Raise the Hammer
By: Ryan McGreal
Published: 2007/10/19 (Category: Energy)
Oil futures just flirted with $90 per barrel before settling at around $89. (In real terms, the prices that followed the 1979 OPEC crisis were higher, but only slightly: adjusted for inflation, oil hit $95 per barrel in
Some analysts are still talking about political instability and the weak dollar, and of course these are factors, but the high prices we're experiencing are fundamentally geological in origin.
It comes down to rate of production. Saudi Arabia, for example, has promised to increase its daily production to 12 million barrels by the end of the decade; but their production actually fell over the past year. That's because Ghawar is past its production peak and no amount of salt water injection is going to reverse its decline in rate of production.
Kuwait admitted last year that it actually has only 50 billion barrels, not 100 billion barrels as it had previously claimed.
Iran is about two decades past its production peak and falling slowly. Ditto for Venezuela's conventional oil.
Iraq's production is well below capacity due to, er, political instability in that country, but it's also past its production peak. In any case, Iraq was producing around two million barrels a day before the invasion, and it's producing around two million barrels a day today.
North Sea oil is dropping off by about ten percent a year.
There's plenty of non-conventional oil (oilsands, shale, deep-water, etc.), but hard physical constraints will limit the rate of production they can realize. There's a reason the oil companies went for the easy-to-reach stuff first.
Refining capacity is a bottleneck today, but that's because the oil companies don't see any point in building the new infrastructure that would be needed to ease it, since upstream oil production is going into decline anyway.
Another pressure is that sour, heavy crude is making a bigger share of the total as light, sweet supplies dry up (light sweet is already past its global production peak), and it requires more refining.
Total global oil production has been stalled at around 84 million barrels per day for the past three years despite very strong price signals and steadily growing demand. Exploration and drilling are way up, which we would expect as a result of the high prices, but discovery is way down and production is flat, which we would expect as a result of a geological production peak.
Sooner or later, production is going to slide into permanent decline and the world is going to have to figure out how to get by with less and less each year.
The sooner we start to think about how we should do that, the better our chances of transitioning to a lower-energy, post petroleum economy without extreme volatility and horrible economic, political and social dislocations.
NewsfeedsISSN: 1715-1554
Aerotropolis: Will It Fly? - Wednesday, December 3, 2008, at Mount Hope Community Hall, 3027 Homestead Dr., Mount Hope.
Can Harper Prorogue Parliament? (Dec. 3, 2008) - Given the paucity of Prime Minister Stephen Harpers options as Monday's confidence vote draws closer, pundits and analysts are coalescing around the conclusion that he will ask Governor Genera
Picking a Prime Minister: A Parliamentary Primer (Dec. 2, 2008) -
We will use all legal means to resist this undemocratic seizure of power.
-- Prime Minister Stephen Harper
With the Liberals and NDP agreeing to a coalition with the support of the B
Bratina: City Hall Plan Could Save $110 Million Over 20 Years (Dec. 2, 2008) - Councillor Bob Bratina, who has proposed that the City remain at Hamilton City Centre, is claiming that this move will cost only $50 million over the next 20 years, compared to $150 million to com
City Backs Down on Airport Development Size (Dec. 1, 2008) - Citizens at City Hall (CATCH) reports that the city has backed down on at least one aspect of its dispute with the province on the size of the Airport Economic Growth District (AEGD), a planned in
Same Old 'Traffic Trumps Everything' Thinking (Dec. 1, 2008) -
Apparently, the City Traffic department still doesn't get it.
After turning James and John into two-way streets that slowed traffic down, the city is now looking for ways to speed thing
Toronto Council to Vote on Corporate, Union Donations (Dec. 1, 2008) -
Toronto City Council has another opportunity today to decide whether to allow corporate and union donations to be proffered during municipal campaigns.
City Council has voted against such don
By Frank
Posted 10/19/2007 3:34:58 PM
I'd love to see insurance companies come up with occasional driver insurance. If they did, I'd be willing to park my car for the majority of my trips...provided I could get to and from work without getting run over and downtown in an acceptable amount of time.
(Permalink)