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Time to Worry: World Oil Production Finishes Six Years of No Growth
Kurt Cobb, Scitizen
As oil prices rose ever higher in the last decade, the optimists kept predicting rising production capacity and plummeting prices. Looks like they got it wrong.
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We are entering what may be the longest stretch of no growth in world oil production since the early 1980s. But the reasons for that lack of growth differ in ways that ought to make us all uncomfortable.
Starting in 1980, production slumped because for the first time in history people needed less oil. After the huge oil price increases in the 1970s, cars suddenly got smaller. People became more careful about combining trips to save gas. A lot of people switched their home heating to natural gas which was considerably cheaper than heating oil. And, in the United States the Congress severely restricted the use of oil for new electric power generating plants. Those using oil began to switch to cheaper natural gas and coal. The whole globe went on an energy efficiency binge.
Beyond this, the world went through two recessions, one in 1980 and the second in 1981-82 which turned out to be the worst since World War II (until the current one). That curbed oil demand as economic activity sank. All the while, large oil discoveries in Alaska and the North Sea and furious drilling elsewhere produced a glut of capacity that sent prices from a high near $40 a barrel in early 1981 to about $16 a barrel six years later. As it turned out, all of these factors combined to keep world oil production below its 1980 peak until 1988.
Fast forward to 2005 when conventional oil supplies stopped growing and then fluctuated between 73 million and 74 million barrels per day on an annual basis through 2010. (Production averaged 73.8 million barrels per day this year from January through July, the last month for which data is available.) The chain of events following the 2005 peak are both different and worrisome.
(2 November 2011)
Kurt Cobb is linking to his recent column at Scitizen, in lieu of his usual Sunday offering. -BA
The Oil & the Glory — Weekly Wrap of energy news
Steve LeVine, Foreign Policy Focus
About the impending arrival of U.S. energy independence: We return to the twist in our energy and geopolitical circumstances that we are hearing about — that, contrary to the drumbeat regarding peak oil to which we have become accustomed, there is no problem on the global energy patch.
There is abundant oil, report the New York Times, the Washington Post and the Financial Times; not only that, it is located in the nearby, secure Western Hemisphere (pictured above, happy days in Brazil), and not in the violent-and-volatile Middle East; moreover, the United States may be on the verge of achieving what had seemed to be merely fabled — “energy independence.” We expressed our doubts about these findings when they emerged a few days ago. And though this is not a peak-oil blog, suffice it to say that our brow has not become less furrowed. One reason is the mathematics behind the theoretical revision. Let’s start with the suggestion that the gravitational center of oil is shifting from the Middle East to the Western Hemisphere, as we read in the Times, the Post, and last month here at Foreign Policy. In order for that to happen, Western Hemispheric oil production should comfortably surpass the Middle East’s 25 million barrels of oil a day.
When you add up the numbers, North and South American producers currently pump some 21 million barrels a day. The bright-picture scenario suggests another 7-9 million barrels a day (additional supplies of 3 million barrels a day from Brazil, 1.5-4.5 million barrels a day from Canadian oil sands, and 2.5 million barrels a day from U.S. onshore oil shale). Shaving off a bit for depletion of current fields, and you get roughly the same production for the concentrated Middle East as for the far-flung Western Hemisphere, with no single country bearing the singular heft of a Saudi Arabia. It is a tidy volume, but not quite the forecasted tectonic shakeup.
And what of U.S. energy independence? This forecast — suggesting that the U.S. alone or in tandem with friendly Canada might meet its own oil demand by the year 2035 — appears to be based largely on a September report by the industry-dominated National Petroleum Council called “Prudent Development.”
(5 November 2011)
ASPO-USA Conference Report: Friday Notes
World of Wall Street
ASPO-USA Conference Report: Friday Notes
Here’s some highlights:
Robert Hirsch – a guy worth listening to. Claims no change since last year. Peak oil is on track. Dept of Defense has published 2012 as the possible peak data with a 10 mbpd decline by 2015. That’s dramatic. Hirsch estimates a 16% decline of world GDP in the decade after the decline starts based on the correlation of GDP with oil production.
Hirsch expects the mass psychology (based on the previous two crisis of 73 and 79) to be: panic, fuel shortages, large price increases, stock market declines, deepening recession, inflation, rising unemployment. I’d like to add windfall profit taxes and punishment of speculators.
Hirsch rightly defines “the problem” as a liquid fuels problem, not a general energy problem.
Robert Rapier, chemical engineer.
US per capital oil consume is 23bbl/per person/per year. China’s is 2. The big Peak Oil question today is: How does the US come out of recession when oil prices hover at recession inducing levels.
An overlooked point regarding Energy Return On Energy Invested (EROEI) is that it will take more energy (also more man-power) to create that energy and that the energy invested needs to be subtracted from what is produced. E.g. 6 mbpd of oil sands oil is not worth as much as 6 mbpd of light sweet Saudi crude, because substantially more of that 6 mbpd oil sands oil had to be reinvested in keeping production going.
Global warming is really out of US and EU control. US and EU CO2 emissions are declining and a complete end of US and EU emissions only puts the world back to the mid 90s. …
(5 November 2011)
New Dept. of Energy Priority-Setting Analysis Seriously Flawed
Gail Tverberg, The Oil Drum
The US Department of Energy (DOE) recently issued a report called Report on the first Quadrennial Technology Review (QTR), which has as its purpose helping the DOE choose among conflicting priorities.
The new report sets priories based on a distorted view of the future. One issue is that it is trying to set priorities based on an overly optimistic view of energy supply presented in the EIA’s International Energy Outlook 2011 (IEO 2011). Another issue is that it overlooks the way the US and world economy can be expected to change as a result of lower oil and natural gas supply. A third issue is that its view of climate change mitigations is based on a view of fossil fuel supply that is far greater than is likely to be the case.
The DOE needs to re-think its priorities for an entirely different kind of world–a world of energy scarcity. In a world of energy scarcity, citizens are poorer and less able to pay for basic services, much less higher-priced services. Maintaining basic transportation and electrical services for as much of the population as possible needs to be a top priority. Some government agency, presumably the DOE, will need to make certain that rationing systems are set up so that essential industries get the fuel they need and essential workers are able to obtain transportation to work.
This change in approach in priority-setting requires a very different mind-set than is currently being promulgated through the press. Let me start by explaining where we are today.
(4 November 2011)
Exclusive: IEA draft outlook sees $212 oil in 2035
Alex Lawler, Reuters
The jump in oil prices in the past year is adding to concern about the economy, according to a draft of the International Energy Agency’s 2011 World Energy Outlook, which also raised its view of long-run prices.
The draft dated July 2011, obtained by Reuters ahead of the publication’s launch next week, assumes nominal oil prices of $114 a barrel in 2015 and $212 in 2035. Last year’s report assumed prices of $104 and $204 by those dates.
(4 November 2011)
