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DrumBeat: June 10, 2009
Posted by Leanan on June 10, 2009 - 10:17am
Proposition: global effort to model largest oil fields
The authors propose that the key to this understanding is the modeling of the largest fields. Should government and industry fail to understand the future supply from these fields, there is a potential for large shortfalls of productive capacity without adequate alternative replacements having been put in place. As the world has experienced on several occasions, even small shortfalls can cause large price increases. Failure to understand when and at what volume oil supply will be insufficient is not acceptable.
Economy, Higher Oil Prices May Restart Shelved Projects
A rebound in oil prices and signs of economic recovery are renewing interest in exploration and production, but producers are still wary of volatility and determined to cut construction and service costs, which surged last year after oil prices spiked to record levels.
U.S. Trade Deficit Widens as Oil Moves Higher
As oil prices march higher, the United States trade deficit is again widening as consumers spend more on gasoline, the government reported on Wednesday.
Will Higher Oil Prices Drive Petroleum Industry Recovery?
Briefly, the Goldman Sachs' higher price predictions are based on its belief that the world has entered into a four-part bull market for crude oil. They view the current rise to $65 as reflecting the normalization of "pricing dislocations caused by the credit crisis" and its impact on oil demand. They believe that most of the yearly oil demand decline anticipated has already occurred and that demand is stabilizing and should head higher in the future as the recession ends and economic growth resumes.
BP Says Weak Economy to Keep Gas Prices ‘Depressed’
(Bloomberg) -- Natural gas prices will remain “depressed” this year because of the weak global economy and increased supply, according to BP Plc, Europe’s second-largest oil and gas company.Liquefied natural gas supplies will grow at a record pace this year, BP Chief Economist Christof Ruehl said after the publication of the company’s 2009 Statistical Review of World Energy in London. Global economic growth may remain “elusive for some time,” he said.
Oil and gas companies enjoy both lower costs and higher crude oil prices
Unhappily, prices of natural gas have not recovered and look set to remain low for the rest of 2009. At $3.50/million btus, many shale gas projects have stopped completely. Those shale gas companies that continue to drill are being much more selective in the choice of location with the Haynesville shale considerably out in front because of high initial productivity. But it is true that drilling rig day rates are down and it they continue falling, new shale gas activity may result.
Energy providers snub Polish coal
Polish coal mines are struggling to sell their coal as domestic energy providers turn to cheaper foreign imports. In Q1 this year, imports of coal were three times higher than in Q1 2008. Every month Poland buys 1.43 million tonnes of foreign coal; a year earlier the figure was not even half a million tonnes per month.
If current production remains unchanged, Saudi Arabia would have over 4 mn barrels in spare capacity (the largest excess capacity in the world), at a cost of more than $15-20 mn per day. Saudi Aramco for its part has stated that it will carry out additional drilling at existing fields in order to compensate for the natural declines from mature fields. The plan includes increasing planned drilling by a third to around 250 wells, with the priority on offshore areas. In the recent past, Saudi Arabia has stated that the country can add as much as 200 bn barrels of oil to proven reserves, after an extended period of investment and exploration.
Steve LeVine: Choosing Iran's Next Leader
Does Mir Hossain Mousavi have a genuine chance to defeat Iranian President Mahmoud Ahmadinejad in Friday’s elections? Or is he simply the latest beneficiary of the predilection of reporters and pundits to make a wishful-embrace of electoral challengers in dictatorial nations?At O&G, we are closely watching the first round of Iran’s presidential election because of the potential game-changing impact on natural gas politics in Europe: At once, a less populist leadership in Tehran could help lower the diplomatic temperature, thus opening the door to genuine talks with Washington, and possibly a deal that, among other benefits, ultimately unfetters the development of Iran’s sanctions-crippled natural gas fields.
What happened to the energy crisis?
It was less than a year ago when gasoline prices hovered near four dollars per gallon and the entire nation was in an uproar over “energy policy.” Now, even though gasoline prices have climbed more than 50% from their levels at the beginning of the year, not a whisper is heard about what the government is doing to solve the supply problems.
Magna is ready to produce battery assemblies and could be building electric cars within three years -- which means jobs and investment in Ontario.
Plug-in cars have barely made a dent in the global vehicle fleet, and automakers have yet to launch their first real entries into the race for a mainstream electric car. When carmakers do start selling those models — late next year and beyond — they for the most part plan to take their time ramping up, easing into the market with regional rollouts and leases to government or corporate fleets. But, according to some industry observers, we’re on the verge of a global glut of plug-in cars. Huh?
House OKs $4 billion 'cash for clunkers'
WASHINGTON (CNNMoney.com) -- The House on Tuesday waded deeper into the rescue of the troubled auto industry when it passed a $4 billion plan to subsidize new cars sales for consumers who scrap old ones.By a vote of 298-119, the House approved the "cash for clunkers" program.
The downside of lower gas taxes
President Obama’s recent announcement that auto fuel efficiency standards are being sped up to require an average per-fleet fuel economy of 35.5 mpg for cars by 2016 (the previous goal was 35 mpg by 2020) has its environmental and geopolitical merits. Less green house gas emissions, less dependency on foreign oil producers is a very big win-win.But it is potentially lousy news for the roads we drive.
David Suzuki: Now that we own General Motors, what should we do with it?
Well, we now own part of GM. Shouldn’t we have some say in what becomes of it? Will the U.S. and Canadian governments show some imagination and foresight and turn this crisis into an opportunity?Mr. Rubin and Mr. Moore are right: Our future is in fuel-efficient cars, buses, and trains, and in green energy. (And even private automobiles may eventually be a thing of the past; the idea of using of a tonne of metal and many litres of fossil fuel to get one person to the grocery store or work is more than a bit absurd.)
Wartime tips to save the planet
LONG before recycling targets and pay per throw taxes, our grandparents knew a thing or two about being green. Make do and mend was more than a slogan, it was a way of life.And now, as we tighten our collective belts and brace ourselves for economic gloom, seven out of 10 of us believe the country should once again embrace the wartime spirit in an effort to cut down on waste.
Water Scarcity and the Western Oil Shales
Vast technical and environmental challenges have long stood in the way of commercial oil shale production.But it is water – or more specifically, its scarcity – that is likely to be shale oil’s greatest stumbling block in the arid West.
The United States Geological Survey recently estimated that there may be as many as 1.525 trillion barrels of oil trapped in the rock of Colorado’s Piceance Basin, the region’s richest shale field. And a report released in March by the non-profit Western Resource Advocates, an environmental group based in Boulder, Colo., suggested that oil companies have acquired water rights at hundreds of locations in the upper Colorado River basin, which could be used for future oil shale production.
Reports: Russia pledges to keep up oil output
MOSCOW — Russia is not planning to reduce oil production in the next few years and is considering help for companies that discover sizable oil and gas fields, a top oil official said Wednesday, according to national news agencies.Deputy Prime Minister Igor Sechin said there were no economic reasons to cut output.
"We are not planning to cut the production in the next three years, but it may happen afterward if there is no investment in exploration and production," he was quoted as saying by Interfax.
There is no point in putting a cap on exports either, according to Sechin:
"Exports have become more economically reasonable. So why cut it?" Interfax reported him as saying.
Natural Gas Should Get a Boost from China's New Demand
China has been developing natural gas vehicles for many years, recently the number of vehicles running on nat gas has risen dramatically. For example, the government of Xi'an in western China, a medium size with 8M population, has decided to mandate all city buses and taxis using natural gas. The government website reported 5000 buses and 20000 taxis was using nat gas in 2008, and is expected to grow in coming years. This is just a tip of the iceberg. Nat gas may become a major alternative fuel to oil in China, and demand is ramping up.
Speculators back to oil market - Kuwaiti oil official
KUWAIT (KUNA) -- Recent increase in prices of oil could partially be attributed to the return of speculation action to the market amid indications of a start of a global economic recovery, an oil official told KUNA Wednesday.
Will Oil Prices Prevent a Recovery?
The rise in oil prices does not seem to be consistent with the overall weakness of the world economy, but there are several reasons why it just may be sustained or extended, even in the absence of a global economic rebound.The third reason is that the looming danger of peak oil has not gone away, it has only been masked by "peak demand" caused by the economic downturn worldwide. Any incremental oil is now coming from very expensive sources like the Canadian oil sands or the very deep waters of Brazil, both of which require oil prices in the mid-$60’s to be economically viable.
Nigeria militants again promise to release Briton
Nigerian militants Tuesday promised for the second time in 10 days to release a British oil worker held hostage in the Niger Delta for the past nine months.
Iraq to announce oil contracts end-June: minister
BAGHDAD (AFP) – Iraq will announce at the end of this month which energy companies have been awarded contracts to work in the country, Oil Minister Hussein al-Shahristani said on Wednesday.
Baghdad says will not compensate firms in KRG deals
BAGHDAD (Reuters) - The Baghdad government will not pay firms that signed independent deals with Iraq's Kurdish region for the development of the Taq Taq and Tawke oilfields, Iraq's Oil Minister Hussain al-Shahristani said on Wednesday.
Views on Jatropha as Biofuel Mixed
Three different news items highlight the vast differences in viewpoint and the continuing uncertainty around the farming of Jatropha by small scale farmers as a feedstock for Europe's refineries moving towards meeting the EU's renewable liquid fuel goals.
A comprehensive new analysis of water use in biofuel crop production finds that jatropha, an oil-rich plant championed for its ability to grow in arid regions where food crops cannot, is the biggest water hog of them all.Researchers from the University of Twente, in the Netherlands, report in a recent issue of the Proceedings of the National Academy of Sciences that jatropha requires five times as much water per unit of energy as sugarcane and corn, and nearly ten times as much as sugar beet--the most water-efficient biofuel crop, according to the same study.
Green but costly, hybrid buses far from mass production
VIENNA (AFP) – Fuel-efficient and environmentally-friendly, hybrid buses starred at a public transportation congress in Vienna this week, but they still face a long road before becoming cost-effective on a mass scale.
France Finds ‘Carousel’ Tax Fraud in Carbon Emissions Market
(Bloomberg) -- The French government found evidence of “carousel fraud” relating to value-added tax on trades of European Union carbon dioxide allowances, according to an official in the nation’s budget ministry.The official, who declined to be named citing government policy, didn’t disclose the size of the fraud. Sellers committing carousel fraud, or “missing traders,” collect the tax and then disappear before submitting the money to authorities.
China leads escalation of coal consumption
Coal consumption is continuing to grow more quickly than other traditional sources despite high prices and the dangerous impact it will have on carbon emissions, new statistics released by oil giant BP show.China, which has been trumpeting its new wind and solar goals in recent days, led the way with a near 7% increase in the amount of coal it burned during 2008 despite average prices rising 73% to $150 (£129) per tonne. This accounts for 43% of global coal use.
China alone could bring world to brink of climate calamity, claims US official
China must be far more ambitious in tackling climate change if the international community wants to prevent calamitous levels of global warming, a senior US official told counterparts in Beijing today.David Sandalow, assistant secretary of state for energy, said the continuation of business as usual in China would result in a 2.7C rise in global temperatures by 2050 even if every other country slashed greenhouse gas emissions by 80%.
Taking on Climate Change Myths and Sceptics
The scientific facts seem clear, climate change is happening and it is man-made. Still some people disagree. Why?In my experience, these people primarily do not like the consequences of the scientific findings: that we need to reduce our greenhouse gas emissions.
31% - White Evangelicals Reject Global Warming
While only 39% of black Protestants say global warming is a result of human activity, they are, however, the least likely of the religions studied to deny global warming (15%). The unaffiliated (58%) are the most likely to say there is solid evidence the earth is warming because of human activity.
World’s Carbon Emissions Climb 1.6% on Chinese Coal
(Bloomberg) -- World carbon-dioxide emissions from energy use rose 1.6 percent last year as coal consumption advanced in China.
World Oil Reserves Fell for First Time in 10 Years, BP Says
(Bloomberg) -- Global proved oil reserves fell last year, the first drop since 1998, led by declines in Russia, Norway and China, according to BP Plc.Oil reserves totaled 1.258 trillion barrels at the end of 2008, compared with a revised 1.261 trillion barrels a year earlier, BP said in its annual Statistical Review of World Energy posted on its Web Site today. The world has enough reserves for 42 years at current production rates, BP said.
BP and other oil companies are struggling to replace reserves as access to deposits becomes harder and older fields in places like the U.K. and Mexico are depleted.
Turkmenistan’s Proved Natural Gas Reserves Triple
(Bloomberg) -- Turkmenistan’s proved reserves of natural gas tripled last year, taking it to fourth place in the world above Saudi Arabia, according to BP Plc.
OPEC Will Wait for $100 Oil Before Raising Output
(Bloomberg) -- OPEC, the supplier of 40 percent of the world’s oil, will only consider increasing output when the price of crude rises to $100 a barrel, according to Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah.The Organization of Petroleum Exporting Countries, due to meet in September, wouldn’t raise production with oil at $75, “but if it reaches $100, maybe,” al-Sabah said today in Kuwait.
Crude Oil Rises Over $71 on API Stockpile Drop, Weaker Dollar
(Bloomberg) -- Crude oil rose to a seven-month high after an industry group reported U.S. stockpiles dropped and the dollar weakened against the euro, bolstering the appeal of energy as an alternative investment.
Energy Stocks to Outperform in Recovery, Morgan Stanley Says
(Bloomberg) -- Energy, technology and cyclical stocks are likely to outperform other sectors over the coming months as correlations between markets and companies break down during the economic recovery, according to Morgan Stanley.
Oil’s Gain Marks Return to ‘Pre-Crisis Trend,’ Gazprom CEO Says
(Bloomberg) -- Oil’s recent gain marks a repeat of last year’s rally before the global financial crisis sent crude tumbling, and may extend to $85 a barrel this year, OAO Gazprom Chief Executive Officer Alexei Miller said today.“When we see that over the past weeks oil prices closed at around $70, this is not a technical correction or accidental fluctuation but a return to a pre-crisis trend,” Miller said on the Italian island of Sardinia, according to a copy of a speech translated from Russian. “There are sufficient objective grounds for the oil price to rise to $85 a barrel by year-end.”
Petrobras Ready to Benefit from Next Oil Price Spike
Such ultradeep wells encounter intense pressure and temperature. In a recent Forbes articles ("Crude Cassandra"), Matt Simmons suggested going much deeper with a drill bit might strike molten lava and unleash “the biggest volcano in the history of the world.” It’s interesting to think about such an encounter and what the results might be on the surface of the water. Luckily, none of the test wells to date have resulted in such fireworks. That said, Matt Simmons is spot-on with his oil predictions. To put things in perspective, as large an oil field as Tupi is, at 8 billion barrels it is only enough oil to supply the world’s demand for 3 months.
The centre of gravity in the global energy market has changed and we need to wake up
The last year will go down in the history books for many reasons: the events in financial markets; the takeover of much of the banking sector by governments worldwide; and the presidential election in the United States, to name but three.But one event went almost unnoticed. 2008 was the year when the centre of gravity in the energy market tilted sharply and permanently towards the emerging nations of the world. For the first time ever, non-OECD energy consumption outstripped that of the OECD nations.
Senate Panel Approves Drilling Off Florida
WASHINGTON -- A Senate committee on Tuesday approved opening the eastern Gulf of Mexico to oil and gas drilling, including an area rich with natural gas 10 miles off the Florida Panhandle. A 45-mile no-drilling buffer would be maintained off most of Florida's coast.
Iran, China Sign $5 Billion Contract on South Pars Gas Field
(Bloomberg) -- National Iranian Oil Co. said it has signed a $5 billion contract with China National Petroleum Corp. to develop Phase 11 of the South Pars gas field.
Pdvsa's contribution to income tax and social plans falls
At the end of the fiscal year 2008, the state-run oil company Petróleos de Venezuela (Pdvsa) reported revenues and earnings higher than in the previous year. Despite this increase, Pdvsa's contribution to income tax (ISLR) and to social development programs lowered, although the price of the Venezuelan basket of crude oil averaged USD 86.49 in 2008. However, Pdvsa's contribution on royalties, extraction taxes and other imposts was slightly higher.
Petrobras Starts Blog to Respond to Questions Over Tax Probe
(Bloomberg) -- Petroleo Brasileiro SA, the Brazilian oil company under investigation after a newspaper alleged tax evasion, is starting a blog to publish its responses to inquiries about the probe.Petrobras said it will disclose all media requests and the state-controlled producer’s responses as lawmakers prepare to examine allegations that the company evaded 4.4 billion-reais ($2.3 billion) of taxes and overpaid for pipelines and ships.
Mars Mission Could Ease Earth’s Energy Supply Crisis
ScienceDaily - Techniques and instrumentation initially developed for ExoMars - Europe’s next robotic mission to Mars in 2016 - but now due to fly on a NASA mission in 2018, could also provide the answers to the globally pressing issue of energy supply.
Savior Technologies - not the end of motoring era
Here's what's important: These and all other emerging technologies could make IC engines alone produce startling fuel efficiency numbers without any high-cost technological breakthroughs; and, in that manner, without losing the characteristics that have made IC engines traditional favorites in the 3%-5% of the time when extra torque and horsepower are required.
China launches green power revolution to catch up on west
China is planning a vast increase in its use of wind and solar power over the next decade and believes it can match Europe by 2020, producing a fifth of its energy needs from renewable sources, a senior Chinese official said today.Zhang Xiaoqiang, vice-chairman of the of China's national development and reform commission, told the Guardian that Beijing would easily surpass current 2020 targets for the use of wind and solar power and was now contemplating targets that were more than three times higher.
Not so windy: Research suggests winds dying down
WASHINGTON — The wind, a favorite power source of the green energy movement, seems to be dying down across the United States. And the cause, ironically, may be global warming — the very problem wind power seeks to address.
Delay new biofuels rule one year: U.S. oil industry
WASHINGTON (Reuters) - The government should delay new rules that expand U.S. use of biofuels until 2011, the oil industry said on Tuesday, because there is too much work to do on the ground-breaking rules to start sooner. The Environmental Protection Agency has a January 1 target to apply the rules that also require advanced biofuels to have greenhouse gas emissions that are 40 percent lower than petroleum from creation through consumption.
Ensus Prepares to Produce Britain’s First Wheat-Based Biofuel
(Bloomberg) -- Ensus Ltd. is preparing to start production at Britain’s first wheat-based bio-ethanol plant as the country increases requirements for cleaner-burning fuel.
Feeding cities has never been easy. On the contrary, it could be described as mankind’s oldest self-imposed dilemma. The problem is that even though people living in cities don’t tend to produce their own food, whether they realise it or not, they still dwell on the land. The resultant distance (in all senses) between city-dwellers and their food is a paradox at the core of civilisation; resolving it is the greatest challenge of our time.
Green values now in prime time
The transformation from global to local economies will not come about by electing Green governments.Too many people are still stubbornly attached to the old politics defined by an economics of perpetual growth, corporatism, and security defined by militarism. Instead, it will come by necessity as the era of cheap oil comes to an end.
Infrastructure Australia just doesn't seem to have a grasp on reality when it comes to land transport.Its National Infrastructure Priorities lists seven “themes” which are supposed to “...provide a framework for action to meet the gaps, deficiencies and bottlenecks in our nation's infrastructure”.
And neither the national road network nor urban road freight networks rate a mention.
Japan to give 2 billion dollars in loans to fight climate change
Tokyo - The Japanese government was expected to provide 2 billion dollars in yen loans to Bangladesh, the Philippines, Thailand and Vietnam over the next two years to support their efforts to combat global warming, media reports said Wednesday. Prime Minister Taro Aso was to announce the aid later in the day along with Tokyo's target for the reduction of greenhouse gas emissions after the Kyoto Protocol expires in 2012, Jiji Press said.
Texas Blasts Federal Efforts to Fight Global Warming
Texas elected officials Tuesday railed against federal efforts to curb global warming, claiming it would throttle the state's economy -- one of the few that generated job growth last year.
Japan targets 8% emissions cut from 1990 levels
TOKYO (AFP) – Japan said Wednesday it plans to cut greenhouse gas emissions by the equivalent of eight percent from 1990 levels by the end of the next decade, a goal attacked as too little by environmentalists.Prime Minister Taro Aso announced Japan's mid-term target ahead of a December meeting in Copenhagen set to hammer out a new climate treaty that will replace the Kyoto Protocol when it expires in 2012.
Migration From Global Warming May Exceed All Past Displacements
(Bloomberg) -- Human migration due to global warming may exceed all previous displacements of people as sea levels rise, fresh water becomes scarcer and crop yields decline, a United Nations study found.Desertification in Mexico, Mali and Niger is already causing migration while in Bangladesh increased coastal flooding is expected to increase the movement of people, according to the study by the UN University, Columbia University and the charity Care International.
“Flooding, intense storms, or droughts, or more gradual but significant changes in regional climates place great stress on livelihood systems,” the 36-page report said. “The mass of people on the move will likely be staggering and surpass any historical antecedent.”
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Miller of Gazprom says oil prices may even exceed $250 when we reach the "2012 supply gap":
http://www.guardian.co.uk/business/feedarticle/8551057
Post-2005 cumulative net oil exports to date (2006-2008, inclusive) from the top five net oil exporters fell between Sam's middle case and his best case. If we average middle and best case projections for total post-2005 cumulative net oil exports, we would be looking at about 120 Gb, versus about 25 Gb (net) exported in the three year 2006-2008 time frame, leaving about 95 Gb in projected remaining cumulative net export capacity from the top five (Saudi Arabia, Russia, Norway, Iran and the UAE), at the end of 2008.
At a (net) export rate of about 20 mbpd from the top five, they would ship about one-third of their remaining cumulative net oil exports by the end of 2012 (assuming about 120 Gb in post-2005 cumulative net oil exports).
"...120 Gb, versus about 25 Gb..." ???
I'm not following.
Sam's middle case for post-2005 cumulative net oil exports from the top five is about 95 Gb, best case about 145 Gb, so that the average of the two would be about 120 Gb. EIA data showed that the top five (net) exported about 25 Gb in the three years from 2006 to 2008, inclusive.
In any case, my forecast (building on a lot of other people's work) remains unchanged--generally deflationary trends in the auto, housing and finance sectors (and especially on the discretionary side of the economy) versus generally inflationary trends in food & energy prices. Rinse & repeat. Case in point: Citgroup stock and the price of oil were both about $55 in January, 2007.
Thanks. I guess I was misreading it... didn't take my B vitamins this morning.
Thanks much for your update.
On a related note to Miller, he also talks about diversification away from the US dollar - which seems to be the official policy now (see below). Russia is moving official reserves out of US dollars, and into IMF Special Drawing Rights and precious metals.
It is possible in a few years that the price of oil in terms of US dollars will be irrelevent, and the most important issue here in the US then may well be how the US intends to otherwise maintain its high level of oil imports in a world of diminished oil exports where dollars are not welcome. Perhaps that is why Russia is hinting that some contractural agreements will be necessary to secure its exports.
http://www.bloomberg.com/apps/news?pid=20601068&sid=ahoIPyEdpHUI
So, they have 30% in dollar denominated assets. If they sold the entire 401 billion, and purchased 401 billion in SDRs from the IMF, their portion of dollar denominated assets would drop, oops, I meant RISE, to 58.2% ! I guess my math doesn't allow me to see where a doubling of dollar assets constitutes a drop, but I've seen even more amazing math in the last few years.
The information is widely available to anyone interested in the truth, which clearly precludes Bloomberg and the rest of the Corporate News.
delete
put it in context of this headline
OPEC Will Wait for $100 Oil Before Raising Output
you have to remember that $100 was about the average price of oil in 2008. OPEC has cut production by about 3Mbpd since then, and has no plans to restore that production until the price exceeds the previous record annual average price.
Less oil at a higher price.
I don't think the world economy can support $250, but I doubt we will have to wait until 2012 to find out.
Clearly the Saudies would like oil nearer $100 a barrel as they started to count on higher prices in their budgets last year and face big shortfalls...
But then you have to ask how much of the rise towards $100 is firstly an 'Inflation Hedge' and then in a blow-off phase a 'momentum play' like last summer. We may see oil rise towards $100 then fall to sub $50 again all in the next couple of months.
Nick.
Khurais starts pumping
Along with the reports that Saudi Aramco have started pumping oil from the 1.2Mbpd Khurais field was this quote:
Sounds like the suggestion made a while back, that Khurais was there to take over from a depleted N Ghawar, has some legs. Why go all out to bring a new field onstream during a slump if you are not trying to preserve the dregs of your best field for surge capacity?
Good point Gary. Goes along with what I've heard for years from expats who worked over there: the KSA was producing Ghawar too fast and thus hurting ult recovery. Whether slowing the withdrawl rate repairs some of the damage is very speculative. But at least it should slow/stop any additional reduction in URR.
Interestingly the market doesn't seem to have reacted to this news of new capacity. Prices are $70 and still rising.
I wonder what's pushing it up?
Perhaps headlines like: "OPEC Will Wait for $100 Oil Before Raising Output"?
THREAD BREAK FOR dohboi...regarding mankind's general misuse of technology. Had a response but couldn't find your orig post: Sorry for the delay dohboi...always enjoy banter with you but been a few hectic days at work. I agree. But I'll also add you can't unring that bell. So many examples...nukes being one of the obvious. Can you think of any weapon that hasn't been used once it's developed? Technology is developed for one reason only: to be exploited. Even when they aren't used for evil they are just as likely to be taken for granted.
If you're saying that new technologies will likely be misused by someone... of course. Will any conversation change that fact? IMO ... No. If 10 more Ghawars were discovered tomorrow would we utilize those reserves any differently then we did in the past or would we become even more wasteful? Easy answer. Now if someone can develop a technology that could change human nature then there could be a chance to alter the future path. I’ll be more then happy to change my view of the future: just get more than 10% of the US population talking the same talk and walking it.
"But I'll also add you can't unring that bell."
Very well put. Probably the bell to "unring" if we could do it would be Fibonacci's importation of the Arabic (really Indian) numerals that allowed all the complex math that created our terrestrial maelstrom. This bit of eastern wisdom (that nothing was something) in the hands of European mad-genius monkeys enabled the development of both advanced engineering and credit default swaps.
"Will any conversation change that fact? IMO ... No."
Undoubtedly correct. I still find the conversation interesting. Others in my family have taken the route of heading up major organizations dedicated to saving the world or some part of it. I lend a hand in some of that, but mostly I'm interested in how we got here, and questioning deep held assumptions (my own and others'). One such is that we should all be working to maximize human capabilities. That is so deeply ingrained in us that it is hard for most to even recognize it as the core axiom of much of the rest of our value system.
But, to quote the clerk in the movie "Juno": "That's one doodle that can't be undid, homeskillet!"
"Now if someone can develop a technology that could change human nature then there could be a chance to alter the future path. I’ll be more then happy to change my view of the future: just get more than 10% of the US population talking the same talk and walking it."
Nice. That's not likely to be a "technology" in the usual sense of the word, probably. Though I think once people start embedding some version of super cell phones in their brains, we might get a kind of world consciousness that could change basic assumptions rather quickly (but of course there is no guarantee the changes would be for the better).
(I view the development of human language as something along these lines, but the development of that "technology" turned out to be disastrous for the planet. We have yet to see if we can ring a truly new tune on that bell.)
I don't think we have to change human nature so much as human awareness, but that is just about as difficult.
Always enjoy bantering with you, too, rock. I'm heading in to a hectic week myself, so apologies ahead of time if I don't get back to any response in a timely manner.
This headline says it all:
(Bloomberg) -- Crude oil rose to a seven-month high after an industry group reported U.S. stockpiles dropped and the dollar weakened against the euro, bolstering the appeal of energy as an alternative investment.
This is a similar situation as 2008 in that the price of crude oil is increasing to a level higher than what the supply/demand situation would otherwise dictate. There is no supply shortfall now as tankers are parked around the globe serving as excess supply tanks. Yet the price of crude oil is being bid up.
The dollar is weakening so investers are trading in their dollars for crude oil as a hedge against the falling dollar. I suspect that the near term threat of peak oil is also lurking in the background as well. But I would bet my ranch that if the dollar was stable, then crude oil prices would be stable at a much lower price.
Retsel
LOL or maybe demand is no longer falling dramatically as we hit structural limits and production is falling through the floor.
If so this is the big one and crude will go up well over 200 pretty much with few pauses.
Memmel,
I’m curious in yesterday’s drumbeat you said in relation to the predictided drawdown:
“Physically impossible but lets see what the EIA says.” Please could you expand upon that. Why is it Physically impossible? Are you saying that the draw down was not from real barels, but paper barrels?
I never heard of a "paper barrel drawdown". Only the futures market deals in paper barrels. In the real world they use only real barrels. And there have been, in the past, drawdowns a lot bigger than this one. But Memmel said above:
Demand, in this case, is measured as simply what was consumed. There are no structural limits to that kind of demand other than zero. That is saying the economy can always get worse.
Ron P.
As near as I can tell reported US inventories are 20-30 million barrels higher than real oil inventories. This is because they where never reported as drawn down after the hurricanes and inventory was never corrected.
Why who knows.
Certainly the looming election played a role. Many people where unable to report accurately because of physical damage. Away from the gulf the developing shortages in the south east where causing rerouting of oil and oil products etc. We have the SPR so if oil was needed it was theoretically available. One could argue that it was not correct to report large draw downs given the conditions. This is not wrong it was just never corrected.
As long as we where building inventory strongly the absolute value did not matter the refineries became well supplied fairly quickly and the inflated inventory reports served to keep the price low etc.
Its all good and works until we really begin to actually draw down reserves.
If I'm right then we will be close to shortages when we hit the middle of the five year range so things are about to get pretty interesting.
Gail the Actuary,
In response to your request on coal market issues: I think Eastern coal is more expensive because most of it is sub-surface. If you can't blow-off a mountaintop then you have to do underground mining where equipment needs to be powered by electric and/or compressed air. Added into that are ventilation requirements, extra safety precautions, inefficeiency of working to tight scales, etc.
Out West, a lot of coal is surface mined. Most large-scale mining equipment runs on diesel. Cheaper.
That certainly is big part of the difference. I think distance from market somewhat limits the price they can sell coal at as well.
The quality of the coal by volume is better in the east as well. Most eastern coal is bituminous while western coal is subbituminous or worse.
http://www.eia.doe.gov/cneaf/coal/page/acr/table6.html
Western coal is lower sulphur, so this partially offsets the lower energy level. An electric power plant can get by with less in the way of scrubbers with Western coal.
Though preliminary, the study that suggests that gw is reducing average wind speeds is worth noting. This is something I have been wondering openly about for some time.
From the article:
"the temperature difference between the poles and the equator shrinks and with it the difference in air pressure in the two regions. Differences in barometric pressure are a main driver in strong winds. Lower pressure difference means less wind."
Perhaps this should be considered before we madly rush toward a huge build-out of wind generators everywhere?
If worldwide wind really falls off significantly, I would suggest that the world will have bigger problems than a bunch of useless wind turbines. Perhaps we'll just hook them up to solar farms and run them as fans, just to get the air moving again.
"If worldwide wind really falls off significantly, I would suggest that the world will have bigger problems than a bunch of useless wind turbines."
Doubtless true, unless by then we have become largely dependent on this one source for most of our energy. (Not bloody likely to happen, I know. But a good reason to keep a wide variety of sources on hand, and mostly shift away from high-energy lifestyles.)
"Perhaps we'll just hook them up to solar farms and run them as fans, just to get the air moving again."
Now that's a scenario I hadn't imagined! Artificially jump starting global wind patterns with defunct wind generators! It's for those kinds of fantastic mental pictures that I keep coming back to this site.
And if we point 'em all in the same direction, we can speed or slow the earth's rotation. Wile E. Coyote would be proud.
Sounds like the plan. I have an old WW2 searchlight I fire up every night to run my solar panels.
I just don't buy it. Didn't GW predict more harsh localization? like areas with little rain get less, etc... So windier part of the planet will get even more windy. Until we get more data, then we might get a better answer.
That is the problem of explaining things right now. It can go either way and there will be an explanation for it.
Imagine if we get more wind -- hehe -- someone would say "hey, GW is GOOD... We get more wind power."
Because of polar amplification, the Arctic is expected to warm much more rapidly than lower latitudes. Current observations strongly support this expectation. This means that even though temperatures are increasing globally, temperature gradients will be decreasing, at least latitudinally.
Actually, with a modicum of physics, the basic principles of climate are not only easily understood but obvious. Things are unfolding as I expected, unfortunately.
My general observation is that the ability of winds to drive marine moisture inland will drop as a result of the decreased gradient, and local experience here in a rain shadow concurs. Lots of rain at the coast but we're not getting it. This has huge implications for large continental areas. It seems as though the 'backside' circulation isn't as affected as the prevailing onshore, i.e. western versus eastern US.
The reality is that our water comes from the surface of the ocean. Despite a record cold winter and heavy coastal rains, we're at the point where someone appears to have sawed the legs off the water table!
"Sawed the legs off the water table" -- love it! I'll have to use that sometime. ;->
Dinh Ton;
Whose predictions are you choosing to follow? There are theories, but nobody can make us any promises at this point.
I'm preparing for droughts and floods, and anything inbetween.
Anectodally, the trade winds have seemed progressively weaker and less reliable here in Hawaii over the last 35 years, leading to more Florida-like weather these days.
Of course, this codger-like observation may be at odds with actual measurements. Girls were cuter here 35 years ago too.
Still, if true - which it could well be - it'd also have an impact on the rain here. A lot of it currently is precipitated out adiabatically as the wind is forced over the mountains. A warming world with weaker winds will decrease that effect in two ways. The islands then might have to eventually get most rain erratically from decayed EastPac hurricane remnants and other unpredictable weather patterns.
On the plus side, I may have oceanfront property soon.
Perhaps this should be considered before we madly rush toward a huge build-out of wind generators everywhere?
Or, maybe it's not such a big deal.
http://www.realclimate.org/index.php/archives/2009/06/winds-of-change/
Where's my secret De-coder ring when I need it? Trying to decipher this message..
From Science Daily's; 'Little Green men from the Planet of War could help us justify the Water Needs of the Tar Sands program'
I don't mean to say that this discovery of cleaner water-recycling is wrong in and of itself, but when the message is basically 'Don't get in the way of my tar-sands play', then I have to remember how much the boardroom perspective is one of simply maximizing extraction. The code above seems to say that this isn't a scientist who'll let fussy environmental concerns get in the way of business.
It seems like every month, a scientist or company announces a method for cleaning up the tar sands mess, never acknowledging the previous announcements by others. And then you never hear of it again.
Summary of Weekly Petroleum Data for the Week Ending June 5, 2009
And the rest of the Weekly Report:
"Total products supplied over the last four-week period has averaged 18.3 million
barrels per day, down by 6.9 percent compared to the similar period last year.
Over the last four weeks, motor gasoline demand has averaged 9.2 million barrels
per day, up by 0.4 percent from the same period last year. Distillate fuel
demand has averaged about 3.6 million barrels per day over the last four weeks,
down by 8.4 percent from the same period last year. Jet fuel demand is 14.3
percent lower over the last four weeks compared to the same four-week period
last year."
From the products supplied it looks like americans have stopped flying, are no longer transporting goods around but are driving more often to their mail boxes.
Much excitement over this report on CNBC. Nobody was expecting it, even after the API report.
Their analyst said it was a drop in imports and low refinery utilization - supply, not demand - that caused the draws.
Though the gasoline numbers might mean the American road trip is alive and well.
I have mentioned about five times in the last two weeks, gasoline demand has been strong – so strong there was nearly a shortage in the upper Midwest region last week [although supplies heading north from the Gulf Coast were said to improve markedly this week].
As to the reasons for this growing gasoline demand, I can only guess. Reasons are probably relatively lower prices compared to last year and a possible transition from air transport to ground transport. Although there has been a great many jobs lost, and hours cut, those with shorter hours may still be commuting about the same amount and job losers seeking new jobs. There may also be a built in inertia from the switch to larger vehicles and greater suburbanization since 2000 that may not yet have peaked.
After a couple decades pretty much cut off from my high school alums, I've reconnected with some on Facebook. The striking thing is nobody, but nobody gives a damn about PO or ACC. I don't think they think it's all very important.
But what if they do? Their antics (crisscrossing the country/world in airplanes, driving their boats, ATVs and muscle cars, etc.,) make it pretty clear they don't, but...
Makes me wonder: as awareness grows might we see a few years of "one more for the road" on a grand scale due to people assuming they're going to never have the chance again, but they do want to preserve their kids' futures?
Hmmm....
Cheers
I run into these types as well. In some settings it doesn't do to bring up downers like ACC or PO, but the people are out there consuming like they didn't have a care in the world. I guess part of it is a "I can still do it now, so why shouldn't I" sort of attitude.
Some sort of care, but they expect someone else to come up with a solution that doesn't involve any level of personal sacrifice - in the meantime they will continue on as before.
Ultimately it will be the price of things like oil that will put an end to this sort of behavior.
"Though the gasoline numbers might mean the American road trip is alive and well."
Could be that many folks drive even more when unemployed than they did commuting, at least as long as the unemployment checks are coming in. Looking for a job, outright boredom, or relocation explorations. My neighbor draws an unemployment check, seems to go to town just about every day (30 miles round trip)for miscellaneous, certainly not job hunting around here though.
I think it's just the usual summer increase. Prices are lower than they were last summer. And the population is larger. With the summer driving season upon us, we're driving again.
Energen/GEM to inject US$125-200m into sugar factories - Makes down payment on Bernard Lodge, Monymusk (Jamaica)
If this materializes, it will be a revolutionary shift in a centuries old industry that has suffered decades of neglect under government ownership. Little or no investment in modernization of the plants, since they were nationalized by the Chavez like, left leaning government in the 70s, has left them with production costs about three times higher than the world market price for sugar. The practice of burning the sugar cane fields prior to cutting the cane with manual labor, has left the sugar lands dependent on fertilization and it will be interesting to see how a switch to sweet sorghum from the almost culturally entrenched sugar cane will go.
Alan from the islands
As a sad ironies go, this one takes the cake. We can actually observe a classic case of resource substitution taking place in real time. The island of Palau, formally mined for phosphate deposits, may now act as a resource for prisoner detainment.
HuffPo: Pacific Island Nation Agrees To Take Chinese Gitmo Detainees
The even more phophate-exploited island of Nauru may also hold some possibilities for prisoner detainment. These nations are desperate for money now that they have run out of natural resources.
I hope they are good swimmers.
While facing extinction from rising seas, Palau explores potential 'world class' oil field
Palau is also part of an ongoing but largely failing effort to get the U.N. Security Council to put climate change on its full-time agenda. Its representatives say that elevating global warming's status to a security threat will push nations to do more to curb greenhouse gas pollution and help the small island states survive.
"Never before in all history has the disappearance of whole nations been such a real possibility," Palau's vice president, Elias Camsek Chin, told U.N. member states at the most recent General Assembly opening debate. "Palau and the members of the Pacific Islands Forum are deeply concerned about the growing threat which climate change poses not only to our sustainable development, but in fact, to our future survival."
http://www.eenews.net/public/climatewire/2009/05/29/2
How much phosphate can we get per detainee?
Peak Oil News, put out by ASPO-USA, reports this morning (June 10) the following headline:
"CERA Official acknowledges peak oil is here"
Peak Oil News identifies the CERA official as Jim Burkhard, saying that he began and ended his talk by saying that CERA acknowledges that peak oil is here. They cite ASPO-USA Advisory Board member Scott Pugh as the source, who was present and heard the remarks at the Center for Strategic & International Studies (CSIS). Peak Oil News further states that "Mr. Burkhards presentation should be available soon under Events at:
http://www.csis.org/researchfocus/energy/". Upon looking at this link, I wasn't able to find this presentation, so either it was there but I can't find it, or it hasn't been posted yet.
I don't yet see Peak Oil News for June 10 on the ASPO-USA web site (http://www.aspo-usa.com/).
If true, this would be an interesting contribution to the question of whether we have reached peak oil, and would perhaps settle (at least politically) the question of whether peak oil is indeed imminent.
Keith
Discussed in yesterday's DrumBeat. My take: there's a lot less there than meets the eye. In fact, what CERA is saying is that peak oil is NOT here.
Thanks -- I totally missed that discussion.
Keith
In terms of peak oil, it really does not matter if it is here now or in 5 to 10 years.
The time to prepare for a post-peak world has already run out.
Since it would take at least 20 years to prepare for a post-peak scenario.
In theory we could replace all gas powered cars in 15 years.
The US Senate just passed a cash for clunkers bill that allows a $4500 rebate on each old car.
But what about trains, planes, trucks, ships, farm equipment, roof shingles, asphalt?
At some point the tanks will be empty due to cost of oil and gas.
There are some restrictions in the Bill from the House. The clunker traded in must be rated at less than 18 mpg for one. The other is that the the $4500 is only for a car which achieves greater than 10 mpg above the rating of the clunker. If the improvement is only 4 mpg, the voucher is set at $3500. According to the WSJ, SUV's, PU's and minivans get the vouchers at less improvement, $3500 for 2 mpg and $4500 for 5 mpg. Go figure...
Then too, there's the question of WHICH MPG to use, the old EPA rating from the 1070's or the new window EPA sticker or CAFE rating.
http://www.fueleconomy.gov/feg/calculatorSelectYear.jsp
E. Swanson
Does the clunker have to be already owned, or can someone go buy a piece of sh*t for $200 to qualify? Just curious.
Well, it looks like Congress did think about that problem. According to the WaPo, to qualify, the clunker must have been purchased at some date before the law is passed and it must have been registered and insured for at least 1 year before it is traded. The Senate has a similar bill, one difference being that their version is retroactive to new car purchases made after 31 March. I recall reading that at one time, the proposed bill included a requirement that the new car be produced in the U.S., which made the Canadians a bit irate...
EDIT: the Bill number is H.R. 2751.
Go to THOMAS and search on the bill number for the text for details...
E. Swanson
The car market in China is booming: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aJRu_UgivNg8
IMO, China is to our current predicament as the US was to the Thirties Depression--when total US cars on the road reportedly increased by three million in 1937, versus 1929. And actual (nominal) oil prices increased at a double digit annual rate from the summer of 1931 to the summer of 1937.
It's probably hard to imagine for the average Western person how much people are willing to give up or commit in order to have something that is as life changing as a car.
This is perhaps especially true in a Nation where personal liberties are not what they are in the West and the prospect of being able to travel -anywhere- at -anytime- is a massive draw.
From the supplied stats its obvious that our grandparents where willing to give up a great deal -even during a depression- to experiance the thrill...
If China is not careful it may find itself spending increasing amounts of its income on supporting -not US indebtedness- but oil imports.
Nick.
Heading Out had a post about The Tata Nano and Jevons Paradox. They can't get them off the showroom floors fast enough - buyers want AC and power windows, too, not that hideous tacky no-frills $2050 model. 100k sales/month for the Nano so far.
Well, if you want to put a smile on your face -
Just think about the shock those folks are in for when they find out what it COSTS to MAINTAIN that new car of theirs.
Tires, labor, oil, labor, filters, labor, tuneups, labor, electronic component failures, labor, etc..........
And those new cars are much more difficult for the average owner to maintain/repair themselves than my 30+ year old clunkers.
I just noticed that one provision of the cash for clunkers bill is that the traded in vehicle has to more than 8 years old and less than 25 years old. None of my vehicles are new enough to qualify. Guess the Government just wants people like me to keep on driving our 8-10 mpg pickups?
It was pointed out here that all those motorists switching over from scooters/bikes will now exacerbate traffic jams that much more, eating into their cheapmobile's high fuel savings. Better for emissions, perhaps.
They're stimulating their economy:
From Bloomberg:
The Chinese are adding more consumption pressure ... this drives up energy prices and cuts demand for Chinese goods, the income from these is what allows China to buy cars in the first place. Why not 'buy' energy conservation, instead?
The auto sales effort in China is classic Keynesian economic policy. The question is how this policy fits in with the 'menage a trois' of stimulus, the rise in energy costs and the likely relative revaluation of currencies. It seems likely rising energy costs derail similar stimulative efforts in the US. Any stimulative effects on China's and USA's economies are constrained by the yuan-dollar peg. Second, the China stimulus flies in the teeth of the Chinese savings habit, partly because saving is the only way for Chinese citizens to acquire goods and services; this runs alongside a long- standing cultural propensity to save. While the PBOC is unlikely to abandon the dollar peg until events force them to do so, they could cheat by printing more yuan. The outcome of the '(Wolfgang) Munchau Scenario' is a decline in liquidity. Monetary authorities are working strenuously against this illiquidity outcome, including the Chinese, peg or no peg. This is why the Chinese government is paying people to buy cars.
There is more here:
http://economic-undertow.blogspot.com/2009/06/hyperinflatoin-in-china.html
Not exactly news to anyone who has observed Homo sapiens, but now there's scientific proof: 'Tis better to make a bold prediction and go down in flames, than to never make a prediction at all (or to be a milquetoast about it):
Humans prefer cockiness to expertise
Sounds like an ONION story-people are really really stupid-here is another one http://www.theonion.com/content/video/obama_drastically_scales_back?utm_...
It's a toughie on both ends. If one listens to experts in a field one has no or little knowledge of, how does one decide who to believe? If it's of obvious and urgent importance, one plunges further in. If not, one cannot plunge into everything. So one cannot entirely blame average Joe, who R us most of the time.
On the other hand, there are experts that know so much, and can find a flaw in almost any generalization, that they are sometimes incapable of saying anything definite and comprehensible to the average person. V. Smil is one author I have in mind. I'm entitled to say this, because I've bought several of his books -- with no regrets. I contrast him with someone like C. Campbell, who is also extremely knowledgeable, but will take chances, sometimes even somewhat outside his field of expertise. And then there's Lovelock, whose Gaia theory I have immense respect for, and yet his support of the nuclear option I regard as disastrous.
Bottom line, my preferred method for deciding who to believe is open and direct debate between articulate and leading exponents of opposing viewpoints.
...with this new revelation in mind I predict the following with absolute certainty:
1. Oil will rise to $94.63 dollars a barrel before tumbling back to $49.80 by November.
2. In 2012 People travelling to see the London Olympics will be charged almost double the face value of their air-fare in fuel surcharges due to the 'Oil Crunch' that nobody predicted...
There are no gaps in my knowledge so be warned.
Nick.
It certainly explains the success of people like Jim Cramer, or Rush Limbaugh.
If you shout loudly, wave your arms, curse or froth enough then your animation and cockiness is mistaken for expertise. Such a shame. I hadnt thought about it like this before but it explains so much.
The shout them down approach worked well for Hitler. They say his speeches captivated his audiences. He caught the wave of radio and talking movies, so maybe he was the first "rock star", in a manner of speaking. He was real good at intimidating people in personal meetings as well...
E. Swanson
Hah! That ain't news! I've said it a billion times! People are stupid! Style over substance!
We're all gonna die!
;)
Cheers
The statistics I've heard are that about 70% of personal communication comes from body language. About 23% comes from tone of voice. The remaining 7% is content.
It ain't what you say, it's how you say it.
Just like it isn't what you know that gets you places, it's who you know. People are primarily social animals.
That would explain my experiences negotiating with taxi drivers. 6 or more times a week I have to negotiate a flat rate with a taxi driver before I hop in and get driven away. My travel budget is tight so I really need to get the "local rate" not the "tourist special".
At first I worried about what to say or which taxi to approach first. Now I have learned that the best fares are gotten by concentrating on two things. Spreading my weight equally on both feet and breathing evenly. It really doesn't matter what you say, and smiling/frowning etc has little effect either.
Rather scary when you think about all the big decisions that are made by a small group of people based on the advice of experts.
This study probably explains why so many people who would probably be very capable US presidents never run (they'd never get elected) and why so many people who run and get elected are just hopeless when they try this job.
Why do people go for the flashy brash and confident beginner rather than the cautious hesitant and unsure expert?
Caution and deliberation are boring. Who wants to watch a cautious and deliberate person play tennis or act on the stage? Passion, daring, risk-taking are attractive to us. But if it's just a tennis game or a play, that's OK...
Most problems have a temporal element.
It isn't enough to aim perfectly, if you throw too late the target is just *gone*.
Passion, daring, and risk-taking most definitely are needed, caution and deliberation aren't enough.
Regarding the new EIA world oil production data, Matt Mushalik in Australia sent me the following graphs, and asked me to post them for him. These graphs show incremental production, so they really show how production has changed, over the period eight-year period shown in the graph--a wide band for a country is relatively high production for that country; a change from a wide band to a narrow band represents a relative drop in production for that country.
The first graph shows that OPEC oil production is down about 3 million barrels a day from the peak, based on EIA crude and condensate data. The biggest decline in production is for Saudi Arabia:
The other two graphs show world oil production stacked in different ways. When one stops and analyzes the situation, the drop in world oil production since the July 2008 peak is fairly close to the drop in OPEC production - about 3 million barrels a day. So non-OPEC production has been fairly close to flat recently--in fact up 329,000 bpd since July. This may be just an EIA reporting distortion, though. We know from historical data that EIA crude and condensate reported amounts for recent months tend to "develop" downward as estimated values are replaced by actual values.
What's "Incremental Crude Production" and what part of KSA accounts for about 1mb/d of it? New projects? Something from an Oz perspective? Why are producers across the board dropping production in tandem last fall? This wasn't OPEC, it's a whole slew of countries cutting output at the same time as the outages caused by Ike. I think it's last fall, anyway, with my own graphs I orient the dates on the X axis at 90 degrees, to fit as many on as possible.
Nice visuals at any rate.
I find it very difficult to discern "across the board" trends in these stacked graphs. Usually if one major contributor rises or falls, they take the whole graph with them and give the illusion that the rise or fall is happening "across the board". If the more stable producers are put lower in the stack with the most volatile at the top, I feel this illusion would disappear. Just my 2c worth.
Alan from the islands
Oh, I get it, Gail explained all this to an extent. Sort of. Incremental as relative to what - historical production? A wide band indicates "relatively high production;" meaning as compared to its output at the start? But what if production was low due to other factors - depressed price being a big one. This wouldn't be indicative of geologic factors at work necessarily. How incremental gain is stacked up to total C+C I'd be interested to know more about as well.
Missed the stacked aspect of the graph at first. Too much going on here. Still puzzled by "Peak 2006/08."
As an example, in the first graphic, the first big dip in 2003 is almost all due to Venezuela while the dip at the end (2008) is made a lot worse by Saudi Arabia. Take Venezuela out and the fist dip disappears while the removal of SA would make the dip at the end of last year seem a lot less severe. Most big changes can be traced to one or two countries.
Alan from the islands
Yes, Alan, I said I missed that it was a stacked graph. Was puzzling over it while trying to hold a conversation at the same time. Here's one I made just now from the new BP Stat Review's page on regional refining margins:
Would still like to hear from Matt about my other questions.
Dude, I follow and graph every oil producing nation. I saw no such trend, or slew as you call it. Would you care to provide a list of countries you think cut production last fall, corresponding with Ike. Norway had maintenance shutdowns in August and September and Azerbaijan has had some very serious pipeline problems causing their production numbers to crash and generally be erratic last year. And they still haven't gotten those problems completely fixed.
Other than that, there was no other serious cuts in non-OPEC production.
Ron P.
Ron - read my reply to Alan, I misunderstood how the graph was derived when I first glanced at it.
Incremental crude production are production changes compared to January 2001. The methodology is explained in our previous articles here:
Did Katrina Hide the Real Peak in World Oil Production? and Other Oil Supply Insights
October 2007
http://www.theoildrum.com/node/3052
Bumpy Crude Oil Plateau in the Rear View Mirror
April 2008
http://www.theoildrum.com/node/3793
This graph is about PAST production, so new projects are not included. The Oz perspective is that since Australian oil production is declining - WA decline is shown here:
http://www.dmp.wa.gov.au/documents/PWA_September_2008.pdf
it will be increasingly difficult to import oil.
The drop in crude production in August/September due to hurricanes, the BTC pipeline explosion and the war in Georgia (oil from Azerbaijan) can be clearly seen
On the OPEC graph, you see that about every member (except Iraq - which is outside the quota system - reduced production. When stacking, it all adds up and the slope, which starts moderately with Venezuela, gets steeper as you go up in the graph.
Thanks, Matt. Will parse those documents when I have a chance. Since Jan '01 is a wholly arbitrary starting point a dynamic graph that could vary the width of the band as you move a slider to shift the base year would be fascinating - perhaps JoulesBurn could show how to pull something like that off, his last paper here had some very slick features with graphs that changed appearance with mouseovers/clicks. Was surprised at the paucity of comments on that one - I was out of town when it appeared, and didn't have anything substantial to say when I had a chance to read it, really, beyond "wow." ;)
The 10 year treasury auction did not go very well. The price/yeild came in at 3.99%
That's a decent size jump, especially in light of the Treasury purchasing 3.5 billion in long term bonds this morning.
Looks like savers may soon start to be rewarded for saving. At least until inflation blows a hole through the dollar.
That OGJ article top linked is amazing - an call for the need to model the giant/super-giant fields as advocated by Robelius/Simmons/et al, who are referenced by name, this from people squarely within the industry, in its most high profile publication.
I'd call this quite a win for us in the peak oil advocacy crowd. No longer will the idea be dismissed as "garbage." Have to read this CERA piece, too. Have they upgraded it to "trash"?
Dude -- Interesting indeed that the OGJ would throw out such a report. IMO it was done strictly for public consumption outside the oil patch. For those of us in the oil biz, as well as many folks here at TOD, all we can say is "Well...da!!" As I've mentioned many time PO is old news to the oil patch...and yes, we still call it the "reserve replacement problem" and not PO. From a technical insider point of view the article is just wasted print.
Obviously his proposal goes no where until the operators (the KSA et al) open up their files and let the modeling begin. We can all start holding our breaths now. But the article may be just the start of the industry pushing PO supply issues publicly. I'm pretty sure such an effort will get little support from most public oil CEO's. But who knows: the majors are stating to advertise some about the potential future supply picture. They've tried to push the "drill here...drill now" angle without a lot of public support once the prices fell. Maybe a push towards getting out the truth about dwindling reserves is the new approach.
So the industry's lingua fraca is doublespeak? R/P issues instead of peak oil? Clean and Sweep as opposed to Search and Destroy? pəˈteɪtoʊ instead of pəˈtɑːtoʊ?
But I imagine pessimists are pretty rare when discussing the RRP or PO or whatever. Or are they? Most insider accounts I've read suggest that these macro scale issues really just aren't brought up often, your narrow focus specialists at work.
That would be grand if the reserves/flow issues could be framed in an acceptable political fashion. We need to let the hydrocarbon industry off the hook nice and easy; exceedingly marginal enterprises like fuel retailers would be utterly decimated otherwise, and you leave half of the population in a real bind if the other half is tooling around in EVs. This is something I haven't seen addressed much. Most gas stations are outlets for selling candy bars and Low Rider mags that also dispense a bit of fuel on the side to provide a base. People start installing Phills at home for their CNG cars in the millions and that's going to sting these retailers. They can install dispensers of their own but what upfront costs will that entail? How would a marginal business like this justify to a bank to take a risk on being ahead of the curve, if the shape is truly upwardly ascending? Maybe it wouldn't pan out long term. Etc.
Interesting article. However, I am mystified in how they talk about doing this using the future tense. And that they need huge buy-in from their colleagues to create a comprehensive model. As the cryptic Christopher Walken has said:
Yet, frankly, I don't think they are capable of it and they will end up missing the forest for the trees.
Dude -- were you asking if the PO or RRP is on the minds of industry insiders on a regular basis? (also, with respect to “double speak” in 35 years I’ve never heard anyone in the oil patch, except me of course, use the term PO…not once.) If so the answer is real simple: it's an absolute obsession with every operator I've dealt with in the last 15+ years. It is THE CONVERSATION inside almost all companies. It's especially true with new/small players. During the 90's when I was involved in the acquisition game it was a very simple model: no reliable growth potential on the exploration side of the fence domestically. Yeah...still drill a few wildcats but no one had a business plan that depended on this working. It was buy the other's guys crap, polish it up, sell it to Wall Street to get the stock price up and then run like hell. A more sophisticate approach by the majors/big independents but the same ploy. That's why the industry jumped on the shale gas plays so hard: there just weren't that many pieces of crap left that haven't been pumped up at least a time or two.
As I implied, just a WAG but it could be that the folks at the OGJ have decided to push the limitation side of new reserves. But the folks at Chesapeake et al are still pushing the "lots of potential out there" story". In other words, what's the best way to talk up your stock price: "big problems replacing our depleting production" or "there's a world full of great opportunities out there just waiting for us". Can a company make good living drilling NG exploratory wells right now? Hell yeah. In the mid 80’s I had the most successful exploration effort in my career and we were selling the NG for $1/mcf. At $3.50/mcf a company can make a 50% ROR. The problem is that there are few projects out there to be drilled. With the seismic technology we have today I could drill 1000 NG wildcats like I did in the 80’s with a 90%+ success rate. But those wells have been drilled. There just aren’t that many exploration holes left to drill here. The current low NG price isn’t keeping wildcats from be drilled in the US. The price is keeping crappy projects from being drilled.
But CEOs of all the majors and many service companies etc. have sounded off on peak oil - usually to dismiss it, excepting Margarie and a couple others. This isn't even discussed to shoot the breeze? Perhaps it's considered beyond what mere mortals can do anything about - although you can frame it easy enough as a massive business opportunity - or are folks focused on the here-and-now at all times?
This doesn't equate to doublespeak, i.e., saying one thing which has precisely the same meaning as another term, without drawing any kind of distinction. I'm just being critical for no good reason, assuming what you say is true. If you were working for an automaker wouldn't you take an interest in the economy at large, the impact of a severe recession or depression on your livelihood?
I've always sensed a bit of macho in the industry's assurance they can produce any volume at any time if the price is right. Also you may not have conversed directly with anybody in the ff business about peak oil but we do have a few peers of yours online who are aware. Also the two gents who wrote a peak oil book, forget the name of the tome, ex-XOM and CP IIRC. Financial Sense interviewed them a few years ago if you're curious, file's still at the FSN website.
About the US debt desaster:
In an online poll, 87 percent of respondents said they considered China's dollar-assets unsafe, reflecting public opinion that is opposed to the government's policy of buying US bonds, the Global Times reported. The remaining 13% have got to be illegitimate children of Geithner.
It is not like me to bite on an all too easy opportunity to take on a retarded point and crush it. But this one called for it (see title).
Apparently the Chinese have no choice but to keep buying US junk (Treasuries).
Currently the US will issue over 2.0 Trillion USD worth of Bonds over 1 year. That is net. Including the rollovers it will issue over 3.5 Trillion. That is the official line. My estimate is for over 4.0 Trillion total (2.5 trillion net). Over the last 2 years the Chinese have purchased close to 40% of US bonds. To keep this ratio up they will have to purchase over 1 trillion USD Net of Bonds, just this year. Bloating their US Bond holdings by over 125% in one year. But wait...we are not done yet. The rest of countries are in no position to step to the plate here. Many of them have troubles of their own and last year's record Treasury Bond purchases from the Middle East were only possible because of $100+/Barrel oil. With our Bench lineup retired or hurt or just plain unwilling to play in round 2 of "Who wants to be a Trillionaire (sponsor)?, China will have to buy close to 60% of this garbage. Ditto for 2010. China will be a proud holder of over 3.5 trillion USD of Bonds in 2 years. Now this is not a misconception, the Chinese are generally better at math than Americans. I am sure that they can see this as plain as day. I am even more sure they are not running around to their bosses saying "Sir..I figured out a way to solve our 800 Billion USD problem. We will make it a 3.5 trillion USD problem in 2 years and at that point we will sell the bonds and buy General Motors."
Now, I am not saying they will not buy bonds but for them to make an impact on the US economy they are going to have to blow themselves to hell. And what about in 2011? Can they keep buying at this rate?
Here is an idea...The US accounts for 20% of their export market. If that shrinks by 50%, China can make up the difference by stimulating domestic demand with 2.4 trillion USD worth instead of buying this crap.
So no. They do not HAVE to buy this crap. Anyone who is brain dead enough to suggest otherwise needs to start reading my blog regularly.
From: http://ispeakofpeak.blogspot.com/
And that's not including that China is just dying to knock the US off the top rung, have shown every willingness to sacrifice their own (whereas here they have to lie us into it, not being totalitarian), and absolutely, imnsho, intend to drive the US into the ground at some point.
When is the $64k question.
Cheers
Where do China get this kind of money? Are they printing US dollars?
A trillion is a lot of money here.
Hmmm -- thinking about this. That is about $1000/chinese - 3K/family. A lot of money here than for the country folks making less than $100/month. It would do China more good to invest that money in infrastructures to improve the standard living of these people.
-take a look in your garage/wardrobe/etc. About 50% of global manufactures -tat and all- originate their...
-and have a look at todays Guardian article/front page -they will be investing hundreds of Billions in renewables -including a 75 fold increase in solar- to reach a 20% target by 2020...
And to ccpo: if anyones 'driving' the US into the ground its the citizens of the US who have run up such huge levels of debt enabled by the Chinese.
Nick.
That would be a fair indictment if US citizens had gone out of their way to buy Chinese (and other foreign sourced) goods instead of made in USA stuff. To see what has actually happened, walk into any US retail store. You say:
Well, in most US retail stores, the percentage of merchandise made in China is far beyond 50%, and is actually approaching 100%. Good luck trying to find anything at all still made in the USA.
"But the retailers have no choice, the US manufacturers have all "offshored" their production." Well, in many cases they have, but by no means have they in every case. There are still quite a few US manufacturers, and there are not all that many categories of goods for which there is no longer any domestic manufacturer. Good luck trying to find the goods those domestic manufacturers make in the retail stores, though. Most stores no longer carry them. All the stores want to carry is the cheapest crap they can find, and that usually means Chinese junk.
A few examples to illustrate:
-It used to be that if you wanted to buy gauze pads of bandages of various types and sizes, you would visit the nearest drug store, and on the shelf would be products made by Johnson & Johnson, made in USA. Then, a few years ago, some of the larger chains started selling their own store brands, a little cheaper in price, but almost as good in quality. These initially were also made in the USA. A little more recently, the store brands shifted to overseas manufacturers, and were cheaper still, but now of noticeably lower quality than the domestic J&J stuff. Most recently, I have now noticed that the big drug store chains are no longer even stocking most J&J stuff; the cheap imported store brands are all they have for sale. So tell me, is it the customer's fault that they are buying Chinese bandages and not J&J products made in America?
-Another example: Blue Jeans. "You can't get any blue jeans made in USA any more, because there aren't any!" Well, think again. It so happens that there is at least one US blue jeans manufacturer - Pointer - and they make good stuff. I've bought three pairs now, and am very happy with them. Where did I get them? Over the internet, of course. Good luck trying to find a store that sells them, hardly any do. Most people go to stores like WalMart to buy jeans, and what they are going to find on sale are all made overseas. So tell me, is it the customer's fault that they are buying foreign blue jeans and not Pointer jeans made in America?
There are plenty of similar tales I could tell. I have been actively researching goods still made in USA. There is a lot out there, but almost all of it is uniformly VERY HARD to find and to buy. Were it not for the internet, I would be mostly out of luck. Most people simply never have a chance to even consider buying made in USA products any more, because the retailers REFUSE to carry it. All they want to carry is the cheapest imported junk they can find. Sometimes, even if a domestic manufacturer is competitive on price, they'll still go with the imports instead. I am becoming increasingly suspicious that many retailers are going out of their way to exclude US manufactures from their shelves. Maybe they think that the US manufacturer still in business today probably won't be tomorrow, so best to curry favor with the offshore manufacturer now; I really can imagine thse people thinking this way. Or maybe they just assume that price is the only thing that matters to everyone, as if there were no such things as quality differences or even feelings of national pride and patriotism that might influence the buying decisions of some. Oscar Wilde would recognize these retailers as true cynics, "who know the price of everything and the value of nothing".
It is their right to be that way, I suppose. What I do object to, though, is retailers acting this way and then blaming our trade deficit entirely on the US consumer. Sorry, but it is not ALL our fault, and it is certainly not MY fault. I'm trying too hard to avoid buying imports to accept the blame.
The solution is simple and will probably get implemented:
US Treasury bills implode. Dollar crashes, hence Americans can't afford to purchase all the imports, and we return to manufacturing stuff domestically that we really need.
Of course I would think the transition will be a bit rough and China may go all "gangster" on us if left with worthless paper. But reality will catch up to us one way or another.
I don't think the Jeff Rubin scenario will play out so simply-following this logic Mexico will simply manufacture every product Mexicans need as their economy slides downward. IMO Americans will pay more or do without, but the days of the USA as a manufacturing giant are finished. Look at the political reality-almost 13 trillion dollars to support the financial sector-compare that to support for manufacturing (and any manufacturing support goes to old entrenched interests). This is with a President who is continually talking about rebuilding manufacturing. IMO Americans are going to have to eventually accept what the USA is and what it is no longer.
The trouble with manufacturing is that is produces physical goods that can be shipped. These goods represent the costs of labor, government regulations, input materials among other things. It follows then that sources with the lowest of these input costs will be able to out compete those with higher such costs.
Since the U.S. has a strong dollar policy to maintain it's position as the defacto reserve currency of the world and also the oil currency, it is imposible for it to compete on labor costs in most cases. It has a strong environmental lobby and they have been successful in passing many government regulations which foreign competitors may not have.
Add in the ability of many foreign competitors to devalue their currency, which the U.S. can not do because of the dollar's status as a reserve currency, and manufacturing is constantly under pressure.
So what is left of the U.S. economy? Services of course like health care. Retail to distribute the cheap imports. And government. Agriculture survives because the land can not be outsourced, but it too is under attack by environmental regulation. And efforts to raise agricultural prices by expanding markets such as corn use for ethanol are attacked. Imported oil is preferred, even though wealth leaves the economy. It doesn't matter too most. It's the American way.
We are going in the direction and toward the goal most want: a declining America. It may be the best thing in a post Peak Oil world, so don't worry about it too much. When we crash we take a lot of the world with us as we saw in 2008. Anyway manufacturing is doomed by resource constraints.
Different side, same coin.
Cheers
Look like we are driving off the cliff -- all with the help from our friend.
China Car Sales Jump ‘Beyond Imagination,’ Bring Two-Month Wait
"The Crude Reality Of Peak Production
If crude oil can double in value with the world in recession, just imagine what will happen when demand picks up. Prepare yourself."
good advice!
http://www.forbes.com/2009/06/10/crude-oil-yergin-personal-finance-inves...
glad to see Forbes mag is covering this topic.
For those interested in researching what USA-made products there are to support:
http://www.google.com/#hl=en&ei=pJ0wSs3pGon6tgO1mMzQAw&sa=X&oi=spell&res...
Oil's 'Endless Bid' Returns
Interesting theory.
A good find Joseph. It's short and simple and should be a read for all here. A theory or an obvious fact? Let each decide. But here are a couple of points I'll add. First, during the entire cycle of rising and crashing oil prices virtually no changes were seen in the world’s oil reserves or production capabilities. Little changes but nothing even close to explaining the price swings IMO. On the consumption side, yes, some increases and then some decreases. But most of the reports show those changes in just single digits. If the demand for bread drops 5% I doubt most would expect the price of a loaf to drop 70%.
I agree with the article. It's rapidly shifting changes in the mentality towards the futures that seems to have driven the pricing issue IMO.
Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. The concept is based on the observed production rates of individual oil wells, and the combined production rate of a field of related oil wells. The aggregate production rate from an oil field over time usually grows exponentially until the rate peaks and then declines—sometimes rapidly—until the field is depleted. This concept is derived from the Hubbert curve, and has been shown to be applicable to the sum of a nation’s domestic production rate, and is similarly applied to the global rate of petroleum production. Peak oil is often confused with oil depletion; peak oil is the point of maximum production while depletion refers to a period of falling reserves and supply.
I have more info about it in my laptop computers but i will share it later. Now its enough.