Oil Price thread

[Richard]

As far as I can tell, peak oil isn't really about a quantity problem, more like a cost problem.

There's lots of oil, it's just that we have an (understandable) policy of extracting the easy, most economical oil first, then moving onto the harder, less economical stuff (e.g. oil shales, deep-sea drilling etc) when the easy stuff has gone.

Plenty of oil left, it gets more expensive as we move over to the harder-to-extract stuff though.

[eclipse]

Hi Robster,
Re: "Oil storm".

I watched it and it was not just a Katrina event... they also added in some other hypothetical disasters....

* tanker collisions that took out a narrow channel for 3 weeks on your east coast (refineries up a long narrow river, looks like an accident waiting to happen... but I can't remember where it was. It's on tape, maybe I should watch it again.... but the acting was SO bad.)
* uprising in Saudi Arabia due to the perception that SA was "bailing out" the great Satan... terrorist strikes on SA refineries
* Russian oil tankers being bought out by China

The interesting thing about Oil Storm was that it was not America "running out" of oil, but this vital substance declining. They looked at 10 to 15 thousand dying of the cold in Boston due to overpriced heating oil becoming unaffordable. They looked at airlines going bankrupt, and large car manufacturers going bankrupt.

Now, I agree with your last post Robster. Thanks for clarifying that to george... I wonder if Centrillium has any "sources" for his "experts"... or are we meant to hang with baited breath?

Let's look once again at what BIG OIL are saying....


Chevron have said it! "The era of easy oil is over!" writes the CEO at www.willyoujoinus.com

OPEC have already said that light sweet crude is in decline. (Only the sour stuff is still increasing in production.) This backs up what Chevron has already stated, the era of easy oil is over. The age of sweet oil is turning sour.
http://www.vitaltrivia.co.uk/2005/08/26

Exxon Mobile have announced that the entire world outside of OPEC is about to peak in its production of all oil categories in the next 5 years. That is a huge announcement. It tells us that we will be dependent on OPEC for any increase in worldwide demand.
http://www.thebulletin.org/article.p...fn=mj05cavallo

A senior Saudi oil geologist has stated to the New York Times that he believes Saudi oil will peak at about 12.5 to 15 million barrels a day. After that point, there can be no more growth in sour supply no matter what the world demands!

"When I asked whether the kingdom could produce 20 million barrels a day -- about twice what it is producing today from fields that may be past their prime -- Husseini paused for a second or two. It wasn't clear if he was taking a moment to figure out the answer or if he needed a moment to decide if he should utter it. He finally replied with a single word: No."

Once Saudi Arabia have peaked, then that's it — the world has peaked. There will be no more economic growth of the oil dependent variety. Indeed, current industrys such as airlines will start to go broke. The New York times quote is from the comprehensive article below.
http://www.nytimes.com/2005/08/21/magazine/21OIL.html

The Hirsch report (let me mention it once again) to the American Department of Energy has reported that the peak is near and he has emailed me that the consequences will be "dire, worldwide, and long lasting." (Download 96 page 500kb word file HERE.)

The effective end of the oil age is when we can no longer rely on the ever increasing production of cheap oil. For your average suburbanite, farmer and food distributor, the oil age ends when it costs $500 to fill the car!

[agent orange]

Oil prices fell after US refineries in Houston appeared to escape serious damage from Hurricane Rita.

But oil refining plants further east of the city in Port Arthur and Lake Charles were harder hit by the storm.

US light crude dropped 97 cents to $63.22 a barrel in a special Sunday trading session, after falling by more than $2 on Friday in New York.

Brent crude fell 86 cents to $61.58 a barrel in Sunday trading on the London International Petroleum Exchange.

Full story

[eclipse]

The "bumpy plateau" of Hubbert's peak means that the price of oil will rise and fall, up and down a bit chaotically for the next year or two. Take it from a peaknik, this is not it. (Yet.)

But it's coming, and when we reach the ark of decline and worldwide oil production goes irreversibly into decline, less and less each year, with nothing preventing the slide, we'd better have world governments co-operating! We'd better have a rationing plan that makes sense, or the Malthusians could be proved right.

[the reporter]

LONDON: World oil prices rose on Monday, as traders worried about heating oil supplies with the northern hemisphere winter fast approaching during the fourth quarter, dealers said. New York’s main contract, light sweet crude for delivery in November, gained 32 cents to 66.56 dollars per barrel in electronic trading.

In London, the price of Brent North Sea crude for November delivery added 18 cents to 63.66 dollars per barrel. "Refineries are having a slow recovery" in the hurricane-battered US Gulf Coast, said Victor Shum, an analyst with US energy consultancy Purvin and Gertz in Singapore.

"The worry is that now we are heading into the northern hemisphere winter season and the focus ... will be on heating oil." With Gulf of Mexico refineries still struggling to resume full operations after Hurricanes Katrina and Rita, concerns are mounting over heating fuel.

Deutsche Bank analyst Adam Sieminski added: "A number of weather forecasters are now calling for a colder-than-normal winter in the US North East, an area of the United States that historically uses a lot of heating oil and is increasingly focusing on natural gas." A US Congress committee on Friday heard that 12 refineries, accounting for nearly one-fifth of the country’s oil-processing capacity, remained shut down in the aftermath of the hurricanes. Sucden analyst Sam Tilley added: "Many US refineries have opened after Rita but several others remain shut, closing in around 3 million barrels per day of refinery capacity."

Crude production in the Gulf of Mexico region is still almost fully off line following the hurricanes, according to the US Minerals Management Service, while 80 per cent of natural gas production remains shut down. Societe Generale analyst Frederic Lasserre added: "In the near-term, Hurricanes Katrina and Rital translate into a surplus of crude oil and a deficit of refined products. "The simple fact of having stopped production, interrupted imports and close refineries, even temporarily, had and will have a determining effect on the market." US President George W Bush appealed Friday to Americans to conserve energy, notably by driving less, as the country’s refineries struggled to get over the impact of hurricane weather.

[eclipse]

Hi Reporter,

yes, the focus will be on both heating oil and natural gas prices. James Howard Kunstler, peak oil author of "The Long Emergency" and star on www.endofsuburbia.com has stated that many of the poor may freeze to death in America this winter.

Half the houses in America are heated with natural gas and most of them are elsewhere than the Gulf Coast. On the markets, the price of gas is now heading north of $15 a unit (1000 cubic feet). It could easily hit $20 by Christmas, which would be about 700 percent higher than the price in 2002. Everyone in the non-Sunbelt is going to feel the pain this winter, and quite a few of the poor and infirm may freeze to death.

This is going to be a whole new kind of crisis for America and will set off a new kind of political fury. Both parties will get it in the neck but, of course, the Republicans led by the Bush White House will get it worse, because they are nominally in charge of things. There will be nothing they can do about the natural gas crisis. You can't get any significant amount more of it from overseas because it requires special tankers and terminals to receive it, and those terminals will not be built before the robins come back to Kalamazoo. The Democrats will have to prove that they don't deserve to join the Whigs in the Hall of Extinct Parties.

http://jameshowardkunstler.typepad.c...erfuck_nation/

[the reporter]

LONDON, Oct 24: World oil prices fell sharply on Monday as Hurricane Wilma appeared to have missed energy facilities in the US Gulf of Mexico, analysts said. Global energy demand growth in 2006, meanwhile, would be further eroded by the high price of oil, which should however remain above $50 per barrel, the Centre for Global Energy Studies said in an influential report.

New York’s main contract, light sweet crude for delivery in December, dived 58 cents to $60.05 per barrel in pit trading on Monday.

Light sweet crude had slumped to $59.15 on Friday, the lowest level for three months. It has meanwhile lost more than 16 per cent of its value since hitting an historic $70.85 per barrel on August 30 after Hurricane Katrina battered US Gulf Coast oil facilities.

In London, the price of Brent North Sea crude for December delivery shed 48 cents to $58.00 per barrel in electronic deals on Monday.

“The market was back down almost a dollar and is expected to continue to weaken with Brent due to head to $55, and potentially $50 by the year-end depending on how cold the winter in the US and Europe turns out to be,” Sucden analyst Sam Tilley said.

Hurricane Wilma was downgraded on Monday to a Category Two hurricane, weakening as it moved along the coast of southern Florida.

The hurricane “missed the key oil production facilities in the Gulf of Mexico”, Tilley said.

Oil installations in the Gulf region were struck badly by Hurricane Katrina which made landfall on August 29.

Prices have since eased significantly on signs also of weakening demand and a build-up in petroleum reserves in the United States, the world’s biggest energy user.

Elsewhere, traders were keeping an eye on Iraq, where oil exports were completely halted by a combination of insurgent attacks in the north and bad weather in the south.

Exports from the southern oil fields had been running at as much as 1.6 million barrels per day (bpd) while exports from the north had stood at 300,000 to 400,000 bpd.—AFP

[eclipse]

Thanks reporter, I just had some questions about Iraq and that answered it.

I have some hard corps peakniks that really get into the oil stats that say because a few big projects are coming online soon, prices could go down and hover in the mid $50 for 2006 and 2007, and other peakniks that have concluded that because of depletion even these new projects cannot stop the price climbing.

I don't know — and frankly the micro-analysis of every blip on the "bumpty plateau" bores me. Sorry — I'm not a market expert — but rather a campaigner to get the "bigger picture" of oil depletion out there.

ASPO Australia is about to open. I met the head of ASPO Australia, Bruce Robinson, at a function he was speaking at. The North Ryde CSIRO Petroleum group had invited him along. Now what interests me about this day is that this Petroleum group had all the science about oil extraction, prospecting, deciding on the best places to drill wildcats, etc.... but not the big picture of overall oil reserves worldwide and the enormous downtrend in discovery. In other words, they did not know we were facing a worldwide peak in the next few years. They could probably break down all Australian production data... but when it comes to thinking heretical thoughts like.. "How much oil is there on planet earth, really?" the brain shuts down under the enormity of the implications and goes into faith mode: "Someone is doing something about that somewhere".

What fascinated me was that there were obviously some there that were taking the "red pill" for the first time. They were waking up to the fact that society is in serious trouble in just a few years. Australian CSIRO scientists were squirming in their seats. They did not know! These were oil people, and they did not know! That scares me! That gives me hope! Because even though society as a whole has not got the enormity of the crisis, and even though it is quite frightening to think that governments and science agencies around the world could leave something this gargantuan to the last minute, and even though the Hirsch report recommends 15 to 20 years to wean off of oil....

... these scientists GOT IT! These are some of the smartest people in Australia and they got it. They did not turn their noses up as they do when I present the material. (My target audience must be the "average Aussie" as I do not have the science kudos to convince scientists.) They listened to one of their own, another CSIRO scientist, only in this capacity doing oil stuff in his spare time.

So watch these oil market reports. When they speak of "increased reserves" I think they are simply talking more about "stock" as you might find in a shop. Actual URR, "Ultimately Recoverable Reserves" are not really increasing! (Apart from marginal increases in extraction technology allowing us to get an extra 1% from reserves... and this is called "reserve growth" even though the quantity of oil on planet earth has not increased, our ability to get an extra bit out of old fields might.)

I think the message is starting to break. Andrew McNamara's report is due out soon, and unless there is some amazing new breakthrough such as the often touted Hafnium projects, it does not look good for the airlines. (He has indicated in a internet interview that he thinks the airlines are going bankrupt.) Just the airlines going down would throw us into an enormous recession, add the flow on effects of high oil prices through the wider economy... permanently (for this generation anyway) and that's the Great Depression!

[Richard]

I think the message is starting to break. Andrew McNamara's report is due out soon, and unless there is some amazing new breakthrough such as the often touted Hafnium projects, it does not look good for the airlines. (He has indicated in a internet interview that he thinks the airlines are going bankrupt.) Just the airlines going down would throw us into an enormous recession, add the flow on effects of high oil prices through the wider economy... permanently (for this generation anyway) and that's the Great Depression!

Eclipse,

Do you know of any internet resources that discuss the probably future of the airline industry? I gather from the news in general that a lot of them are having problems staying in the black so was wondering if this is just a blip or does it signal the begginning of large-scale bankruptcies?

[eclipse]

As I suggested before, the Andrew McNamara taskforce has basically concluded that peak oil means the end of flight for the average citizen. Certain prioritized fuels might be kept aside for governments and the elite, but for you and me, the airlines are going bankrupt!

http://media.globalpublicmedia.com/R...a.20050824.mp3

This alone will throw us into the Greater Depression. Flow on effects will be enormous, just from the commercial airlines collapsing.

There is some discussion about UAV's being loaded up with Hafnium... but that's a Predator drone, not a fully loaded 747!

When I think about the billions being wasted in airport upgrades around the world, predicting "increased tourism & business planning" projected for the population growth of the next few decades, I want to tear my hair out.

I started asking the same question about airlines in the following science forum... and received a very techno-cornucopian answer... Hafnium will save us! But no questions about actual hafnium reserves have been answered.

http://www.scienceforums.net/forums/...753#post219753

Don't get me wrong... I wish for a "silver bullet" every day, and have thought I have found them on a number of occasions. Once bitten twice shy, which is why I invented the SERVICE checklist for renewable energy so that on the spur of the moment, I could remember the main things to ask.

http://eclipsenow.org/facts/service-checklist.html

The SERVICE test for alternatives

This is a basic checklist to use in evaluating alternative energy. If a renewable energy fails just one of the tests below, it is not going to replace oil. The more tests it fails, the less it can help mitigate peak oil. The experts are telling us that no alternative energy matches all the tests below, so our lifestyles must change. It is that simple!
“Alternatives are not going to SERVICE our current energy needs after cheap oil.”

S.E.R.V.I.C.E.

Sustainability

Energy payback

Rare materials

Volumes

Implementing Infrastructure

Cheap

Even supply

Sustainability – is it sustainable for the long term?
Bio-diesel depletes the soil unless we put some NPK back (which is also difficult without accruing an energy loss).
Gas conversions to cars will just use up the LPG faster.
A "hydrogen economy" based on natural gas will just bring "peak gas" forward that much quicker, etc.

Energy Payback — the EPR. Do you get more energy out of a device that went into making it in the first place? Have you counted all the energy costs that go into the new energy infrastructure?

Tar sands and shale oil are incredibly energy expensive means of producing fuels. (And would again contribute to the global warming crisis.)

Rare materials essential to some renewable schemes would limit the worldwide deployment of that scheme.
EG: Electric Vehicles (EV’s) hold great promise, but what are the world’s current Lithium reserves and how many generations before we experienced “peak Lithium?”
EG: Fuel cells use plantinum, and after just a few years of a fuel cell transport system we would reach peak platinum.

Volumes — are most often too low.
EG: All Australian wheat into ethanol = 9% of liquid fuels and no bread! This alarming statistic takes into account the fact that we grow enough wheat for roughly 100 million people (we only consume 20% of our wheat for our 20 million Australians.) This statistic comes from Bruce Robinson of the STC.

EG: Biodiesel... even if we managed to grow biodiesel crops without modern fertilizers and pesticides (through biofarming methods such as "crop and cow" rotation) there is just not enough arable land to grow the quantities we need. We would run out of land for food!

Some potential energy volumes are vast (just 40 km by 40 km of solar PV is all Australia's energy needs) but we have left it too little too late. In other words, our current volumes of energy from these sources are far too low... below 1% of worldwide electricity supply.

Even if there is a vast potential energy source such as solar, the following questions pretty much prevent it running what we are currently running.

Implementing the Infrastructure — is the fuel compatible with the current infrastructure? What are the issues in implementing the new fuel at filling stations? Is it easy to transport? Can it be stored easily? How energy dense is the fuel — and will you burn 90% of the fuel just to transport it to the filling station? How long will it take to implement? What other time factors are involved in converting filling stations over?

Cheap — What is this alternative going to cost society? We are not running out of oil, we are running out of cheap oil and it is throwing us into a crisis.The costs for a solar to hydrogen fuel system would currently bankrupt any nation — we may as well use the original solar electricity to charge EV’s rather than bother wasting energy making Hydrogen. What the alternative costs is extremely important, and is the basis of the peak oil crisis.

Even supply of energy — Is the energy supply constant?
The sun doesn’t shine at night, and the wind does not blow for long periods. We need a system of energy that is reliable, or the power grids start to fail. How do we adapt to the intermittent nature of renewable energy sources? What backup energy mechanisms are there? How expensive is this, and how do we adapt society to live in the new realities of more expensive energy?