If all goes well...or is it "Thar' she blows"

Spring is turning into Summer, and Memorial Day, the start of the Summer Driving Season, is almost here. In theory the world is better prepared for the resulting steady growth in oil demand than we have been for years. Inventories around the world are getting close to being at capacity. Sometime in the late fall, assuming that things go well, these inventories will be drawn down to balance any shortfall in supply and the world may well weather another year as we move towards Peak Oil.

But the Memorial Day weekend also marks the beginning of the hurricane season. Late last year (and before we formed TOD) there was a suggestion in Powerline that the rise in oil prices was a conspiracy to try and control the election.

At the time I suggested that the cause was more likely because:

the hurricanes closed down about 0.5 mbd of production in the Gulf of Mexico,

oil production in Iraq dropped below 2 mbd because of pipeline bombings,

there was a threatened strike in Nigeria,

and there was a fear that Yukos (which produces around 1.6 mbd) might stop production in Russia.

Well J has commented, more authoritatively on the damage to the platforms last summer:
We routinely evacuate offshore platforms when a hurricane enters the Gulf of Mexico. Deepwater work must cease quickly, because the rigs are dynamically moored. Shallow rigs are left in place as are platforms, but the production is shut-in and personnel evacuated.

Last year, we had 15 platforms that were damaged and required repair. The industry had over 75 total damaged, two had drilling rigs collapse on top of them. These repairs sometimes run months due to personnel and equipment shortages in our industry.

The same holds true for Mexico, Trinidad, Brazil and all of Southeast Asia - when hurricanes blow, the offshore oilfields shut down. Then they have to call the same companies we do and get them repaired. You can watch prices rise according to hurricane activity in these areas already. As supplies become constricted, these shut-ins will trigger price spikes even more significant than seen in recent years.
So what is the prospect for this year? According to NOAA
NOAA hurricane forecasters are predicting another above-normal hurricane season on the heels of last year's destructive and historic hurricane season. "NOAA's prediction for the 2005 Atlantic hurricane season is for 12 to15 tropical storms, with seven to nine becoming hurricanes, of which three to five could become major hurricanes," said retired Navy Vice Adm Lautenbacher, Ph.D., undersecretary of commerce for oceans and atmosphere and NOAA administrator at a news conference today in Bay St. Louis, Miss. "Forecaster confidence that this will be an active hurricane season is very high."
And for our foreign mystery guest this year I think we can expect Venezuela to volunteer, if it hasn't already. Ongoing stories on the difference between claimed production and actual, and some of the other problems that are arising can be found at sites such as Vcrisis as well as a review at Salon (thanks to Praktike).

And there has been little positive change in Iraq to indicate the chance of any significant growth in output there this year. Throw in the inevitable problems that will arise from running refineries at full production, and I suspect, before long, there will be a new set of conspiracy theories by those who see some invidious plot.

(And lest that be seen as a political comment, it should be noted that the Congressional folk who are trying to get attention brought to the problem are Republican, so far).
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One of the big pictures here is that the lawyers at PowerlineBlog have never acknowledged oil depletion as an issue (talking about gas prices alone doesn't count). Can you imagine that; they have opinions about everything under the sun except the one issue that wll probably have the longest-lasting impact to the future of this country (and the world).

The next sea-change of opinion will occur when the AssMissile's of the world start acknowledging oil depletion. Likely, their heads will sooner explode than this actually happens.

Aha! I have it! It's the evil Dr. Nature who's going to slap us down for stealing the stashed carbon deposits and using them to overshoot our carrying capacity. Quick, we need to develop some new technological device to defeat Dr. Nature once and for all. Oh great, our prayers have been answered; Bush is going to weaponize space, violating yet another treaty to try and destroy that evil terrorist Dr. Nature. But I thought our missile defense shield was going to protect us from hurricanes and climate change. What was that you said? It doesn't work!? Never had any chance of working!? Not even against missiles!? What if we join those folks in Kansas and try to exorcize Dr. Nature so we can return to religious dogma and concepts like the Great Chain of Being, a geocentric universe and abiotic oil? [Exasperated Sigh]

Gentlemen, surely you realize that the US is still the world leader in technology?

Our country has consistently innovated and delivered things to the world to turn the tide! Things like the efficient cars of the 1970's, whose classic style and increased power truly amazed the world. Certainly, the Japanese tried to copy us, but their cheaper imports with their smaller frames and lighter bodies just didn't last. Look in any junkyard - those hulks are American-made, and still there today! The Japanese cars are nowhere to be found - why, you go ahead and search any scrap yard!

We have always built great things - the Popeil Pocket Fisherman, the Personal Hygeinator, the SUV, the Water Weasel...we developed some of the worlds most fearsome weapons (the A-bomb, the Bradley Fighting Vehicle, the Star Wars Missile Defense).

We should have faith and trust in American ingenuity. Just watch your television, another great American invention! This technological wonder, our "window on the world", allows us to keep you informed about what your government is doing, for you. I urge all true patriots to watch the national news for daily technical breakthroughs which we will foster through grants, federal matching funds and targeted tax incentives.

Your government is using your tax dollars wisely, fighting terrorism across the world, and making it a safer place for Americans. Do your part, and buy American! Support our American businesses, such as WallyMart, and, er, well, ahem! such as WallyMart! If we all work together, there will never be an oil peak to worry about.

HO -

Has NOAA made any type of tacit or other acknowledgement that the tropics are heating up? And/or that this may be a contributing factor to the increased storm forecast?

In so far as they have done modelling that shows that storms will get stronger due to increased CO2 and they have done modelling of the changes in soil moisture I believe that NOAA have (this from a quick peek at their web site). I don't have any data on what the current temperature trends are in the Gulf though.

I can just see the biography now...

Ron Popeil: The Man Who Saved the World from Peak Oil

(subtitle: "The King of 'Set It and Forget It' Finds the Ultimate Innovation Faster than the US Government")

as Big Gav and many of our other readers would be inclined to say: CRIKEY!

Guys -

off-topic, BUT...


Please have a read of this linked article. I realize that Peak Oil is the issue here, but there are 3 other horsemen riding towards us as well, and one of them is financial.

This article CLEARLY shows what is happening with respect to our debt financing (follow the links to the Bond sales) and the blatant doctoring of numbers by our own Treasury Department.

This is a very clear illustration of the US government overtly fabricating and doctoring information.

Prepare to be sickened...but have a look, please.

HO -

FWIW, we use real-time monitoring of the Gulf Stream to determine when we can locate floating rigs without having to fight this big current.

The GS has picked up speed, and moved a bit farther south than usual in the last few months, by about 50 miles.

RE - Energy Conspiracies

It has been my experience that many of those putting forth gas and oil "price gouging" or "conspiracies" have little or no background IN oil. For those who do not know us, we are the most ill-suited group on this planet to form any type of group.

Those of us left in the oil patch are inherently skeptical of any "truism"; we have a very wide "independent streak" down our backs, we are used to taking the contrarian position, even revelling in it, and we do not play well with others.

We are THE most important industry on the planet, and yet we are vilified daily. That explains a little. But we really do not play well with others, particularly governments. Sure, they throw us some tax subsidies when it suits their political purposes, but the corporate tax burden on oil companies is many times greater than any other industry. Internationally, we have seen all our corporate assets seized by governments numerous times, had contracts breached or revoked repeatedly by governments simply out of greed, and we have had more people killed outright than any other international industry, with the exception of the military. Besides, we are a vanishing industry.

Conspiracy among oil companies? Puhlease.....

J, NOAA tries hard to delink what's happening with its hurricane forcasts from climate change by citing the "multi-decadal signal" as the only culprit needed. http://www.cpc.ncep.noaa.gov/products/outlooks/hurricane.html
Yet, it's possible to see little hems and haws within this forcast.

Here's another useful site paid for by our taxes, http://www.drought.unl.edu/dm/monitor.html

Redirecting angst at faceless institutions, like Wall Street and OPEC, has long been a part of the Prince-like tactics of control. But you must admit that the oil depletion allowance provides fuel for seeing a nexus between big oil and government. If the ODA didn't exist, all oil-based products would be far more expensive and the country far better prepared for Peak.

As for the financialsense item, I'm going to forward it to a few who might provide additional illumination.

Karlof -

You are right - that has always been the biggest subsidy. The big plus for ODA is that it keeps stripper oil and marginal fields flowing, and it allows Mom & Pop oil companies to actually exist. If you look outside the US & UK, there aren't many Mom & Pop oilcos...

But the worst part of the ODA is that it basically transfers wealth from the royalty owner to the oil company invisibly, by artificially reducing the effective selling price. I have always hated it. The ODA is odious, IMHO. Without it, we would basically be exactly where Britain is in terms of gas prices. And as you so aptly said, better prepped for peaking.

But as for there being some sort of "oilfield cabal" or a secret group smoking cigars, sipping brandy, and deciding policy - not bloody likely. We hardly show up for our own trade shows anymore. And at this point, the major oil companies are not the guys with the political or resource clout.

In fact, I am guessing they may well wind up being a very convenient scapegoat for government, because they are bellicose (Exxon, Chevron), and they couldn't spin their way out of a tea party.