This week in peak oil:
- No need to worry, our government is busy putting it's collective head in the sand.
- Tom Whipple has yet another peak oil article in the Falls Church, VA News Press
- Fishermen and oil explorers clash of the coasts of Norway.
- A great peak oil post at alternet.
- Sci-fi author and futurist Bruce Sterling weighs in on peak oil.
- Mexican President Felipe Calderon must face up to peak oil.
- The Australians are at it again.
- At least the Brits are doing as poorly as we are.
- Then again, some citizen groups in the UK are preparing
- Some very interesting speculation about how the oil companies react to peak oil.
- Continuing with more analysis from the British Isles, the Scotsman
- Oil companies face the risk of underinsurance
- A libertarian dismisses peak oil then gets slapped around in the comments.
- Yet another stock analyst recognizes the significance of peak oil.
- McKinsey and Co. underestimate peak oil and misadvise Fortune 1000 companies
- Peak oil activities in Brattleboro, VT.
- What are the Canadian's doing about peak oil? Not so much, eh?
- On the lighter side, peak oil is not an issue on Titan, you know ... one of the moon's of Saturn ...
-- cross-posted from mnblue.com, home of the Norm Coleman Weasel Meter --
It is always good to see our government in action and especially on such an important topic as peak oil. It's too bad their busy putting their heads in the sand. Oil sand, maybe?
When Undersecretary of Defense Kenneth Krieg asked Defense Science Board (Memorandum, 2 May 2006) to form a Task Force on DoD energy strategy he specifically used two words very often – identify and assess.
The DSB released its report called DoD Energy Strategy: "More Fight - Less Fuel" (PDF) on February 12, 2008. The title of Section 2.2.2 is Peak Oil. Not surprising, because James Schlesinger was the co-chairman of the DoD Task Force.
Section 2.2.2 on peak oil (pages 13-14) briefly describes the Hubbert theory, and the various government reports on peak oil (Hirsch, National Petroleum Council and GAO).
The section concludes:
- Among the implications for DoD are that after peaking, prices for fuel will be even higher than today. The Task Force did not discuss the geopolitical, economic or national security implications of peak oil, but the recommendations in this report regarding reduced fuel demand would help mitigate its effects.
It is unfortunate that the report (135 pages) lacks direct and precise answers to what it was asked to deliver. If you hope to find some data on US military energy consumption then this report is probably not the one to look for. It does not give the evolution of energy use by fuel, by DoD service, by platform, by type, by location, by cost, by emissions? It is not enough to blame the insufficiency of energy demand data. Have they looked at the Federal Energy Management Reports of each DoD service? No! (unless it is given in the Classified Appendix G). If you don't know where, why, what is used and if you don't calculate the future path by taking into account of current and future inventory then you end up repeating what the 2001 DSB report "More Capable Warfighting Through Reduced Fuel Burden" had said 7 years ago.
(Energy Bulletin)
Tom Whipple has been writing about peak oil in the Falls Church, VA News-Press. This is suburban DC. The word is getting out all across the country.
Earlier this week oil closed above $100 a barrel for the first time. To make matters worse, wholesale gasoline and heating oil jumped 11 cents a gallon in a single day to their all-time highs. A lot of bad news triggered the increase of nearly $14 a barrel in the last two weeks. A 70,000 b/d refinery in Texas blew up and may take months to repair; floods, snowstorms, and power outages have the world's coal markets breaking records; and to top it off OPEC is threatening to cut oil production, either officially or unofficially, because OECD stockpiles crept up a bit in January. When you can get $100 for every barrel exported you might as well save some for the grandchildren, because you sure don't need the money.
Then there is the economic news. Last week, a Harvard economist opined to an energy conference in Texas that when we are through tallying up the credit crunch losses from real estate loans, car loans, credit card loans, and business loans all going bad at the same time, the total will be over $1 trillion. Now this is just an abstract figure until you learn that the total capitalization of all the banks in America is about $1 trillion.
It gets still worse. We recently learned about an arcane new financial product called the credit default swap. These are sort of marketable private insurance policies that you buy to cover financial assets that you suspect might go bad. This is all very nice until we learn that these "insurance polices" have been sold and resold so that the insured has no idea who is supposed to pay off his claim and whether or not the current insurer has any money. The scary part is that these things are now said to have a total value of $45 trillion.
If these credit default swaps start going bad and somebody is liable for even a tiny fraction of their supposed value, there is not enough money in China or all the sovereign wealth funds in the world, or the US Treasury to bail this out. All this is by way of saying that $100+ oil may turn out to be the least of our problems.
(Falls Church, VA News-Press)
Oil exploration companies are trying to force Norwegian fishermen to leave prime fishing grounds so that they can explore for oil. With such a desperate need to discover new oil sources, oil explorers become more desperate.
Skirmishes have been taking place for months off the coast of Norway, as fishing vessels and seismic vessels try to work in the same areas. Last year, three fishing boats tried to prevent a seismic vessel from conducting oil exploration in the seas off Vesterålen.
Newspaper Dagens Næringsliv reported earlier this month that offshore territorial battles have grotten so intense that oil service- and exploration firms have started paying fishermen large sums to leave the area. Not everyone is agreeing to do so.
Many fishermen claim the oil exploration firms are simply trying to bribe them to give up their livelihoods. They also complain that the seismic activity is scaring fish stocks away from formerly rich fields.
(Aftenposten)
I think this is a great title, Is There a Plan for Life After Peak Oil?, because there is no plan.
Now they might start sitting up. They wouldn't listen to the environmentalists or even the geologists. Can governments ignore the capitalists?
A report published last week by Citibank, and so far unremarked by the media, proposes "genuine difficulties" in increasing the production of crude oil, "particularly after 2012." Though 175 big drilling projects will start in the next four years, "the fear remains that most of this supply will be offset by high levels of decline".
The oil industry has scoffed at the notion that oil supplies might peak, but "recent evidence of failed production growth would tend to shift the burden of proof onto the producers", as they have been unable to respond to the massive rise in prices. "Total global liquid hydrocarbon production has essentially flatlined since mid 2005 at just north of 85 million barrels per day."
The issue is complicated, as ever, by the refusal of the OPEC cartel to raise production. What has changed, Citi says, is that the non-OPEC countries can no longer answer the price signal. Does this mean that oil production in these nations has already peaked? If so, what do our governments intend to do?
(alternet)
Sci-fi author an futurist Bruce Sterling is optimistic we can adapt to peak oil. Among many answers as part of a Q&A, he brings up Cuba. There's more to it than that, so I suggest reading the whole thing. The question we won't know until long into the future is, of course, is he right?
Some of whom seem positively wed to and delighted by the possibility of the end of society as we know it. Like some End Timers and Marxists, they want the current order to collapse, seemingly unaware that it will fall on them too.
- M: Will the financial system go into cardiac arrest?
S: It might, but the financial system isn't the heart of a civilization. Communism went into cardiac arrest. The GDP of Russia dropped something like 30 percent, the whole shebang was privatized to mobsters... The Asian financial system went into cardiac arrest a couple of years ago.
Yet they all just kept on keeping on, didn't they?
- M: Would we be able to raise sufficient quantities of food and get them to market?
S: Cuba had a peak oil experience when the Soviets stopped shipping it. The average Cuban lost thirty pounds, or so I'm told. It was a calamity of sorts, they called it the "special period." Cuba is still there.
Cuba by necessity then went to organic gardening and locally produced food on a mass scale. That's how they fed themselves now and once the blockade is lifted, will genuinely have quite a lot they can teach the rest of us about low petroleum farming.
(Politics in the Zeros)
Mexican President Felipe Calderon must face up to peak oil. One thing is for sure, it's probably not going to be pretty.
The political showdown over the future of Pemex, the Mexican government's crucial oil monopoly, appears to loom at last.
At stake, people on both sides of the clash say, is the viability of Mexico's petroleum industry, which ranks as the third-largest source of imported U.S. oil and supplies nearly 40 percent of the Mexican government's budget.
Pemex — which exports about 1.4 million barrels of crude a day to the United States, most of it through Houston and its environs — has acknowledged that its oil production and reserves are dropping fast.
Many across the political spectrum here agree something must be done, and quickly, to reverse the tide, but the showdown isn't expected to come for several months. The argument involves whether to invite in American and other foreign oil companies, which have the advanced technology and resources to find more petroleum, and on what terms to do so.
(Houston Chronicle)
Another stock analyst recognizing the significance of peak oil at the end of an opinion piece about steroids (of all possible topics):
The larger issue of course, is the big picture peak oil stuff. Does a recession really matter if we are running out of oil? With all the bullish fundamentals that have driven oil for the last 5 years, we only added roughly 10 dollars to the highs for oil a year. That was in the backdrop of a growing and expanding economy. Now we add 30 into a slowing economy! The only thing that can explain it is either we are seeing the peak oil production along with the sudden realization by the masses that we are running out of oil or more likely; it's the bulls on steroids! Or maybe, just maybe, this is a last desperate attempt to take out a $100 a barrel before we crash into the sixties!
(Inside Futures)
The Australian government is seemingly light-years ahead of us.
It has been a good week for peak oil in Australian politics. Andrew MacNamara (ASPO Australia Patron) launched a peak oil policy in Queensland, and Australian Democrat Sandra Kanck proposed a 'peak oil select committee' in the South Australian Legislative Council (although I fear for the motion's chance of success - write to your local member if you're in SA!).
Now, we have our first positive mention of peak oil by a Member of the House of Representatives, with a new MP shining a light for his new Federal Labor Government. With the Green Senators leading the campaign in the Senate, we now have at least positive indications from three of the four main parties. That leaves the Liberal/National Coalition out in the cold - with no advocates for peak oil awareness and no longer in Government anywhere in the country. Perhaps there is a lesson in that?
(The Oil Drum)
While we still suffer under the Bush Administration until 1/20/09, the Brits have the Labour Party. If there's a country who better understands how a really good bureacracy can really gum up the works, I'd be shocked...
You'd hope, wouldn't you, that the government department responsible for energy to heat our homes, power our cars and so on would be on top of two key issues - a switch to a low-carbon economy and the possibility that oil might run out sooner than we thought.
Both these issues should concern us greatly and, indeed, there is growing discussion of them everywhere. But, the Department of Business As Usual (DBERR) doesn't seem to be on the case at all.
It spends most of its time pointlessly changing its name (from the Department for Trade and Industry, you will recall) or changing ministers so often that few have time to get their feet under the desk before they are gone.
(The Guardian)
A group, Sustainable Seaton, in the town of Seaton in Devon, England (on the south coast of southwest England) has been recognized for their education efforts and preparations for a post-peak oil world. There is all kinds of things that people can do and this is a great example.
SEATON has been officially recognised as a 'transition town' thanks to the work of an environmenatl group.
Sustainable Seaton meet once a month to discuss ways in which the seaside community can tackle the issues of climate change and 'peak oil', the moment the world's demand for oil outstrips its supply.
Now the group's work has been recognised by the Transition Network, a charity which aims to promote groups like Sustainable Seaton around the country.
Member of the group and town councillor Claire Wise said: "It means we're going to embark on a gradual awareness-raising campaign about peak oil in Seaton, involving as many people as possible.
(Devon 24)
Guy Fawkes (continuing an English bent ...) speculates about how the oil companies will respond as the evidence of peak oil mounts.
... you can bet your life on every oil company, every military machine, and every government having a blue sky think tank mulling over peak oil, and we can all think of examples of stuff that was deliberately published, was deliberately not published (but later leaked out) and perhaps, if we think about it carefully, the third category, neither deliberately secret nor deliberately published, but almost always interesting.
(Technocrat)
Moving north to Scotland, Leslie Riddoch at the Scotsman wonders what it will take for our governments to begin addressing peak oil.
Perhaps we think supplies still come from the North Sea? Perhaps we think they always will? And why wouldn't we? No elected political leader has had the considerable guts needed to tell us that a shortfall between demand and supply of 10 to 15 per cent is enough to shatter an oil-dependent economy and transform the way we live.
The only obvious indication of trouble has been the rising oil price. And yet, the public evidently thinks politicians can cap it. Today, business leaders are calling on the Chancellor to scrap intended rises in fuel duty. With prices rising from $68 to $90 a barrel, they argue, the government's share in tax and VAT has already soared.
In 1996, oil cost $10 a barrel. It costs $100 this year. And according to ex-OPEC analysts featured in A Crude Awakening the price of $200 may be just two years away.
It's almost impossible to imagine how a world without copious, cheap oil supplies will operate. Ironically, the archaeologists excavating Scotland's past along the M74 route can help. They've found an old pharmacy, a dentist's surgery, and the site of Caledonian Pottery – innovative in the 1880s for using gas kilns instead of solid fuel. Past worlds abandoned as times changed.
Hugh McBrien, consultant for West of Scotland Archaeology Service, says: "We showed some kids a teapot they couldn't tell us what it was. This generation can't recognise teapots because they've never seen their parents use one."
(The Scotsman)
Too much good fortune, might be too good ... for their own good ... seriously.
Oil companies face the risk of underinsurance as world oil prices reach record highs, a global insurance broker and risk adviser warned yesterday.
"An increase in activity in the oil sector means that any major loss will cost more than ever to replace," Marsh managing director Andrew George said.
"In recent years there have been many more projects commissioned such as offshore infrastructure including rigs and platforms, refineries and petrochemical plants, which may have been less viable with lower oil prices," George said.
"This increase in demand, which has shown little sign of abatement in the Middle and Far East, directly impacts replacement values and project lead times.
"While many clients are actively addressing this issue many remain significantly underinsured," he said.
(Gulf Daily News)
A libertarian attempts to dismiss peak oil then gets smacked around in the comments to his post. I won't link to any of the comments, but the commenters are clearly more informed and knowledgeable.
The most significant cause for the ever increasing oil price is the 'peak oil' theory. The 'peak oil' theory states that at some undefinable point (some analysts say it has come and gone during Q4 of 2007) that the world's oil production output, like any nonrenewable resource, will eventually reach an all-time high and afterward gradually decline. This however, is not a new theory, in the 70's it was predicted that the U.S. would reach its peak. Most analysts will agree that this was true but disagree on the cause. The U.S. hasn't allowed any new refineries since the 70's nor have they allowed any drilling in our largest oil fields located in Alaska.
'Peak oil' scare has been around in some fashion or another since the mid-19th century, when people were making patent medicine from crude oil that bubbled to the surface in Pennsylvania an advertisement for Samuel Kier's Rock Oil cautioned buyers: "Hurry, before this wonderful product is depleted from Natures laboratory!"
With new oil fields being discovered at an exponential rate it is hard to see a peak in the near future. Russian scientists have discovered enormous fields in the arctic which it plans to start drilling in the near future.
(Nolan Chart)
Dave Wheelock has been writing about peak oil since 2005. He's watched the discussion of environmental issues and watched America ignore peak oil. One of the reasons he's particularly worried is that the company that advises the Fortune 1000 companies, McKinsey & Co., are utterly clueless about peak oil. He says:
Besides gaining an appreciation for how profoundly dependent on dirt-cheap energy our civilization is, I’ve learned that estimates of how much oil remains in the ground have been notoriously overestimated, captive to corporate secrecy and national interests. I’ve learned something about the challenges of developing alternatives to energy derived from petroleum, and how tragically short of the needs of a rapidly expanding world population current efforts will likely fall due largely to the very short window of time left to build an entirely new energy world. By the estimations of many lifelong petroleum geologists, we have left it too late to avoid a fundamental shock. Perhaps most frightening have been personal interactions which tell me that while most folks favor cutting carbon emissions to remediate global warming, they are either ignorant of the peril peak oil presents or simply assume a painless transition to a post-petroleum era will occur, like the latest (synthetic) miracle pill.
Add to the list of challenges to the survival of industrial society our once-proud financial sector. At a time that demands the immediate launch of a transition to clean and renewable (not merely alternative) forms of energy, Wall Street seems capable only of serving up a greenwashed version of business as usual.
Last week in New York, management consultant firm McKinsey and Company, which advises three of the world’s five largest companies and two-thirds of the world’s Fortune 1000 businesses from its 90 offices in 51 countries, presented a report at the United Nations’ Investor Summit on Climate Risk. (I’ve taken to covertly inserting "and peak oil" into virtually all global warming discussions.)
The report was sponsored by Ceres, an alliance of what you might call green investors, and shows how unresponsive 40 of the world’s largest investment banks have been to the threat of global warming ... and peak oil! In a country whose president has provided official cover by rejecting the Kyoto accords and refused to mandate carbon dioxide reductions, the survey shows that banks have failed to incorporate climate change considerations into their investment activities. Worldwide, not a single bank has opted to avoid investments in coal-fired power plants or Canadian tar sands – not only major sources of greenhouse gases but ultimately unaffordable distractions from the Herculean task of developing sustainable alternatives.
(Mountain Mail)
Citizens in Brattleboro, VT are organizing on peak oil.
"There is a factual basis to peak oil and that, in fact, there is reason to believe that peak oil may have already occurred," said Rose Avenia of Townshend, reading from the task force's report.
Post Oil Solutions is a Brattleboro-based citizens group that has initiated a number of projects designed to build greater sustainability and community in the Windham County region.
Inspired by a similar group in Portland, Ore., the Brattleboro version of the peak oil task force is the first of its kind in Vermont, and was first proposed to the Selectboard in May 2007.
The members of the task force told the board that world crude oil production rates have plateaued at approximately 85 million barrels a day since December 2005, while demand has continued to rise.
(Brattleboro, VT Reformer)
This epitomizes peak oil ignorance. This Professor at UC-Berkeley, Severin Borenstein, simply doesn't get it. His analysis on the most simplistic cost-benefit level. His argument assumes inexhaustible oil supplies and ignores the environmental destruction our oil-based civilization causes. He's stuck his head so far down into his numbers that he fails to see the cliff he'll soon be driving his SUV or Mercedes off. How likely is it that this guy drives a hybrid?
Installing solar panels on homes is an economic "loser" with the costs far outweighing the financial benefit, a respected University of California-Berkeley business professor said Wednesday.
The technology, using photovoltaic panels to generate electricity, is not economically competitive with fossil fuels and costs more than other renewable fuels, said Severin Borenstein, who also directs the UC Energy Institute.
"We are throwing away money by installing the current solar PV technology," he said.
Not surprisingly, the solar industry reacted strongly to the report.
Neal Lurie with the American Solar Energy Society called the study "a publicity stunt."
"Borenstein doesn't give proper credit to the important role that competition and economies of scale play in driving down costs," he said.
And Julie Blunden, a vice president with San Jose's SunPower, said Borenstein's analysis was "deeply flawed."
"He seems to be disconnected from the empirical data in the market," she said. "He doesn't seem to have much peripheral vision from his ivory tower."
(San Jose Mercury News)
Even Gov. Terminator is a big fan of solar power. No, really. Read the rest of the article.
Rick Monroe of the National Farmers Union in Canada did a little digging:
If you go to the US Dept. of Energy website and do a search on peak oil, you will get over 8000 leads, many of which indicate that peak oil is a very serious concern.
If you go to NRCan's website and do a search, you will get 10, none of which have anything to do with peak oil.
(What is Canada doing about peak oil? at the Energy Bulletin)
So he wrote a letter to Gary Lunn, Minister of Natural Resources in early January expressing his concern and asking what Mr. Lunn was doing about peak oil. Since he hasn't heard back, so he's made his letter public.
On the lighter side, peak oil is not an issue on Titan, ya know ... one of the moon's of Saturn ... but wait ... all we need is an dumbass enterprising oil man to start shipping oil back from Titan ... just think about it ... it could solve ALL our problems.
Titan's Surface Organics Surpass Oil Reserves on Earth
Saturn's orange moon Titan has hundreds of times more liquid hydrocarbons than all the known oil and natural gas reserves on Earth, according to new data from NASA's Cassini spacecraft. The hydrocarbons rain from the sky, collecting in vast deposits that form lakes and dunes.
The new findings from the study led by Ralph Lorenz, Cassini radar team member from the Johns Hopkins University Applied Physics Laboratory, Laurel, Md., are reported in the Jan. 29 issue of the Geophysical Research Letters.
(Science Blog)
Here's a great peak oil animation. Hat tip to Ken Avidor.
-- cross-posted from mnblue.com, home of the Norm Coleman Weasel Meter --