Watch In Absolute Wonder As The Demand For Oil Plunges & It's Price Goes Thru The Roof

[cells]

Given the size of the field its decline will be long and slow. My view is a slow drift downwards in terms of oil production. Perhaps Iraq can take up some of the slack.

What will be interesting is how much gas can fill the gap. We have already fooked it in terms of a nuclear rennaisance and most renewables require too much upfront capital.

There exists so much plentiful fossil fuels that huge reserves are being left untapped because there is currently no market for it.

Russia put on hold massive gas fields because the market is saturated. And soon demand will be saturated. It already is in the west and declining due to efficiency.

China is the growth for the next 15 years and then it too is saturated. Thankfully they have a good amount if coal for their electric and are planning to add lots of nukes . They may increase oil demand by 10m barrels but that can come from the us and EU fleet of 3-400m vehicles improving efficiency a few points. Plus sale techniques are yielding shale oil

Overall there seen no peak anytime soon.

[cells]

Question.

How much oil is burnt in power stations per day?

Answer.

About 5 million barrels per day

So you can quite easily replace that with coal or nuclear or gas or wind and price differential us the incentive.

[cells]

Question.

How many barrels of oil equivalent can be saved by upgrading the worlds gas fired power stations to modern units?

Answer.

Aprox 5.5m barrels a day.

Question.

How many barrels of oil equivalent can be saved by upgrading the world coal plants to modern units?

Answer.

Aprox 6 m barrels a day.

So your,looking at saving near 12m barrels a day by upgrading power stations and replacing the oil fired units with gas fired units.

Who needs a new Saudi when the above can be done economically and importantly quickly! New gas stations only take 18 months to build.

[fluffy666]

There exists so much plentiful fossil fuels that huge reserves are being left untapped because there is currently no market for it.

Russia put on hold massive gas fields because the market is saturated. And soon demand will be saturated. It already is in the west and declining due to efficiency.

Any particular evidence for this?

China is the growth for the next 15 years and then it too is saturated. Thankfully they have a good amount if coal for their electric and are planning to add lots of nukes . They may increase oil demand by 10m barrels but that can come from the us and EU fleet of 3-400m vehicles improving efficiency a few points. Plus sale techniques are yielding shale oil

China, and India, and the rest of SE asia, and Latin America.. hmmm.

I'm not familiar with 'sale techniques' and haven't seen much advance in shale oil recently, but there you go.

Overall there seen no peak anytime soon.

IF the only way that BRIC can meet demand is by the West dramatically increasing efficiency, that IS a sign of peak oil. (Never minding the fine print underlying peak oil as a concept)

[funinhounslow]

A slow gently decline may give mankind the opportunity to build out sufficient nuclear & renewables to transition to a post fossil fuel world. Shale gas may help bridge that transition.

But isn't it going to be expensive and difficult to do this at a time when our main energy souce is dwindling, and growing more expensive albeit slowly?

The time to start preparing for this was years ago. Wasn't jimmy carter ridiculed for trying to get to grips with this problem in the late 70s?

[Kurt Barlow]

But isn't it going to be expensive and difficult to do this at a time when our main energy souce is dwindling, and growing more expensive albeit slowly?

The time to start preparing for this was years ago. Wasn't jimmy carter ridiculed for trying to get to grips with this problem in the late 70s?

I agree. Last week I was at a jolly and chatting to a Lebanese colleague. We got on to the subject of the oil 'running out'. He said once that happens we have the sun. I pointed out that to exploit the sun you need lots of capital which means the investment should happen now. No good waiting until the Country has no money. He didnt really have an answer.

[gravity always wins]

Deregulation of commodity markets and the hundreds of billions (up from $13 billion in 2003) of speculative dollars in commodities says its peak bubble time.

According to an open letter from the major airlines to their passengers in 2008, 66% of oil futures are bought by speculators, adding $30-60 to a barrel.

Michael Masters, fund manager at Masters Capital Management, in his testimony before the Committee on Homeland Security and Governmental Affairs pointed out:

Heres part of the transcript of an excellent interview with Frederick Kaufman on Democracy Now! which explains how Goldman Sachs manipulated the wheat market which resulted in the soaring prices of 2008 despite a record global wheat harvest.

Of course none of it has anthing to do with central banks printing money.

Its always the last argument of socialists to blame speculators whilst at the same time pressing central banks to print money to cover up their mistakes.

Futures contracts for commodities have been around for over 5,000 years they add liquidity to a market. The speculators as many call them add liquidity and remove the need for you to buy your commodities direct from the producer.

If you need to use a supermarket then you will need a speculator to take the risk and carry the cost of being the middle man for you. If not its time for you start bartering with your local commmodity producer.

When central banks print all savers are eventually forced to act like speculators wether they like it or not to protect their purchasing power.

Best to stop blaming people for protecting their interests and have a look at the real reason your currency is losing its purchasing power.

Good luck.

[@contradevian]

I've seen a documentary this evening where we could secure immense energy by errecting solar mirrors on the light side on the Moon and lets hope the accumulating economic/resource problems of the current century will provide the impetus to build solar mirrors on the Moon or similar out in space...

Moon environmentalists are already campaigning against it. Save the moon from development!

[fluffy666]

But isn't it going to be expensive and difficult to do this at a time when our main energy souce is dwindling, and growing more expensive albeit slowly?

The time to start preparing for this was years ago. Wasn't jimmy carter ridiculed for trying to get to grips with this problem in the late 70s?

Jimmy Carter:

- Almost balanced the US budget for the first time in ages

- Presided over a sharp decline in US oil imports

- Improved US car economy

- Got the US to live within it's means

- Lost reelection by a landslide to 'voodoo economics' Regan..

[Leroast]

Of course none of it has anthing to do with central banks printing money.

Did I say it didnt? Besides, the articles I linked to are refering to the 2008 commodity spike - Goldman was pumping wheat, oil and other commodities before central banks had started printing.

When central banks print all savers are eventually forced to act like speculators wether they like it or not to protect their purchasing power.

And this is why commodities should be regulated and why, until recently, they were regulated.

In 1936, however, Congress recognized that there should never be more speculators in the market than real producers and consumers. If that happened, prices would be affected by something other than supply and demand, and price manipulations would ensue. A new law empowered the Commodity Futures Trading Commission — the very same body that would later try and fail to regulate credit swaps — to place limits on speculative trades in commodities. As a result of the CFTC's oversight, peace and harmony reigned in the commodities markets for more than 50 years.

All that changed in 1991 when, unbeknownst to almost everyone in the world, a Goldman-owned commodities-trading subsidiary called J. Aron wrote to the CFTC and made an unusual argument. Farmers with big stores of corn, Goldman argued, weren't the only ones who needed to hedge their risk against future price drops — Wall Street dealers who made big bets on oil prices also needed to hedge their risk, because, well, they stood to lose a lot too.

This was complete and utter crap — the 1936 law, remember, was specifically designed to maintain distinctions between people who were buying and selling real tangible stuff and people who were trading in paper alone. But the CFTC, amazingly, bought Goldman's argument. It issued the bank a free pass, called the "Bona Fide Hedging" exemption, allowing Goldman's subsidiary to call itself a physical hedger and escape virtually all limits placed on speculators. In the years that followed, the commission would quietly issue 14 similar exemptions to other companies.

Now Goldman and other banks were free to drive more investors into the commodities markets, enabling speculators to place increasingly big bets. That 1991 letter from Goldman more or less directly led to the oil bubble in 2008, when the number of speculators in the market — driven there by fear of the falling dollar and the housing crash — finally overwhelmed the real physical suppliers and consumers. By 2008, at least three quarters of the activity on the commodity exchanges was speculative, according to a congressional staffer who studied the numbers — and that's likely a conservative estimate. By the middle of last summer, despite rising supply and a drop in demand, we were paying $4 a gallon every time we pulled up to the pump.

What is even more amazing is that the letter to Goldman, along with most of the other trading exemptions, was handed out more or less in secret. "I was the head of the division of trading and markets, and Brooksley Born was the chair of the CFTC," says Greenberger, "and neither of us knew this letter was out there." In fact, the letters only came to light by accident. Last year, a staffer for the House Energy and Commerce Committee just happened to be at a briefing when officials from the CFTC made an offhand reference to the exemptions.

"I had been invited to a briefing the commission was holding on energy," the staffer recounts. "And suddenly in the middle of it, they start saying, 'Yeah, we've been issuing these letters for years now.' I raised my hand and said, 'Really? You issued a letter? Can I see it?' And they were like, 'Duh, duh.' So we went back and forth, and finally they said, 'We have to clear it with Goldman Sachs.' I'm like, 'What do you mean, you have to clear it with Goldman Sachs?'"

The CFTC cited a rule that prohibited it from releasing any information about a company's current position in the market. But the staffer's request was about a letter that had been issued 17 years earlier. It no longer had anything to do with Goldman's current position. What's more, Section 7 of the 1936 commodities law gives Congress the right to any information it wants from the commission. Still, in a classic example of how complete Goldman's capture of government is, the CFTC waited until it got clearance from the bank before it turned the letter over.

potato and millet has decreased by a fraction compared to those staples that are subject to speculation.

I would rather see the essentials of life carefully regulated from people trying to protect their piles of paper. Seriously, you have lost a part of your humanity if you are condoning this behaviour.

[MrPin]

I agree. Last week I was at a jolly and chatting to a Lebanese colleague. We got on to the subject of the oil 'running out'. He said once that happens we have the sun. I pointed out that to exploit the sun you need lots of capital which means the investment should happen now. No good waiting until the Country has no money. He didnt really have an answer.

KSA has plenty of sunshine and sand to make the solar cells!

And a lot of space to put them in!

Being 3 hours ahead you will be generating nicely when the UK is making tea during a break in East Enders!

Of course the cable might have to go through Israel!

[skomer]

KSA has plenty of sunshine and sand to make the solar cells!

And a lot of space to put them in!

Being 3 hours ahead you will be generating nicely when the UK is making tea during a break in East Enders!

Of course the cable might have to go through Israel!

It will not be the KSA but Algeria supplying solar energy to Europe via cables under the Med to Spain and France. Algeria is the ideal location for this with massive areas of the Sahara available.

Plans are already well advanced to start this project with German companies investing heavily (one of them i work for) - meant to provide 20% of Europes energy need in 30 years time. And provide Algeria with a good income too.

http://www.neurope.eu/articles/103836.php

http://www.desertec.org/en/news/

Edited February 5, 2011 by skomer

[MrPin]

It will not be the KSA but Algeria supplying solar energy to Europe via cables under the Med to Spain and France.

That's good because Algeria has not had much luck previously!

[hayder]

i wouldn't worry too much about oil running out.

Yes Saudi is struggling to increase supply ... but now the top markets for Exploration are: Mexico, Venezuela, Brazil, Iraq, Kazakhstan, Ghana... (in order). There's certainly enough oil to last for CENTURIES... as long as demand doesn't increase more than 20% from the current (something that is manageable)

[Lagarde's Drift]

i wouldn't worry too much about oil running out.

Yes Saudi is struggling to increase supply ... but now the top markets for Exploration are: Mexico, Venezuela, Brazil, Iraq, Kazakhstan, Ghana... (in order). There's certainly enough oil to last for CENTURIES... as long as demand doesn't increase more than 20% from the current (something that is manageable)

Hah what a good post, may well be factually correct but seems to completely miss the point.

[hayder]

Hah what a good post, may well be factually correct but seems to completely miss the point.

i think the point is that oil price will be in equilibrium. at the moment its too expensive because of underinvestment in new fields during the late 90s till 2005. New fields take a long time to discover, develop and setup export routes, but they are happening. In fact the amount of "new" reserves and production capacity coming on the international market in the next 10 years will mean there'll be a glut in oil supplies around 2020 (unless every indian and every chinese start driving cars, which is something that's impossible due to the physical limitations of their roads/cities as well as the fact that they are investing quite heavily in urban railways of different sorts which WILL dampen their eventual demand for cars). At the same time Europe / US / Japan is going increasingly for hybrids and small diesels thats also cutting the demand side. Nowadays the old oil fired thermal power stations are being decommissioned around the world, further cutting demand).

"oil" is not a problem today... perhaps government attempts at plugging the deficit gap with ludicrous levies on fuel ends up shooting themselves in the foot by destroying the already badly mauled auto industry (and associated industries like service stations, car dealerships, petrol stations etc...)

[tallguy]

i wouldn't worry too much about oil running out.

Yes Saudi is struggling to increase supply ... but now the top markets for Exploration are: Mexico, Venezuela, Brazil, Iraq, Kazakhstan, Ghana... (in order). There's certainly enough oil to last for CENTURIES... as long as demand doesn't increase more than 20% from the current (something that is manageable)

Complete boll*cks

Provide evidence for your claim that there is enough oil to last for centuries as long as demand does not increase by more than 20% from current levels

[erranta]

Complete boll*cks

Provide evidence for your claim that there is enough oil to last for centuries as long as demand does not increase by more than 20% from current levels

Nov 26th 2008

Despite oil prices' nosedive by nearly $100 a barrel since July, nervous OPEC members gathering in Cairo later this week appear likely to defer another oil-output decision until December so they can gauge the impact of two previous cuts.

Worried by the sinking demand and rising storage levels that helped to tip oil prices below $50 a barrel in the last week, the Organization of Petroleum Exporting Countries has hastily arranged to meet Saturday in Egypt for consultations. The meeting coincides with a previously planned meeting of Arab oil-producing countries.

One place now coming on stream - Canada shale-oil has up to 300yrs of production - as big as Saudi Emirates output (apparently).

However, worldwide technically recoverable reserves have recently been estimated at about 2.8–3.3 trillion barrels (450×10^⁹–520×10^⁹ m³) of shale oil, with the largest reserves in the United States, which is thought to have 1.5–2.6 trillion barrels (240×10^⁹–410×10^⁹ m³)

These were not viable at 2004 oil prices!

Edited February 5, 2011 by erranta

[hayder]

Complete boll*cks

Provide evidence for your claim that there is enough oil to last for centuries as long as demand does not increase by more than 20% from current levels

There's two points here.

First point about the reserve quantities.

Second point about the "increase in 20% from current levels"

First point is being revised massively upwards right now in most countries with improved extraction rates as well as addition of shale oil and tar sands to reserves. I can't "point" you to any publically available documents from EIA or another organisation for the simple and unfortunate fact that they always publish old data. The reports from EIA to support my assertion won't be available until 2013 I reckon. here's an oldie from 2009 (just to illustrate how even a barely 1 year old report has become so outdated now wrt to reserve figures). http://www.eia.doe.gov/oiaf/ieo/pdf/liquid_fuels.pdf

Now the second point is basically my personal "wish".. most analysts expect a meteoric rise in demand from the developing world, but at least china is investing massively in nuclear and hydro power as well as urban railway schemes to clean up their cities (and reduce car use). China simply won't continue increasing the numbers of cars at that prodigious rate. Similary whilst they will massively expand air travel, they are also working to eliminate air travel from many of their busiest routes through their new high speed rail links between the major cities which will be coming online after 2020 or so... China's thinking ahead of the curve (something that many analysts aren't appreciating).

So, for now you can call my assertion "B*llshit", but i should remind you that peak oil hysteria has been with us for over a century.

[hayder]

Titan has far less green tape. There is no reason why we couldn't ship some of the abundant non fossil derived methane from its vast methane lakes.

the pipeline would cost a few bob though or maybe an LNG tanker in space?

Edited February 6, 2011 by hayder

[steve99]

Nov 26th 2008

Despite oil prices' nosedive by nearly $100 a barrel since July, nervous OPEC members gathering in Cairo later this week appear likely to defer another oil-output decision until December so they can gauge the impact of two previous cuts.

Worried by the sinking demand and rising storage levels that helped to tip oil prices below $50 a barrel in the last week, the Organization of Petroleum Exporting Countries has hastily arranged to meet Saturday in Egypt for consultations. The meeting coincides with a previously planned meeting of Arab oil-producing countries.

One place now coming on stream - Canada shale-oil has up to 300yrs of production - as big as Saudi Emirates output (apparently).

However, worldwide technically recoverable reserves have recently been estimated at about 2.8–3.3 trillion barrels (450×10^⁹–520×10^⁹ m³) of shale oil, with the largest reserves in the United States, which is thought to have 1.5–2.6 trillion barrels (240×10^⁹–410×10^⁹ m³)

These were not viable at 2004 oil prices!

There is bigger more detailed analysis however in simple terms:

http://watd.wuthering-heights.co.uk/subpages/uncoils.html

There is certainly no shortage of oil shales – it is estimated that the world has over 1,600 Gb of shale oil available, 1,200 Gb of which lies in the USA. Other countries with oil shale include Canada, Australia, Estonia, Germany and Israel. With conventional oil reserves estimated at 860 Gb, it would seem to be the answer to our prayers.

Unfortunately oil shale carries serious disadvantages. First, most of it needs to be dug out in strip mining rather that drilled, a process that has high environmental problems. Once dug out, it then needs to be heated to 450-500°C, enriched with hydrogen via steam before the resulting oil is separated. We are then left with a sludge which has increased in volume by 30% through the process and needs to be disposed of.

The downsides of all this are that oil shale production creates more than four times as much greenhouse gases as conventional oil production, it uses vast quantities of water (which are not always available where the shale is), and wastes something like 40% of its initial energy in production.

Oil shale production is expensive, wasteful and environmentally hazardous. It is only now, when conventional oil prices are high, that oil shale production has become feasible. It will no doubt make a small contribution to the oil shortfall (less than one million barrels a day by 2030) in the future but it is no panacea.

[Meat Puppet]

And the burden of proof should remain with the peakers for this very reason.

And us agnostics stuck between the doomers and the cornucopians? Those of us, sceptics to be sure, who don't trust that it is a certainty that energy resources exploited will continue to supply economic growth and even if they prove adequate aren't in such an abundance that global conflict will be avoided?

I've seen "potential" fail so many times that I think its prudent to prepare for an apocalypse here, no matter how unlikely.

[tallguy]

There's two points here.

First point about the reserve quantities.

Second point about the "increase in 20% from current levels"

First point is being revised massively upwards right now in most countries with improved extraction rates as well as addition of shale oil and tar sands to reserves. I can't "point" you to any publically available documents from EIA or another organisation for the simple and unfortunate fact that they always publish old data. The reports from EIA to support my assertion won't be available until 2013 I reckon. here's an oldie from 2009 (just to illustrate how even a barely 1 year old report has become so outdated now wrt to reserve figures). http://www.eia.doe.gov/oiaf/ieo/pdf/liquid_fuels.pdf

Now the second point is basically my personal "wish".. most analysts expect a meteoric rise in demand from the developing world, but at least china is investing massively in nuclear and hydro power as well as urban railway schemes to clean up their cities (and reduce car use). China simply won't continue increasing the numbers of cars at that prodigious rate. Similary whilst they will massively expand air travel, they are also working to eliminate air travel from many of their busiest routes through their new high speed rail links between the major cities which will be coming online after 2020 or so... China's thinking ahead of the curve (something that many analysts aren't appreciating).

So, for now you can call my assertion "B*llshit", but i should remind you that peak oil hysteria has been with us for over a century.

Energy supply is about three things

* Absolute supply

* EROEI

* Speed of flow

In terms of absolute supply, there is no shortage of energy nor will there ever be. Renewables are, as long as the sun shines, effectively infinite. So, absolute supply is of no relevance here in terms of a debate about oil shale or, indeed, a debate about energy supply in general.

EROEI refers to how much energy has to be spent in the extraction of energy. For crude oil this ratio used to be as high as 30:1. These days, it tends to be nearer to 7:1. Nevertheless, as long as the EROEI is positive it's worth harvesting the energy. As soon as it gets to 1:1, however, it doesn’t matter how big the absolute supply is, you may as well consume the energy you already have. A case in point is hydrogen. Because of its tendency to bond strongly with oxygen, the EROEI is negative as it takes more energy per unit to extract the hydrogen than is contained in the hydrogen.

Speed of flow refers to how fast a given quantity of energy can be extracted in a given period of time. This is strongly related to EROEI. In other words, if the EROEI is low, then the speed of flow will also be slow unless there is a significant scaling up of production to compensate.

Oil shale suffers from both a very poor EROEI and also a very poor speed of flow. Consequently, while it will undoubtedly make multi billionaires of the people who control its supply, if you think that it will save our industrial civilisation of 7 billion and rising, you are sadly mistaken. All of the above is quite beside the massive environmental damage that will be incurred as well as the biblically unsustainable quantities of water that would be required to process it at any significant volume.

The best way to view oil shale or, indeed, any alternative to crude oil (including renewables, by the way) is to consider the following analogy;

Imagine a barrel of water with a queue of 100 people waiting to drink from it. The top of the barrel is open and there is a nice big ladle for everyone to take a drink. The queue's length is such that each person is able to make it to the front of the queue before they die of thirst. Any longer and some would die.

One day the barrel runs dry.

But, before anyone has time to worry, someone shouts up that they have found another barrel and this one is even bigger. What this person neglects to mention is that the new barrel has a lid firmly over the top with only a tiny straw to draw the water from. Each person at the front of the queue is still able to take as much as they want, of course. Only now, they must take twice as long getting their water and must expend twice the energy. Not to worry though. As soon as half of the queue has died of thirst, all will be fine.

The above is why oil shale will not save your way or life.

And before you mention nuclear fission, take a look at the projected peak of uranium supply if merely the developed world made a wholesale switch to nuclear energy, never mind the developing world as well.

Edited February 6, 2011 by tallguy

[Meat Puppet]

You are of course entitled to form your own view which is equal in value to the next persons view. But given your view what precautionary principle should be applied as a solution to your apocalyptic event ?

Having a supply of food is foremost. Its my wife's land, since I can't legally own land in Thailand, but we have 4 acres now and I plan to buy another 6 over the next few years. Even without fossil fuels we can feed ourselves. I've also misspent my life enough that I can breed, raise and slaughter pigs. None of this was done in any anticipiation of an apocalypse, just an antipathy to corporate life and consumerism in general.

And like I said before, I am an agnostic. Maybe thorium, solar, or shale will keep the party going but I dont care. Most fulfilling "job" I ever had was raising pigs, killing them with my own hands, and eating them.

[Meat Puppet]

That was a throughly entertaining and unexpected response, no problems with any of that, sounds like you have thought it out especially the pig bit. I just hope that in the remote chance there was an apocalyptic event your little lot in life would be spared its wrath.

I must confess that I also have notions of running around the hills naked, smeared with animal droppings, bottle of jack in hand, discharging my shotgun with gay abandon when I grow up.

Well, if apocalypse comes I imagine as an outsider I would be disposable hence I don't worry about it much. Doesn't mean I'm not long commodities especially agriculturals. If it bends I make a killing, if it breaks oh well.

Haven't had a shotgun since my days growing up in America, but do have some decent rifles. Its fun to paint faces on coconuts (wish I was talented enough to make them look like Blair, Brown, Bush and all the rest) and then explode them from a distance.