Energy Security

Last week the Defense Science Board released its study, "Trends and Implications of Climate Change for National and International Security" (175 pgs):
http://www.acq.osd.mil/dsb/reports/2...ate_Change.pdf

I have not finished reading the entire report, but it is clear from the outset that the DSB views CC as ongoing and serious, and that it accepts the "compelling evidence that climate impacts are observable, measurable, real, and having both near and long-term consequences" (p. vii).
The report has a particular focus on Africa, water and the potential for failed states.
The report also contains a detailed set of recommendations for various federal agencies (both civilian and military).

So Rick we are now moving from Peak Oil to Global Warming. What's next? Ozone depletion anyone? How 'bout Malthusian food shortages?

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So Rick we are now moving from Peak Oil to Global Warming. What's next? Ozone depletion anyone? How 'bout Malthusian food shortages?

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Misifus if you have something to add that contributes to the discussion please do so, but it is long past time to knock off the snide remarks that contribute nothing to the discussion. If you disagree with the study, state the points you disagree with and why. SWJ doesn't tolerate personal attacks, nor should they. It is an open forum where ideas are debated, not a forum for personal attacks.

From a department of defense of view climate change is taken very seriously as it should be. It is politically incorrect to assign cause and effect, so instead analysts just focus on the effects. As for food shortages, climate change much more than population growth is driving challenges in food production in some locations due to floods and droughts. Whether it passes in a year or two is immaterial to the current food security challenges in parts of the world most effected by climate change, which often happen to the least resilient.

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Originally Posted by Bill Moore

Misifus if you have something to add that contributes to the discussion please do so...but it is long past time to knock off the snide remarks that contribute nothing to the discussion.

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What personal attack did you read in post #402 above? Seems to me you are just another guy looking to pick a fight.

This thread is not about Global Warming, so that article has no place here. The thread is about Energy Security, and I have contributed to this thread with real information on my area of expertise, oil & gas. Do you have comparative expertise in this area? The psychosis of Peak Oil needs to be debunked so that people can truly understand what the real issues are with oil & gas production. Not only that, I did warn further upthread that Global Warming would eventually creep into this thread because the same psychosis that feeds Peak Oil is the same psychosis that feeds Global Warming, Global Cooling, Silent Spring, Malthusian food shortages, over-population, etc. Now Global Warming has crept into this thread just like I predicted.

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From a department of defense of view climate change is taken very seriously as it should be.

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DOD needs to concentrate on winning our current wars. You guys (DOD) are out of your element when it comes to these other topics.

What's long past due, since you are here to lecture now, is the deconstructing of pundits who simply Google from one link to another spreading false knowledge solely to participate in whatever the latest political fashion trend of the Left is. Peak Oil offers such an example in this thread.

Misifus,
Far from predicting that "Global Warming has crept into this thread just like I predicted," you yourself raised the topic in your very first post here (pg 15, #294).
Also, others have mentioned climate change and provided supplementary links on this thread over the years, which I guess you were not aware of.

You said earlier that you confine your postings to your two areas of expertise, oil & gas being one of them. Unless climate science is the second one, you seem to have some very strong views on an area which is outside your expertise.

I provided the DSB link because their document is newly-released, thorough, and because DSB is an organization which most SWC readers probably view as credible. In short, I thought that such a document on a topic of this magnitude would be of interest to this audience.

A similar (ie. similar in that CNA, like DSB, takes CC seriously) document was issued by CNA four years ago:
http://www.cna.org/reports/climate

As for the relevance of CC to energy security, Homer-Dixon and other analysts have argued that fossil fuel depletion and CC must be viewed as "twin" problems which are interconnected and must be dealt with simultaneously.
I agree with this view, but have largely avoided posting CC issues here not because I don't think they are relevant, but because they usually receive a good deal of coverage in the mainstream media, while the issues of PO and government plans for oil shocks do not.

I posted this one because it is an indication that military analysts take CC seriously, as they do PO.

As for your dismissive point about food shortages, common sense surely warns us that CC and water problems can have direct effects on food production. So would any constriction (for whatever reason) of the availability of affordable fuel to farmers (and the rest of our food supply chain).

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Originally Posted by Rick M

Misifus,
Far from predicting that "Global Warming has crept into this thread just like I predicted," you yourself raised the topic in your very first post here (pg 15, #294).

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I think that's an attempt on your part for a circular argument. If you'd like to start a thread on Global Warming have at it, but this thread was about Energy Security and specifically Peak Oil. Do you have to conflate the two, or three, or ten? Regarding the topic of Global Warming you will find even more controversy. We could make this the Chicken Little Conflated Crises Thread if you wish, after all, it is your thread, whereby we could put every anti-development psychosis in this one thread. As such, we could probably find room for the "occupy" crowd here as well.

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You said earlier that you confine your postings to your two areas of expertise, oil & gas being one of them. Unless Climate Science is the second one, you seem to have some very strong views on an area which is outside your expertise.

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No, meteorology is not my second area of expertise. There is no technical discipline known as Climate Science, which is simply a fashionista term started by the Global Warming crowd. A better term would be political science. My second area of expertise may not be relevant to anything on this board, so I don't mention it here. Anybody can talk about Climate Change, and everybody does. It takes no expertise because it is a dreamed up concept and when it was proven wrong the wackos changed the name from Global Warming to Climate Change.

Why don't we just talk about air pollution in the developing world? That's a real problem. The reason we don't talk about air pollution is because the Liberals are intent on giving the developing world a free pass on this issue. The Right is not any better in this issue as they can manufacture goods overseas cheaper and dirtier than they can here at home. Hence dirty countries like China, India, Brazil, Mexico, etc. get a free pass on pollution. Meanwhile anti-development intellectuals in the developed world make up pseudo-crises regarding benign gas emissions like carbon dioxide, something that we and other mammals exhale, and something which promotes plant life. We need to get real about our priorities. It is the psychosis of self-loathing that sparks anti-development movements like Global Warming, Global Cooling, Silent Spring, etc. I went over this already upthread.

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As for the relevance of CC to energy security, Homer-Dixon and other analysts have argued that fossil fuel depletion and CC must be viewed as "twin" problems which are interconnected and must be dealt with simultaneously.

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Well let's use your logic on this then. Do the guys who intend to solve the Peak Oil issue also have degrees in Climate Science and petroleum engineering? Yes, I am being facetious. But do you see how silly this can get? So it looks like I am correct, the psychosis of one leads to the other. It's all the same gang. Homer-Dixon's degrees are in political science, not real science. Who cares what he says? Besides I don't trust men with hyphenated last names.

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I posted this one because it is an indication that military analysts take CC seriously, as they do PO.

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Military analysts need to focus on military matters. Fuel logistics and theater supply is valid and in their realm. DOD does not have the skill set to even think about Peak Oil. They do not have the skill set to discuss Global Warming either. They are simply on the bandwagon because these are political/fashionista issues with doubtful origins.

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As for your dismissive point about food shortages, common sense surely warns us that CC and water problems can have direct effects on food production.

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Here we go again. Like I said, it's all the same crowd. And again, do you have to conflate the two, or three, or ten?

Now before a moderator steps in here (they are prone to do that lately), or before you hit the complaint button, let me ask you this...

Have I directly called you a derogatory name in this thread? Have I delivered a personal attack on you, whereby I said specifically that you are a so and so?

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Military analysts need to focus on military matters. Fuel logistics and theater supply is valid and in their realm. DOD does not have the skill set to even think about Peak Oil. They do not have the skill set to discuss Global Warming either. They are simply on the bandwagon because these are political/fashionista issues with doubtful origins.

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Thanks for telling us we don't need to focus on issues of strategic concern. Most of us thought we had a role in predicting the probable locations and causes of conflict or instability that the military may be asked to respond to, which is why the military in concert with others in the government, academia and private industry explore issues like climate change (a reality), energy, food, and water security. Agree this forum should be restricted to energy security, but sometimes there is a nexus. For example, due to the hype associated with energy security, the U.S. government offers incentives (criminal in my view) to farmers to grow corn for ethanol production, which in turns equates to higher food prices and less food being grown, because it is more cost productive to grow corn for ethanol. Another example of where the market failed because it was over rode by dumb government policies in this case.

Encourage you and others to read the Joint Operating Environment 2010, which is produced by DOD, but informed by experts both in and outside of DOD.

http://smallwarsjournal.com/blog/joi...vironment-2010

Excerpts:

Energy:

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To meet even the conservative growth rates posited in the economics section, global energy production would need to rise by 1.3% per year. By the 2030s, demand is estimated to be nearly 50% greater than today. To meet that demand, even assuming more effective conservation measures, the world would need to add roughly the equivalent of Saudi Arabia’s current energy production every seven years.

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A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment.

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Much more in the document on energy (statistics), food, and water security and why it is relevant.

Misifus,
You asked, "Have I directly called you a derogatory name in this thread? Have I delivered a personal attack on you, whereby I said specifically that you are a so and so?"

Since you asked the question, I would have to answer, "Yes, you have used a variety of ways to insult me and others with whom you disagree. Most are indirect (eg. "Chicken Little doomsayers"), but some have been direct and personal."
Here is a sample:

pg. 18, #343:
"your Peak Oil psychosis."
(I believe that people who suffer from psychosis are called psychotics. These are not terms which should be tossed around lightly.)

also #350:
"our Peak Oil guru"

#353:
"you may need to reconsider being a Peak Oil acolyte."

#356:
"you are a collator of information seeking to spread a hysteria."

Back on pg. 19 #365 you said,
"This thread needed an insider. Just read the thread before I entered. It was pretty much a "group think" thread with no form of self-calibration. This party needed to be crashed in order to get some thought injected into it."

This thread would welcome the constructive observations of someone with first-hand O&G experience, but to suggest that this audience is stuck in group-think, lacking independent thought (and in need of your crashing it) is a touch arrogant on your part.

As Bill Moore politely put it, please "state the points you disagree with and why."
You do not need to imply insanity, nor that someone is trying to be a guru, nor that anyone is trying to create hysteria, in order to present sensible counter-arguments.

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Originally Posted by Bill Moore

Thanks for telling us we don't need to focus on issues of strategic concern. Most of us thought we had a role in predicting the probable locations and causes of conflict or instability that the military may be asked to respond to, which is why the military in concert with others in the government, academia and private industry explore issues like climate change (a reality), energy, food, and water security.

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Oh c'mon Bill. How are those predictions working for us? Some good, some not so good. However, jumping on the political bandwagons of Peak Oil and Global Warming is a stretch. I don't want my tax dollars wasted like that by DOD.

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For example, due to the hype associated with energy security, the U.S. government offers incentives (criminal in my view) to farmers to grow corn for ethanol production, which in turns equates to higher food prices and less food being grown, because it is more cost productive to grow corn for ethanol. Another example of where the market failed because it was over rode by dumb government policies in this case.

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I agree with the above and keep in mind that ethanol is a net energy loser. However, it is the anti-development psychosis that is pushing ethanol. The same people who brought you Peak Oil, Global Warming, etc. Another backfired program. It takes more energy to produce ethanol than what ethanol provides when it is burned. Brilliant!

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Excerpts:

To meet even the conservative growth rates posited in the economics section, global energy production would need to rise by 1.3% per year. By the 2030s, demand is estimated to be nearly 50% greater than today. To meet that demand, even assuming more effective conservation measures, the world would need to add roughly the equivalent of Saudi Arabia’s current energy production every seven years.

A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment.

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Same old stuff Bill. Alarmists without a real basis for the predictions. Same horse, different saddle blanket.

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Same old stuff Bill. Alarmists without a real basis for the predictions. Same horse, different saddle blanket.

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If that was true, I don't think we would see the level of tension we do we do in the South China Sea over access to potential energy sources. Lots of open source stuff indicated this analysis is accurate and will drive a potential conflict (if not war) between states. This isn't a peak oil alarmist argument, so much as we're not producing (and then refining) enough oil to meet demand.

Next weekend I'll pull some articles (well researched) that point out how energy politics is impacting the global security environment and it has nothing to do with anti-development intellectuals, that is just background noise. It has everything to do with maintaining economic growth and stability.

Misifus,

Military researchers in the USA, Canada, UK and Australia consistently warn of both PO and CC, yet you dismiss their objective determinations as "jumping on the political bandwagons?"

Honestly, have you examined any of their reports?
As Bill suggested earlier today, please tell us (especially since you have insider expertise) precisely where/why these military analysts are so wrong.

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Originally Posted by Bill Moore

If that was true, I don't think we would see the level of tension we do we do in the South China Sea over access to potential energy sources. Lots of open source stuff indicated this analysis is accurate and will drive a potential conflict (if not war) between states. This isn't a peak oil alarmist argument, so much as we're not producing (and then refining) enough oil to meet demand.

Next weekend I'll pull some articles (well researched) that point out how energy politics is impacting the global security environment and it has nothing to do with anti-development intellectuals, that is just background noise. It has everything to do with maintaining economic growth and stability.

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Nope not referring to Peak Oil. "Same horse different blanket," by that I mean that oil is in contention. Hasn't it always been in contention since Churchill and Fisher decided to replace coal with oil as the British fleet's fuel? There has always been contention about oil security. As I pointed out upthread, there are more reserves now than ever. Nevertheless, I do remember when China was a net exporter of oil, now it is a net importer.

Misifus,
"I do remember when China was a net exporter of oil, now it is a net importer."
Excellent point.... I remember as well.

Given your insider knowledge, could you please provide us with a list of oil producing countries which were once major oil exporters, but are now net importers?

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Originally Posted by Rick M

Misifus,
"I do remember when China was a net exporter of oil, now it is a net importer."
Excellent point.... I remember as well.

Given your insider knowledge, could you please provide us with a list of oil producing countries which were once major oil exporters, but are now net importers?

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No. I'm not going to sleuth that. I'm sure you can Google it! :D

I anticipate you would like to show that reversals of net exporter to net importer means that oil has "peaked " ;) However, such is not the case, there are more reserves now than ever, as has already been indicated.

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Hasn't it always been in contention since Churchill and Fisher decided to replace coal with oil as the British fleet's fuel? There has always been contention about oil security. As I pointed out upthread, there are more reserves now than ever. Nevertheless, I do remember when China was a net exporter of oil, now it is a net importer.

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True, but the question is regardless of there being more reserves now than never, does that keep pace with the growing demand? The point that oil has always been contentious I believe reinforces the point about why we need to be concerned about it. More players with the rise of the rest competing for secure supplies, and it is this new great game that is driving a new geopolitical map consisting of new alliances and tension points, where states bid for influence either through coercion or attempts to bribe secure access to oil fields or secure pipelines/seaways to allow for the transport of it.

I think we're seeing a shift away from wars of ideology back to wars over resources and markets. Once again we're going back to the future.

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Originally Posted by Rick M

Misifus,

Military researchers in the USA, Canada, UK and Australia consistently warn of both PO and CC, yet you dismiss their objective determinations as "jumping on the political bandwagons?"

Honestly, have you examined any of their reports?
As Bill suggested earlier today, please tell us (especially since you have insider expertise) precisely where/why these military analysts are so wrong.

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Rick we have been over this already upthread with Hubbert's work and other.

Now look at my avatar, I'm just poor little Misifus.

Misifus,
You said, "there are more reserves now than ever."
No quarrel with that statement.

But as has been pointed out many times, PO refers to peak flow, not peak reserves.
I know that you are unique in claiming that "Found reserves are considered production" but that is rather like confusing the tank with the spigot.
If I have a tank of immense volume, but the spigot/tap/outlet valve allows less flow than I require on a daily basis, then I will have an ongoing supply problem despite the immensity of my reserve/tank.

As for the growing list of post-peak oil producers (with rapidly decreasing export capacity), would you accept such a Google list if I posted it?
Or would that be beyond my area of expertise, and therefore invalid?

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Originally Posted by Bill Moore

True, but the question is regardless of there being more reserves now than never, does that keep pace with the growing demand? The point that oil has always been contentious I believe reinforces the point about why we need to be concerned about it. More players with the rise of the rest competing for secure supplies, and it is this new great game that is driving a new geopolitical map consisting of new alliances and tension points, where states bid for influence either through coercion or attempts to bribe secure access to oil fields or secure pipelines/seaways to allow for the transport of it.

I think we're seeing a shift away from wars of ideology back to wars over resources and markets. Once again we're going back to the future.

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Well Bill of course. But that has always been in the game, yet we still always have had the oil to meet the demands. In fact if we are to believe what Peak Oil'ers have been saying, we now have a glut of oil. So right now the Peak Oil logic is that we have too much oil but that we are running out. Huh?

We covered this already upthread. We have been running out of oil since it was discovered. That however does not mean it has peaked.

Okay guys, I gotta go now.

Misifus,
You said, "we still always have had the oil to meet the demands."

True, but that is what PO is all about: if oil is finite (and you thankfully accept that it is), then despite 153 years of ever-increasing commercial supply (which surely shapes our ongoing expectations) we must accept that we will inevitably reach a point in human history when we no longer have sufficient supply to meet demand.
At that point (as Dr. Hirsch's PO study stresses) humanity will face "an unprecedented risk management problem."

Misifus,

Perhaps you can provide an explanation for this recent and rather bleak prognosis from ND-DMR regarding future shale oil production:
https://www.dmr.nd.gov/pipeline/asse...11-10-2011.pdf

My sense was that almost everyone expected significant, sustained production increases at least throughout this decade.
But slide #3 shows production declining around 2015, and never reaching the 1 mbpd that so many people expected.

Any thoughts as to what's caused the sudden (and rather significant) change in expectations?

Where is Misifus when we need him?

I'd like to know why the forecast for ND/Bakken shale oil has suddenly turned so pessimistic.
Given the importance of shale oil to the recent reversal of declining US oil production, this is a fairly significant question.

IIRC, he wrote a couple of weeks ago that he had to go back to the field / area where he was working and would be back to post in a few weeks...

ADDED:

Yep; he posted this last week:

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Actually I have only been here the last few days because I have been off. Will back to work soon and then y'all can be merry again without me At least until the next break

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Thanks, Ken

We'll just have to wait until he returns and see if he can shed some light on what's going on in ND.

Meanwhile, there is some compelling video evidence from ND which supports many of the animal & human health concerns which have recently been raised in PA.
If readers can tolerate the first 40 seconds of noisy music, the rest of the video is worth watching. Sick cattle, congested cats, human rashes, weird white stuff on walls & floors... surely something is not right:
http://www.youtube.com/user/BakkenWa.../9/850VKyFnxIk

I find it hard to believe that so many rural citizens in various states have simply made all this stuff up.

I shove everything into carry-on because I don’t trust that outfit with my luggage, but the author of this piece says, “Maybe.”

The electrical grid is a classic example of a natural monopoly and should not be run by for-profit companies anyway.

I doubt that bureaucrats and their hirelings are a competent choice for overseeing infrastructure, though.

This is a very important issue, one which I know little about.

For those who wish to explore the matter in detail, I would offer this recent (and very thorough) MIT study, 280 pgs:

http://web.mit.edu/mitei/research/st...ull_Report.pdf

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Originally Posted by Rick M

...We'll just have to wait until he returns and see if he can shed some light on what's going on in ND...

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Huh? You guys can't have a conversation without me? Why not? Y'all don't even like me :p

Try the below thread from Armchair General. I have not posted over there, nor have I read the IER report. But the thread indicates that the report from IER is a myth buster for Peak Oil types and other wackos. The thread is also very entertaining :D

http://www.armchairgeneral.com/forum...d.php?t=117369

Not sure I will be discussing energy matters here at SWC, nor Mexico drug trafficking matters, nor my experiences in Africa for much longer. My free time is running short. Also, the posts here at SWC seem to be mostly from the mods with heavy background traffic as well, etc. Y'all need more participants and less inbreeding. Nevertheless, thanks.

Welcome back, Misifus

I was hoping that you could shed some light on ND's sudden pessimism re. future shale oil production.

I did have a look at your ACG link. You are correct, it is entertaining.
-rm

French oil analyst Olivier Rech worked at the IEA between 2007-09. He was involved in their landmark 2008 World Energy Outlook which examined oil-field depletion rates (and then stated the need to find and bring on-stream flows equal to six times that of Saudi Arabia between 2007 and 2030).

This concise interview was published last week in French, and the English translation was posted yesterday:
http://petrole.blog.lemonde.fr/2011/...energy-agency/

Best wishes for 2012 to you all.

- rick

Britain's leading organization of planners recently published a report on Peak Oil (Nov. 2011, 59 pgs).

The central message of their report is that the peaking of global oil production is a pervasive issue whose effects could be profound, yet it remains almost entirely overlooked by civic officials in the UK, including by planners themselves.

The review provides further details:
http://www.energybulletin.net/storie...olicy-nov-2011

On Wednesday Chatham House released a study on the Saudi's "hidden energy crisis" which indicates that surging domestic demand may start to constrict the Kingdom's export capabilities in about ten years' time, after which exports could plummet:
http://www.chathamhouse.org/publicat...rs/view/180825

Please note Fig. 1 on page 2 which shows increasing domestic demand eating into Saudi export capacity around 2021, followed by plummeting export capacity. This scenario is consistent with warnings issued by Jeffrey Brown, Jadwa Investment's report last year (from within Saudi Arabia), and an earlier study by Chatham House in 2008.

Wednesday's warning ought to have been front-page news around the world, but of course it wasn't.

I haven't read this report, but it's getting a good deal of press...

http://www.zawya.com/story.cfm/sidZA...emailmarketing

Key excerpts...

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The United States is set to become the largest oil liquids producer in the world overtaking Russia and Saudi Arabia before the decade is over, says Citibank in a new report.

"North America has been the fastest growing oil and natural gas producing area of the world for the past half-decade," says Ed Morse, managing director of Managing Director and the Head of Global Commodities Research at Citigroup Global Markets, in a report.

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"The US alone could add 6.6 million bpd to bring liquids from 9 million bpd at end-2011 to over 15.6 million bpd in 2020-22. In total, North America as a whole could add over 11 million bpd of liquids from over 15 million bpd in 2010 to almost 27 million bpd by 2020-22." notes Morse.

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Saudi Arabia has recently noted that it may hold back on its production target of 15 million bpd from its current 12.5 million capacity, notably due to the rise in U.S. shale oil.

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Total OPEC crude oil production averaged 315,000 bpd in February, according to IEA data, led by a three-decade peak in Saudi output and a sharp recovery in Libyan production.

"Output of 31.42 mb/d was the highest level since mid‐2008," said the IEA in its latest report. "The 'call on OPEC crude and stock change' for 2012 is raised by 0.2 mb/d for 2Q12 and 3Q12, to average of 30.1 mb/d, due to lower forecast non‐OPEC supplies."

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The basic issue is that the amount of crude that is available for western countries is decreasing with amost 3% per year, the main causes are

1) global production of crude is stagnating

2) domestic consumption of producers is increasing

2) India and China import despite increasing prices a larger percentage of the produced crude.

Since 2005 we have an avarage increase of crude price of 12% per year.

The question for western countries is whether we can compensate for the 3% with higher energy efficiency and substitution of crude with natural gas or do we hit the wall first.

Arguments like "The US alone could add 6.6 million bpd to bring liquids from 9 million bpd at end-2011 to over 15.6 million bpd in 2020-22. In total, North America as a whole could add over 11 million bpd of liquids from over 15 million bpd in 2010 to almost 27 million bpd by 2020-22." assume that there is enough prodcution capacity for the conversion of natural gas into liquids.

IIRC these production capacities do not exist and I have not found a serious study which claims that can be done in time.

Some good discussions are on the Econbrowser:

http://www.econbrowser.com/

US consumption has also declined recently; whether that will last in a recovery remains to be seen. What interested me was the projection of higher output from N America and from OPEC, which directly contradicts the widespread assumption that what once has "peaked" must thereafter go into continuous decline.

Of course I haven't read the report (and won't, if I have to pay for it), so I can't comment on the underlying assumptions.

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Originally Posted by Dayuhan

US consumption has also declined recently; whether that will last in a recovery remains to be seen. What interested me was the projection of higher output from N America and from OPEC, which directly contradicts the widespread assumption that what once has "peaked" must thereafter go into continuous decline.

Of course I haven't read the report (and won't, if I have to pay for it), so I can't comment on the underlying assumptions.

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Here one relevant discussion:

http://www.econbrowser.com/archives/....html#comments

There is no real increase, small plus in NAmerica and Opec is compensated by losses of other producers.

For me the question is, can we substitute and save for a longer span of time at the same rate as the available volume of crude, i.e. global production minus demand of China and India, decreases, this was 3% p.a. since 2005.

This analysis was recently posted at The Oil Drum:
http://www.theoildrum.com/node/9079#more

This review (with link to the Dec. 2011 thesis) was posted this morning:
http://www.energybulletin.net/storie...obal-balance-p

There is some market analysis against peak oil and persistent high gas prices. Essentially, we are experiecing a global oil price bubble (and it isn't the first). Also, this article suggests that increased US oil production is not necessarily the most effective strategy for escaping foreign oil dependence or high oil prices.

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Originally Posted by AmericanPride

There is some market analysis against peak oil and persistent high gas prices. Essentially, we are experiecing a global oil price bubble (and it isn't the first). Also, this article suggests that increased US oil production is not necessarily the most effective strategy for escaping foreign oil dependence or high oil prices.

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We have a stagnating global production since 2005, OTOH the demand of India and China, which buy more despite increasing prices, increased, the domestic consumption in most producing countries increased.

How do you really expect a falling price? This is only possible if you substitute or save crude at a rate of more than 3% p.a.
That would be a lot and requires huge effords (industrial programmes), which I do not see in the USA.

Here a new contribution on the econbrowser:

http://www.econbrowser.com/archives/...ing_irans.html

Energy intensity is a neat indicator, putting energy consumption into the relation of the GDP.

Needless to say that many factors go into both variables, especially the transfer of energy intensive industries has had recently an important impact. Overall demand and supply interact through the price and the curves have been surprisingly elastic over the long term. Cheap ressources are of course of great benefit to the economy however key and finite ones should not come to cheaply to give enough early incentives to increase the overall efficiency and the development of alternatives.

In the mid term the high price increases the attractivness of investment into the sector.

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Originally Posted by Ulenspiegel

We have a stagnating global production since 2005, OTOH the demand of India and China, which buy more despite increasing prices, increased, the domestic consumption in most producing countries increased.

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Declining oil production is not sufficient of itself to determine whether production is in irreversible decline; or to prove that high oil prices are here to stay. There are two problems: first, the oil market in general is not stable; prices and production constantly cyclical rise and fall. There are at least four previous eras in which production appeared to peak, but was only followed by an oil glut and collapsing prices. The second problem is that the oil market is now dominated by speculation, which is driving up prices despite slowing demand. 2005 saw what Daniel Yergin termed a demand shock, where the simultaneous tightening of capital investment in oil production and market contraction (a response to the unexpected oil price collapse in the 1990s) collided with growing consumption in the developing world. This has stressed global spare capacity, with the consequent rise in prices encouraging intense speculation and more rising prices (the inflationary pressures of the GWoT, Iranian confrontation, and instability in Nigeria don't help matters either). And now more cynical than in the 1990s, oil producers are not about to rush to increase production without significant external pressure. Sustained high prices produces countervailing forces (increased production, reduced consumption) that will eventually dry up investment. This is already happening (high oil prices partly contributed to the 2008 recession as trillions of dollars of wealth was transferred from consumer-intensive modern countries to savings-focused third-world producer governments). Governments around the world are taking alternative energy seriously. And the oil market is throwing billions of dollars into exploration and production. We may or may not be transitioning from an economic dependency on oil (it's hard to say), but we are definitely not in some world ending peak oil crisis.

"we are definitely not in some world ending peak oil crisis."

AP,
I would not argue that we are yet in a PO crisis, nor that it would necessarily be "world ending."
But there is much to be concerned about re. global supply of liquid fuels, and Ulen flagged three of the main ones:
- flat conventional production for 7 years
- demand growth in China & India
- demand growth within KSA and other major oil exporters.

Here in eastern Canada, the UK used to be our #1 supplier of crude only a decade ago, but it is in ever-worsening terminal decline (17% for 2011).
Chatham House warned that the export capability of KSA is likely to start to decline in about 10 years' time: should this occur, we will certainly enter a new era.

I agree with Lt. Col. Eggen that (for many reasons) nations may stick with oil until the last minute despite he risks of doing so. We still have no scaleable replacement for petroleum, least of all at the last minute. I see little room for complacency re. liquid fuel supply.

Meanwhile, we have the ill-informed claiming that we have trillions of barrels of shale oil, apparently just waiting to be pumped:
http://opinion.financialpost.com/201...-awash-in-oil/

Quote:

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Originally Posted by Rick M

But there is much to be concerned about re. global supply of liquid fuels, and Ulen flagged three of the main ones:
- flat conventional production for 7 years
- demand growth in China & India
- demand growth within KSA and other major oil exporters.

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Sure, demand is up and production has not responded to keep prices within what was previously considered a reasonable price band. I mentioned this in my previous post. But that does not indicate we are entering a period of sustained high prices or entering into terminal oil decline. I agree that there are serious security and political consequences that emerge from the behavior of the oil market, and this has been demonstrated throughout the course of the 20th century.

"demand is up and production has not responded"

AP,
If demand is likely to stay up (or even accelerate, as seems pretty certain in Asia and MENA) and if conventional production can barely stay even with depletion, then I don't understand why you say "that does not indicate we are entering a period of sustained high prices." Surely both fundamentals point toward high prices for the foreseeable future (which admittedly is not very far ahead).

Like so many other analysts, I see little hope of a return to sustained low prices for liquid fuels. I agree with those who claim, "The era of cheap oil is over."

As for entering terminal decline, I agree that we have not yet peaked (much less entered decline), at least in terms of all-liquids. And perhaps seven years is insufficient to claim (as many have) that we have peaked in conventional oil... things could pick up on that front.

Also, the risks continue to mount: we have minimal spare capacity, refineries closing, Israel & Iran which will not back down, this week's announcement that Russian oil output will stay flat for the next 20 years, fierce UK decline, etc.
And all of this with no effective means to deal with a major global oil shock, should one suddenly occur (no matter what the cause). Surely north-eastern North America would be highly vulnerable in such a situation: Canada has no strategic reserve and USA would have difficulty moving SPR oil to assist PADD 1.

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Originally Posted by Rick M

If demand is likely to stay up (or even accelerate, as seems pretty certain in Asia and MENA) and if conventional production can barely stay even with depletion, then I don't understand why you say "that does not indicate we are entering a period of sustained high prices." Surely both fundamentals point toward high prices for the foreseeable future (which admittedly is not very far ahead).

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Because I do not think that the tame response from the producers is an entirely a forced condition.

This week an article by Robin Mills, an energy consultant, appeared on the website of the European Energy Review. The piece sparked a controversial debate among the readers.
Especially questionable appear his assumptions about the energy value of different sources ("to the consumer, the source of the fuel that goes into the tank is irrelevant"), his belief that oil as fuel can be replaced by alternative fuels without any difficulty, as for example the substition by LNG or nuclear power on ships, as well as his total neglection environmental effects by the production of unconvetional oil (e.g. tar sand).

Mills' opininion is also contrasted by the article of James Murra and David King ("Oil's tipping point has passed") in Nature (No. 481, p. 433-435).

Oil demand and speculation may be topping off. This should not come as a surprise since consistent high oil prices produce countervailing forces in supply increases and demand reduction.

AP,

I posted a few observations re. your Globe article (in the Comments section for that article).

As for the larger energy supply picture, the big hope/"game-changer" has been shale/tight oil and shale gas.
The Globe recently ran an article on Art Berman, who was warning several years ago that shale gas was over-hyped and that investors should be careful.

Having been roundly criticized for expressing his concerns, the ongoing difficulties at Chesapeake Energy are exactly the sort of thing that Art warned about.
Please see Comments here:
http://www.theglobeandmail.com/globe...rticle2405737/

Rick,

I appreciate your comments on that article; very well written. I agree with you that shale oil and gas are not an effective replacement for crude. Where I disagree is the claim that we are in, entering, or have past a point in which oil production is in terminal decline. I think this 2011 EIA report is a good starting point. I also mentioned in a previous post about the problems of demand shock, speculation, and global security issues (GWoT, Iran, etc), which all contribute to high oil prices. I think this graph and this graph are important to understanding the long-term context of oil prices and production.

"in, entering, or have past a point in which oil production is in terminal decline."

Thanks for your reply, AP

It's a matter of definition (re oil production).
What is oil?

I certainly accept that although the evidence gets stronger with each passing month, the IEA could be proven wrong in its assertion that conventional oil is unlikely to surpass its 2006 peak of around 74-75 mbpd. There is plenty of evidence that this plateau was reached in 05, even as early as late 2004, but there is little to be gained by haggling over minor details.

Meanwhile, there is no evidence that global all-liquids production has peaked: we are now near 90 mbpd and there is nothing to indicate a peak (much less a subsequent decline).
I have no idea what the global all-liquids peak might eventually be, nor when such a peak/plateau might occur, but I do believe that it will be very problematic when it does occur.

What does seem clear is this: conventional oil production has been stalled for a worrisome length of time. depletion of the very large oil-fields (which provide most of our liquid fuel supply) is ongoing, perhaps accelerating, and new sources of liquid fuels (ie. deep-water pre-salt, shale oil, etc) are both more energy-intensive and more capital-intensive.

Both of these trends are consistent with the warnings that peak oil analysts have been arguing for many years.