I've written about energy issues a few times and been wrong as often as I've been right. One of the reasons predictions about energy prove so difficult is that data on oil production are so poor. But we do have a new data point out today that shows that OPEC's production hit its highest level ever this past month. It's just one piece of information, but it seems as if there was at least some additional capacity in the system.
Peak oil?
New data point shows that OPEC’s production hit highest level ever last month 25
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12 Aug 2008 6:05 PM
by Jason D Scorse -
Posted in
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Jason Scorse, PhD
Associate Professor
Chair of the International Environmental Policy Program
Monterey Institute of International Studies
Institute Webpage: http://www.miis.edu/academics/faculty/node/936
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Colin Wright Posted 11:46 am
12 Aug 2008
There has been very little change in the fundamentals of supply and demand during the last few weeks. OPEC production for July was up a bit, but this was more than offset by declines in non-OPEC production. US demand for oil products remains about 2-3 percent lower than last year. Chinese imports which are more volatile than those of other countries were significantly lower in July than in the spring and this may be a factor in the price drop.
In any case, Petroleum Review editor, Chris Srebowski has done a project by project analysis of upcoming production, and his model suggests that we won't start declining til after 2010. Even so it would be really helpful if OPEC were to open their books to independent agencies, so the world can make the necessary preparations for the inevitable post-peak era.
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gmobus Posted 11:48 am
12 Aug 2008
George
George Mobus,
Associate Professor, Institute of Technology,
University of Washington Tacoma,
and Professional Student for Life
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Jon Rynn Posted 12:00 pm
12 Aug 2008
The second thing to keep in mind is that what really drives the international price is the export capacity of oil-producing nations. I believe exports have already peaked. Just to get your economists' blood boiling, the level of subsidization of oil in countries like Venezuela, Mexico, Iran and Saudi Arabia is not only preventing a huge amount of oil from going on global markets, but it robs those countries of badly needed development money. And speaking of sclerosis, there are riots if they try to raise the price of gasoline. Although even if the subsidies came off, it would only delay peak.
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Craig Allen Posted 12:53 pm
12 Aug 2008
They are using their oil wealth to build science fiction metropolises that are in turn powered by oil. Luxury hotels galore and cranes everywhere building a vast commercial-financial district from scratch (including the tallest building in the world). All the water is desalinated from the sea (I was told that they have the highest per-capita water use in the World), the average car is humongous, everything is air conditioned (but with little thought given to heat leakage), and the tourism is predicated on cheap air flights. Furthermore, Emirates Airlines is buying up big on Airbuses.
Either they don't think the oil will run low any time soon, they have a clever plan to go solar (not that that will solve the air travel cost issue), or they are just is such a head-long rush to develop that they haven't thought it through.
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Jason D Scorse Posted 12:56 pm
12 Aug 2008
We need to focus on the root causes of problems. http://www.voicesofreason.info.
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Laurence Aurbach Posted 1:49 pm
12 Aug 2008
Re: Preparations in the Middle East.
Big plans are underway for a Saudi Arabian rail network connecting all population centers. This includes the high speed Makkah Madinah Rail Link from Jeddah to Mecca and Medina which will serve 15 million travelers annually.
Abu Dhabi (its oil reserves are the fifth largest in the world) announced it will spend $350 million on a 100 MW solar plant. It is "part of Abu Dhabi's drive to cut dependence on hydrocarbon power generation." The investment is part of the Masdar Initiative which is authorized to spend up to $2 billion to become an exporter of solar technology.
Other Middle Eastern countries are increasing their renewable energy portfolios at a fast rate.
Ped Shed Blog
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Bart Anderson Posted 1:52 pm
12 Aug 2008
Bart
Energy Bulletin
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Delay And Deny Posted 2:09 pm
12 Aug 2008
That oil's origins are not, to repeat, not biological, according to the gospel we have been taught to believe. That in effect oil originates from deep carbon deposits dating to the very beginnings of the Earth's formation in quantities vastly greater than commonly thought.
The very presence of methane in the solar system is cited as one of the key underpinnings of this theory's seriousness. Then by seepage through the earth's mantle, Abiotic oil becomes in essence a renewing resource migrating toward the Earth's crust until it escapes to the surface (i.e. Canada's tar sands as theorized by some) or trapped by impermeable strata forming petroleum reservoirs.
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amazingdrx Posted 2:12 pm
12 Aug 2008
When peak GHG climate disaster made it a happy circumstance, if anything. Now it would really be a joy, now that we realize simply lowering demand puts OPEC, big oil, and the whole bushie war machine at iour mercy. Have no mercy, keep cutting demand.
Bankrupt these interests. Do it for the planet, for the future generations, and for revenge. Watching the oily war mongers squirm will be marvelous.
The fright to the fixed futures markets will allow crooked traders to make money off of the exxonmob and their invstors and cronies all the way to bankruptcy court. They will create a reverse bubble with manipulated insider trading. Watch the oily ones scream for market regulation then. hehehey.
Ride a bike or a bus or a train or a plugin hybrid car or bike. Charge the plugin on your own solar panels. Enjoy.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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1Eco Posted 2:52 pm
12 Aug 2008
so far the average has been 10M gals less per day, which is only 2%.
If that number could be reduced by 10% in two years that would be a reduction of 50M gals per day.
If that number could be reduced by 30% we would see a reduction of 150M gals per day. Could this be done? Conservation and better MPG is extremely important. I am seeing far more MOTOR BIKES here.
I am also seeing far less BIG SUVs. One was in front of me the other day and the total on the pump read $78. My guess is the vehicle was almost half full upon arriving. This will simply not stand even as security and protection are the two most important aspects of travel for these family oriented buyers.
The downturn we are seeing here will soon be seen all over the world and demand will fall far faster than most expect. It was easy to see this bubble in the price. What goes up, must come down.
If the car companies survive they will be forced to produce vehicles that produce far better MPG than before.
Ecosystems empowerment for the rural poor.
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Russ Posted 2:58 pm
12 Aug 2008
No one doubted there was some spare capacity in the Saudi system, in the neighborhood of c. .5-1mpd. This corresponds to the recent, belated increase in Saudi production, after years of claiming it could ramp up production at will while finding pretext after pretext for not doing so, which is what has increased skepticism about their real ability to significantly increase production for longer than a short period.
Now they finally say they're going to put their money where their mouth is. They have gone up to 9.7mpd this summer, and claim they'll achieve 10 by the end of this year, and 12.5 by the end of 2009.
This, then, is the test of strength. So far all we've heard from the Saudis is hype. If they can achieve these new goals (and sustain them - because it's also possible to recklessly overextract and "damage the field", forestalling future recovery and causing the subsequent production decline to be all the more precipitous), it would show that Peak Oilers were premature in judging Saudi Arabia (and the world) to be currently at the Peak.
However, given that until this recent uptick Saudi and world production have been stagnant since 2005, I'm certainly taking a Show Me position on this.
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vakibs Posted 12:52 am
13 Aug 2008
exports peaking :: ..but it robs those countries of badly needed development money..
The importance of capital for industrialization / automation has diminished greatly during the years. The world is currently dripping with capital. The world economic product has reached unprecedented amounts.
In this circumstances, energy has become the true equivalent of money. All global currencies are currently tied to energy prices.
Those countries who have energy automatically become rich countries. So it is in their interests to spend all the energy that they have for themselves. Capital for investment is coming begging at their doors. They don't have to ask for it.
These circumstances force USA to rethink its strategies and become energy independent. It can either do it by cutting down demand or developing indigenous energies. I just hope that coal will not get into this new energy mix.
Let's think in terms of eco-dollars.
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Jon Rynn Posted 1:04 am
13 Aug 2008
So, machinery is used to create more wealth. Generally, actually, something that is used up, like oil, is not even capital, it's an input to production, which uses capital (machinery) to make things. And oil provides the service of allowing people to drive around. But however you look at it, unless it's being used for something that makes something else -- such as solar panels or wind turbines, ideally -- then it is not capital.
So, the oil-producing countries are using up what could be capital, letting it go up the tailpipe. They could have used it, or the proceeds from the sale, to make factories, solar panels, rail, etc., but they didn't, and they are poorer for it.
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vakibs Posted 2:12 am
13 Aug 2008
Thanks for articulating your views :) It will be cool if I can peep in your dissertation.
I didn't say energy is capital. I said energy is money. There is a slight difference.
Money is what determines our capacity to consume different resources. For most of our history, money was composed of two things (a) initial capital that you possessed (b) amount of energy that you possessed.
Automation, or machinery as you have mentioned, needs capital to be built. It needs energy to run. Together it creates resources which we then purchase by money. So money = capital + energy
For most of our history, this capital was in short supply where as energy was abundant. But now, we are experiencing a reverse phenomenon. The world today is literally dripping in capital, but running short of energy.
Industrial growth is an exponential function, and the global economic product has been growing rapidly for several decades. The amount of capital that we now have at our disposal is unprecedented (even as compared to 50 years ago).
As capital is no longer a scarce resource, its importance in the composition of "money" is being totally replaced by energy. In short, energy is (or will be) the true currency. We will soon start counting in terms of KWH instead of dollars.
Standard economic theory tells us that when money is circulating in a society, there will be growth. Translated into the current world, it means when energy is circulating in a society, there will be growth.
If you accept this, it makes clear sense why Arab countries are increasingly consuming their oil internally. Oil is not just going up the tail pipe, it is kindling a huge construction machine. Arab countries are massively updating their industrial infrastructure. Their economies are getting increasingly more automated.
When capital ceases to be an important resource, there will be no incentive to exchange energy (oil) for obtaining it. Arab countries no longer have an economic incentive to export oil.
When you digest this phenomenon, you need not wait for peak-oil to get shit scared. There will be less and less oil available for imports in the future. This itself will require each country to become energy-independent.
(I have written in a slightly higher detail in my blog).
Let's think in terms of eco-dollars.
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cnbcsucks Posted 2:19 am
13 Aug 2008
a) Anyone have any explanations for the China demand destruction story? I don't necessarily buy it. I do know that there were plans to build a strategic reserve and I suspect that the lack of reserve infrastructure in China is allowing the price of crude to dip currently; otherwise, the Chinese would and should be hoarding as much $113 oil as they can.
b) From a market opportunity perspective, the Middle East seems an attractive market for solar power. Anyone have any thoughts on what the best country markets might be to do business with as an American? Love to hear any inputs on this.
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Jon Rynn Posted 3:00 am
13 Aug 2008
Fun with accounting!
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Jon Rynn Posted 3:06 am
13 Aug 2008
Oil-producing countries are even more generous to their residents. In Venezuela, gasoline costs 12 cents a gallon. In Iran, it costs 41 cents. In Saudi Arabia, it costs 47 cents; in Russia, $3.90...Even after subsidies were partly lifted last month, a gallon of gas in China costs only $3.40, well below market prices.
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Jon Rynn Posted 3:07 am
13 Aug 2008
Oil-producing countries are even more generous to their residents. In Venezuela, gasoline costs 12 cents a gallon. In Iran, it costs 41 cents. In Saudi Arabia, it costs 47 cents; in Russia, $3.90...Even after subsidies were partly lifted last month, a gallon of gas in China costs only $3.40, well below market prices.
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amazingdrx Posted 3:44 am
13 Aug 2008
Even low and misinformation derived ideas are inspirational. By knowing about the nature of disinformation and mass delusion, progress is made possible.
An echo chamber wouldn't do this.
It's kind of like biodigesting manure! Clean energy, GHG offset, and smart grid backup is the result. Then the organic fertilizer grows bigger and better crops.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Russ Posted 3:50 am
13 Aug 2008
Consider this, from today's Oil Drum, with regard to American imports specifically:
4. There is a substantial chance that petroleum products available will suddenly decline by a large percentage (more than 20%), rather than just the small annual increment one might expect that results from the world decline in oil production.
There are really two issues with oil availability--the worldwide decline, expected to begin in the next few years, and a decline in the US ability to import petroleum products. Of the two, the decline in the US ability to import petroleum products is probably the bigger issue.
We have lived in a world where the United States uses 24% of the world's petroleum products for such a long that it seems like this is the natural order of things. The problem is that we are no longer exporting very many goods to pay for this oil, and our balance of payments situation is getting worse and worse. Our financial situation is worsening. There is a substantial chance that the value of the dollar will drop sufficiently that we will not be able to afford to continue our big share of world oil supply.
There are other ways that the amount of oil we are able to buy might decline, also. Geopolitical forces may eliminate some production, or may change the amount we are able to purchase in the open market.
From every point of view, even leaving the Peak aside America's oil situation becomes more and more tenuous.
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amazingdrx Posted 4:06 am
13 Aug 2008
It would be a good way to counter the drill our way out of this notion taking hold in mass media.
Miss two quarters in a row and rationing kicks in. And emergency rationing would be the standby plan to discourage quick supply constraint oil schocks to the economy. With rationing, emergency use of the national oil reserve would be feasible.
A 5% reduction per year would do the trick over 20 years. So that would be 1 1/4% per quarter.
Just like the fed uses money supply to cushion economic shock, government oil policy should use demand control and emergency supply to cushion oil price schocks.
Either we get serious about demand reduction or oil war and climate disaster will bankrupt our economy.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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gmobus Posted 4:58 am
13 Aug 2008
Money (M1) is actually a symbolic representation of the amount of energy available to do useful work. When you buy, say, fixed capital resources, you are telling the system that the energy used to produce that capital was well spent - do it again!
It has actually always been thus since the time coinage replaced fractional bartering. Money has always represented an amount of work (by the physical definition of mechanical, chemical, or electrical) that can be done.
Now in a strict sense, there should not be any more money in circulation than there is energy reserves. This doesn't mean oil, but rather the net BTUs that can be extracted from oil (and all other energy sources as well) fix the money supply. But, since mankind sort of forgot this fundamental relationship, and since we have historically been on an upward growth curve in terms of increasing net energy, we've created all kinds of bogus institutions (of the financial kind) that disconnect money supply from energy supply. Fractional reserve banking and liquidity markets turned speculation markets are a couple of examples of ways to artificially inflate the 'money' supply.
Now that the energy supply may be going into contraction the tide is turning. All of our debt-instrument financing is going to go to hell in a hand basket. A lot of so-called wealth (paper assets) is going to go up in smoke (no pun intended). The housing bubble may be just the first major sign of this phenomenon.
I have been blogging about the energy/money relationship for a while now. See, for example, my March 25th piece, "What is money, really?"
One more tiny detail. Energy does not, unfortunately, circulate the way money does. Energy obeys the second law of thermodynamics and gets used up at each stage of transformation and when work is done. Therefore it is a one-way trip through the economy. Money's circulation is just the effect of it being used to track the two-way exchanges of energy that take place, like my salary represents my energy input to my job, but I buy some of the very product I help make. So it looks like circulation but it only works because real energy is constantly being input at one end of the economy to replace what has been lost as waste heat. Incidentally, I would bet you can correlate the velocity of M1 with the throughput of net energy through the economy.
George
George Mobus,
Associate Professor, Institute of Technology,
University of Washington Tacoma,
and Professional Student for Life
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1Eco Posted 2:04 am
14 Aug 2008
Forcing people to do as you might wish sounds very extreme right wing to me. Funny have the extreme left and the extreme right seem to wish to force their own awareness on everyone else.
To be forced to do whatever in my view is total
and complete Bull crap.
Rather how about the idea of educating the masses on the common logic of using less fuel. Will it take time, is it a job that pays no money. YES
Knowing the facts and explaining them in a way everyone might understand them is stepping back in time about 10 years an slowing down to let everyone else catch up to YOU. Who wants to do that? Who has time? How about we make the time to simply start to educate over and over again until everyone gets IT.
390M gals of gas a day X 365 days in the year.
That is 142,350,000,000 as in 142B gals a year.
5% might be a good number to consider however a more logical goal might be 3.3%. That is still a major reduction.
If every three years we might see a 14.2B gal gasoline reduction the future of fuel would shift in a major way. This would allow time for a bridge between the current transportation system structure to one that is far more green.
That shift will not take place without the car companies moving NOW to improve MPG. Those that do will get the business, those who do not will be going out of business. Do the Officers at Chevy and Ford get this yet? They may not but you can bet Honda and Toyota understand. How totally LAME is that.
Ecosystems empowerment for the rural poor.
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Wolverine Posted 5:13 am
14 Aug 2008
All governments force people to do all sorts of things. From being forced to obey traffic laws to being forced to pay taxes, there are a multitude of things we are forced to do. Forcing people to do things that protect the environment would be the best reason for forcing people to do things.
I think we all agree that educating people in order to convince people to act in a more spiritually evolved manner is far superior to forcing them to do so, but when the dike is leaking, you need to plug it while you also deal with the root of the problem. Additionally, people should not have freedoms for which they don't take full responsibility, and the vast majority of people, especially Americans, have proven themselves to be totally irresponsible when it comes to oil.
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1Eco Posted 6:28 am
14 Aug 2008
if you want to see a few, I like this place, and would enjoy being there the 16th and 17th.
http://solarliving.org
solfest X111
got to get back to the land and set your soul free. How to get there, now that is the next
question.
Ecosystems empowerment for the rural poor.
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