northeast Public Radio)
KINGSTON, NY — Over the past few years there’s been a gradual change in attitude toward renewable energy. It’s gone from science fiction to hybrid cars and solar powered city halls. Hudson Valley bureau chief Susan Barnett spoke with one scientist who fears it may be too little too late and people who are already disconnecting from western civilization.
(26 May 2008)
Interviews with
Political scientist Clifford Wirth of Peak Oil Associates
Nick Rosen of Off-Grid
Denise de la Cerda, a tattoo artist who lives in NYC half the time, and off-the-grid in the Adirondocks the rest of the time.
