Open Thread

Virgin exploration territory. Sign up for a lease and start sinking wells.
"Oil is a fungible commodity" - discuss. Is it? How much is sold on forward contracts like Venezuela's new contracts with China? How much is sold on the spot market? Does anyone know?
Interesting that you should mention Venezuela.  It seems to me that insofar as they offer oil on a priority basis and at a discount rate to close allies such as Cuba, oil is not fungible.  Or am I wrong about this?  (Not that I find Venezuela's policy objectionable - quite the contrary, actually.)
Warner Brothers has started running ads, with heavy emphasis on oil, for "Syriana."   The script is based on work by former CIA agent Robert Baer, and Baer is credited as a cowriter on the script.   The movie is in limited release on 11/23, and it will be released nationwide on 12/9.  

Following is the Warner Brothers website:

The website has a link to a website that asks you to get involved in reducing our reliance on oil.  

Following is a plot summary from IMDb:

Plot Summary for
Syriana (2005)

 From writer/director Stephen Gaghan, winner of the Best Screenplay Academy Award for Traffic, comes Syriana, a political thriller that unfolds against the intrigue of the global oil industry. From the players brokering back-room deals in Washington to the men toiling in the oil fields of the Persian Gulf, the film's multiple storylines weave together to illuminate the human consequences of the fierce pursuit of wealth and power. As a career CIA operative (George Clooney) begins to uncover the disturbing truth about the work he has devoted his life to, an up-and-coming oil broker (Matt Damon) faces an unimaginable family tragedy and finds redemption in his partnership with an idealistic Gulf prince (Alexander Siddig). A corporate lawyer (Jeffrey Wright) faces a moral dilemma as he finesses the questionable merger of two powerful U.S. oil companies, while across the globe, a disenfranchised Pakistani teenager (Mazhar Munir) falls prey to the recruiting efforts of a charismatic cleric. Each plays their small part in the vast and complex system that powers the industry, unaware of the explosive impact their lives will have upon the world.

See also previous TOD commentary on Syriana here.
I wonder if the Saudis are setting themselves up, and if so, why. If they expand production as stated, applause all around. However, if they don't, many will assume it is because they don't want to, greedily hoarding their treasure to themselves and/or holding out for ever higher prices. This would cause unhappiness among US consumers, already displeased by 9/11. Many would then wonder if we should go over there and help them increase production.

The only reason I can think of for the many (thousands?)princes putting themselves in such a potentially awkward situation would be the thought that, if the populace were to think the resource might soon run out, the ungrateful might try to end the well-deserved (but paltry) billions paid to them each year (month?)  Naturally, every month or year they hang on means ever fatter Swiss bank accounts.

Meanwhile the IEA is carefully covering their rosy estimates (behind) by saying that OPEC must invest many billions to expand production, and that if OPEC can't/won't make the investments in a timely manner, it is OPEC's fault and the IEA obviously cannot be blamed. This position firms up Saudi for the patsy role.

OPEC's past performance of withholding production to firm up prices helps all the more to prepare the cartel for considerable blame. However, it should be said (but won't be) that past withholding, and the ensuing high prices/reduced consumption, clearly delayed the peak by several years (and at least delayed global warming). Try to imagine $3/barrel instead of $3/gallon.

I'd been a bit puzzled at the way the Saudis seem to have set themselves up for a fall too. Perhaps though they are between a rock and a hard place - maybe they are trying to avoid pressure to allow in the big oil companies by claiming they can deliver the big production increases by themselves.
You are a sheik in a very small and oil rich country. The largest and most advanced military force in the world, known to have insufficient oil supplies for its own ends, invades and conquers the country next door. Now they call on you to stabilize the oil market and increase your production... I missing something? Occams Razor, people....

Politicians are thinking hard about the future!

Lieberman And Other Senators Unveil Oil-saving Plan
A bipartisan group of senators unveiled legislation Wednesday they said would save 2.5 million barrels of oil a day within a decade and 10 million barrels a day by 2031. The country now uses a little over 20 million barrels of oil a day, most of [it] for transportation.

"Failure to act, we fear, will make America like a pitiful giant, tied down and subject to the whims of small (oil-producing) countries," said Sen. Joe Lieberman, D-Conn., calling U.S. dependence on foreign oil a national security risk.
Don't worry about it, Joe, we'll certainly be down 2.5/mbd within a decade and 10/mbd by 2031. Will make America a pitiful giant? You mean that's not well under way?
This is great news, and should be praised, not derided.  At least it's a foot in the door. It's also interesting that evangelical Christians and conservatives are playing a key role in the process.

If you look at the long-term forecast for U.S. oil production, the U.S. will drop to around 1mbd in 2020. As a ballpark figure, the U.S. military uses around 800,000bpd. So somewhere around 15 years from now, the U.S. will barely have enough domestic oil to fuel its military, let alone fuel its military and economy at the same time. At the same time, the fields supplying the U.S. will become smaller, less geographically concentrated, and more difficult to secure against sabotage. The idea that the U.S. can't really conserve oil is a siren song leading the U.S. into a very dangerous trap.

I agree, this is a step in the right direction and should be applauded. Maybe it isn't all that we wish for or that is needed, but it is a heck of a lot better than nothing.

It also seems to have a good mix of components...incentives for more research, incentives for smarter consumer choices, alternative fuels, and alternative transportation. Better than most legislation, which always seems focused on one component - whether it be ethanol, refinery construction, or ANWR.

The time frames for these demand reductions are ridiculous and do not reflect the real supply shortfalls that lay before us. I concede that it's a good but small step toward acknowledging the actual future problems but that is all.

So, JD, since you're so busy debunking peak oil, I suppose you think this is real progress. Conservation and efficiency are real but so is Jevon's Paradox. Diminished oil & gas usage--if it is sustained over time--really helps us meet the "Hirsch Gap". Otherwise, Lieberman is just talking about slowed rates of demand/comsumption growth over time. This is just nonsense and helps us out not at all. His 2.5/mbd reduction in a decade would reduce US overall consumption by some small amount over one year's increase in demand given the current trends. Anyone believing that will make any appreciable difference is living in a fantasy world.
I just want to make a correction. When I said "His 2.5/mbd reduction in a decade would reduce US overall consumption by some small amount over one year's increase in demand given the current trends", I meant reduce world-wide overall consumption. Sorry.

In addition, if we look at the EIA's demand increase numbers for the US, we see that over the period 1997 to 2004, oil demand (consumption) increased by about 0.3/mbd year to year. So, if demand increases remain linear and if in the 10 years we cut domestic consumption by 2.5/mbd, we will increase our total new consumption by only 0.5 mb during that period and our growth rate will be cut to 0.05/mbd per year on a linear basis. But, our consumption would still be growing albeit at a much smaller rate. Yet, there will be less world oil supply to share, supply will be decreased. So, where's the solution to our problem here? Obviously, demand must decrease, catastropically so for those earliest affected by the scarcity. Therefore, we are not looking at a situation where excess capacity is available but we are doing the right thing by conserving, instead, we are looking at a situation where demand shrinks (so-called "demand destruction") due to lack of supply. Which is why I think Leiberman's assumptions are all wrong. He frames it as "oil independence". This is a red herring at this point. We will be more oil dependent than ever, there will just be less of it to go around.
There is no such animal as "oil independence".  The only way we can be independent, is to not use oil from any other sources but our own.   That is not going to happen seeing that most people have to drive to work, to schools, and we still have to harvest things to eat, let alone fuel a military.
There's something seriously wrong with supporting continuous budget increases (latest senate approval is for 900 billion dollars) for a military that burns 800,000 bpd of oil, and talk about conservation on the other.  

What a bunch of hypocrites they are: Joe Lieberman and his cynnical alliance of fundamentalist Christians, right-wing republicans, and environmentalists.

(Oh yeah, we need to conserve oil because we need kerosene and polystyrene to make the new generation of napalm used on Iraqis.)

I have to say I'm with JD on this one (at least based on the press release - the details need analysis). Politicians can't be expected to eat the whole triceratops in one bite, but this sounds like it might at least tear a couple of holes in its side, and more can be added later.
After reading the article, the following thoughts come to mind:

--will those "savings" even offset demand growth?

--aren't those numbers rather puny, and isn't the time frame rather extended?

--aren't these politicians talking, and don't they do everything for show?

Then another thought occurred which sort of made all of the above moot:

If oil peaks between now and 2010, and if the decline is as bad as some say, then we're going to be cutting a hell of a lot more than 2.5 million barrels a day out of our "diet" "within a decade," whether or not Lieberman and the rest of them "act" in a "bipartisan" manner or not.

They're jumping on a foregone conclusion and pretending they're enacting some sort of solution.

As usual, I hate them for their disingenuousness.

But that's just my humble opinion.

We blame our leaders loudly for not taking action, and if someone tries to lead, we react with pure cynicism and jeer them for not taking perfect action.  

"It is not the critic who counts: not the man who points out how the strong man stumbles, or where the doer of deeds could have done better. The credit belongs to
the man who is actually in the arena, whose face is marred by dust..." T. Roosevelt

An shift may be occurring in consciousness amongst conservative/mainline Christians where we stop expecting our superman God to magically bail us out with his infinite unconstrained-by-natural-law powers, and instead realize that we may have to grow up and take responsibility for that which has been entrusted to us, the physical world we should steward, not consume.

This change is quite significant, if it is occurring, and may allow groups to come together who previously saw nothing in common.

Re: "Politicians can't be expected to eat the whole triceratops in one bite..."

Of course that's right and this is a potentially important acknowledgement that we've got serious problems. But it does not yet raise the issue to the level of a national emergency and sends the false message that these moves will be adequate to solve our problems. They will not. They will not even stop growth in our oil & gas usage in the cited period (out to 2015). Since all that time US production will be declining as usual, any new growth depends on new imports.

What is curious about this is that it comes on the heels of the recently passed Energy Bill. So, I'll concede that some people are waking up and smelling the coffee instead of drinking the CERA/IEA/EIA kool-aid.
Well, it would seem to me that the way to get our government to start a real push into ethanol or other fuels would be to frame it in terms of military security. I know the military is actively starting to use biodiesel, but that doesn't fly planes.

Maybe the best way to get something started is to get the generals all worked up about their own energy security. Military minds and budgets are the only government operations that seem to be able to think farther ahead than the next election..

So, where do you get these numbers, and what do you think they mean?
The numbers come from bloomberg energy - you can get to the page by clicking on the image.  The 40% increase is in 1 day.
We know natural gas is going up.  The 40% GOM shut-in capacity means 40% less natural gas available to U.S. customers.  (This includes many power plants, chemical plants, and other plants whose product prices are going to be rising proportionately.)  

Unlike with crude oil, we can't import our way out of this one.

speaking of virgin exploration ... check this one out
In page 19 of the BP statistical Review of World Energy (June 2005) there is a world map with the main oil trade movements.

I have tried to make that picture more intuitive and informative (e.g. the thickness of the arrows are proportional to the trade volume). A loop represents the amount of oil that a region produces for its own consumption (i.e. production - exports). Click on the image to enlarge.


Quoting Deffeyes (Beyond Oil): "The world oil peak is a world problem. Supertankers can haul oil
halfway around the world for two dollars per barrel. ... Export-import patterns can be rearranged
with a few phone calls. As the world oil shortage becomes more severe, who ships what oil where is less relevant".

I don't agree with Deffeyes here. My impression is that "who ships what oil where" should be
important. From time to time there will be local reorganizations of the flow (for political reasons
for example) but most of the trade flows will remain the same.

At Peak Oil news,, it was announced that Rembrandt Koppelaar has published his World Oil Production & Peaking Outlook in English which can be downloaded from  His lengthy report has extensive data by country, field and planned project that could be input into other models (e.g. differing depletion rates, shocks, etc.).  Your comments, comparisons, or alternatives?
I find the Koppelar report very refreshing, honest, detailed, and open in its assumptions. My only problem with it is its dealing with production decline rates. There is a discussion of ways of coming up with worldwide base decline rates, but then they announce that they picked a number (2.5% or 2.2 million barrrels/day production needed to cover annual decline till 2010) without really justifying where that came from. They have great discussions looking at declines in individual fields, and various references to oil co documents reflecting 5% declines, but I still can't figure how they arrived at the 2.5% figure. This makes a huge difference in whether we peak in 2012 or 2008.

They repeatedly state that their decline number may be too low, but didn't show the impact this would make.

My concerns are amplified by the following quote from the report:

* ... for countries that have been in decline for at least four years the average production decline after the peak was calculated. This production decline percentage was thereafter extrapolated. The problem with this method is that adding new projects to an extrapolated historic decline rate gives too optimistic an outlook. This is because the decline from the entire country (type III decline) is extrapolated. The decline rate is actually steeper than assumed by using this method. A better approach would be to see what projects came on-stream in the period that was used to estimate the decline and deduct the additional production from new projects in that period, then calculate the average production decline. In this way declines in fields and regions in the country (Type II decline) is calculated. However, it is questionable if this changes the outcome significantly, because once an oil producing country has peaked, it is logical that fewer oil projects will be added. This is due to the decreasing amount of discoveries starting at least 5 years before the peak.*

It is unclear if they follow this procedure (subtracting new additions) or not in the final analysis, given their comments. I would note that with US peaking 30 years ago, the contributions of the post-peak developed  Alaskan and GOM fields (and other onshore lower 48 fields) are huge, and ignoring them when calculating decline would make a huge difference. The same is true if you ignored the developments in the FSU since it peaked in the 80s. I don't think the report has as good a handle on decline as I would like.

Otherwise, I believe the report is a major and credible contribution.

We have replaced Rembrandt's draft outlook with his final report.  These comments and the new graph at :

Nov 16th, 2005 - Today's update replaces Rembrandt Koppelaar's draft version with his final 2005 Regular outlook.  As some other modellers, he has three scenarios; the other two being the Technological & Disruption Scenarios.  He is one of the few addressing refining capacity in his studies.  Above, we see he has tempered his peak extraction somewhat and that has postponed exhaustion well into the next Century.  His URR remains intact.

The Exhaustion Exit is demarked by each model's failure to produce 8-mbd (was 7-mbd).

See our Comments on Peak Oil, the ASPO Record & other recent Scenario draft updates at the Economics link.

Saved by the Europeans.

This week in Petroleum makes for interesting reading.

I encourage everyone to check it out.

I have copied some quotes from the report.

EIA has noted that gasoline supplies have increased due to both an increase in refinery production and a surge in imports. But which of these factors have been "most valuable" in terms of adding supply and reducing prices? While this debate has not invoked a similar passion as the baseball MVP votes did, it is instructive to look at the impacts both had in adding gasoline supply recently.
As the graph above indicates, increases in both production and imports have been important in reducing gasoline prices, but the surge in imports came at a critical time. While gasoline production increased by over 1 million barrels per day in a two-week period in early October, imports surged by significantly less than that in absolute volumes.

Good evening:

I though this story would be of interest to The Oil Drum community.

The Swedish Government has committed to Oil Independence by 2020. Announced measures include:

  • Tax relief for conversion from oil;
  • More renewable energy;
  • Measures for renewable fuels;
  • Resources for energy research; and
  • Continued investment in district heating.


Now why can't the G8 countries get their act together like this?

BTW I've been reading TOD since this past summer and must congratulate you all on excellent work! Thank you!

Ah, one less customer means oil for the United States will be cheaper by 2020 than it would have been otherwise. The U.S. should encourage all other countries but itself to follow Sweden's lead.</sarcasm>
I wonder if Sweden has also determined whether it can feed its population as petroleum and natural gas (fertilizer) become more scarce in the rest of the world.
One country's (or individual's) selflessness is another country's (or individual's) opportunity to pig out on the savings made.
OTOH, I would expect that a program like this would save a considerable amount of money wrt the trade balance, especially if oil / NG are becoming more expensive.

The next point is that when developping these technologies, that may also add considerable advantages in the world market.

hey fellow brainiacs...
This idea occured to me ... I'd rather not reveal
where I was when it did but, with handy legislature -
such as "The PatRIOT Act" and "Emminent DOmain"
readily available
      (and there are others in the works?)
Should be a piece of cake.

A major source of Fuel conservation would be to ban
fast food drive thrus but, not the banks.
Please, I still need a quick get away as I make off
with my stash of savings and compounded interest.

You see while it would not be illegal to operate
a fast food drive thru, There could be penalties
for non-co-operatives.
Infidels > painted as unpatriotic BECAUSE
conservation of fossil fuels is ...
a Nationl HOMELAND Security threat.
Any unethically seeking self interest(groups),
burger joints in the publics... minds eye,
will not bode well for the Slider. (ah coercion)

And Large corporate food chains main arguements
 against such a ban could possiblly be:

A)Additional heating costs in cold climates,
  Additional cooling costs in hot climates,
  both direct results of additional DOOR SWINGS.

B)Additional Replacement DOOR COSTS !!!

C)Loss of Revenue due to employees being in
  the customer is allways right
  line of sight.
  Consequently Observing food handling practices;
  resulting in lack of appetites,
  hence: loss of sales.

D)DANA corp.(Ticker symbol DNC)
  Automotive replacement parts division slows.
  And your brother-n-law thought it couldn't get
  any worse.

Mom and Pop Drive Thrus ... Well,

Do they exist ???

"Hi mom, hey Pop." echoes


Upside beyond the obvious fuel savings/emissions

a)Ya gotta get off your but, and put some (energy)
  effort into it. What ... exercise!
  Big health issue = lots of votes here people.
  Come on.

b)DOOR manufacturing booms. Adds Jobs.

c)Professional (contracted) Door Installation trade
  increases, providing fast food employees
  alternative JOB opportunities. (Upward mobility)
  Increasing tax revenue! Adds Jobs. More Votes!

d)Jobs Program - Which Government has an obligation
  to provide FUNDING (raising taxes for training)
  stimulates an all ready red hot economy ...
  and known ripple effect - practically funds
  IraQ war and future terror (whoms?) projects
  into the unforeseeable future! Win win situation


 All in favor vote yeah
 all opposed hates his neighbor.

While there are other points to this delicate issue,
I cheerfully put forth this measure as a simple
remedy. A David v. Goliath solution if you will.

My friends at TOD can crunch the numbers.
The bottom line, I am confident, will be impressive.

Thank you... thank you,

sheeesh... and ALDI sells cheap coffee

Think small, think fast ,PeAcE

For a bit of amusement, but the ethanol pitch is on topic:

The Palace of Sheikh Zayed bin Sultan Al Nahyan

Bad: Falling for an email hoax. Worse: Using the hoax as the basis for your presentation to the local city planning commission, thereby displaying your gullibility to the entire public.

As reported by the Muncie Star Press (no link), Don Love gets the award for doing the latter. He received an email containing a series of pictures of an opulent estate (shown below), with the caption:

"In case you're wondering where this hotel is, it isn't a hotel at all. IT IS A HOUSE! It's owned by the family of Sheikh Zayed bin Sultan Al Nahyan, the former president of the United Arab Emirates and ruler of Abu-Dhabi."

Enraged, he made a slide presentation out of the pictures and showed them to the planning commission, as part of his effort to get them to approve construction of an ethanol plant. His point was that they should promote local energy projects, to prevent all the city's money going to greedy, oil-rich sheiks. He told them: "This is the type of thing being done with your petro dollars that I want to re-patriate. Keep in mind the gentleman has more than 20 wives. This is one of 70 baths. Some are bigger than my house. This is his little swimming pool. These are his cars."

Of course, the pictures don't show a sheik's palace. In reality they show a fancy hotel in Abu Dhabi called the Emirates Palace. All the stuff about 20 wives is bogus too. If Love had bothered to do any research, he would have found this out. He probably could also have found some real pictures of a sheik's palace, which would have been a more effective way of making his point.

Just to take stock and play Hari Seldon a bit, the Groppe comment from ASPO about energy switching and the secret White House energy meetings only reinforce my feelings about a post-Peak scenario.  

Even though, as Darley says, the world's middle classes are by far the primary energy depletors, the first to feel the effects will continue to be the poorer countries and to a lesser extent, the poor of the richer countries.  Will those countries left behind suffer famine, genocide, civil war, purges, or will they adapt more stoically like Cuba and the FSU states?  Like the poor of New Orleans, the poor of the developed world will become a bit less invisible as they slip towards a ragged, 3rd World level of poverty.

After all that demand has been destroyed, the producing nations will be on the spot.  Looking at Roberto's great Oil Trade graphic (which is now my desktop background), I see Mexico, Canada, North Africa, South & Central America, Asia Pacific and, of course, the Middle East caught between the oil needs and weapons of the US, Europe, FSU and China.

Those will truly be interesting times.

Jack Nicholson once said in a movie: A Few Good Men.

this reinforces my opinion of demand destruction will get ugly!

I was wrong about my comment. I stand corrected. I don't buy the abiotic theory either. I thought they were upset about the thought of only so much oil left. please disregard my prvious comment! Hard to think Rigzone even published it. Sorry about that!