Energy Security

[Ulenspiegel]

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.

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.

[Rick M]

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

[Rick M]

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

[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.

[Ulenspiegel]

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.

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

[Firn]

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.

[AmericanPride]

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.

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.

[Rick M]

"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/