WSJ article - The Next Crisis: Prepare for Peak Oil

probe

"In the first report from the task force, Ron Oxburgh, a former chairman of Shell, wrote that "It is pretty clear that there is not much chance of finding any significant quantity of new cheap oil. Any new or unconventional oil is going to be expensive." He went on to quote King Abdullah of Saudi Arabia commenting on a new oil find: "Leave it in the ground...our children need it."

http://online.wsj.com/article/SB10001424052748704140104575057260398292350.html?mod=WSJ_hp_us_mostpop_read

YourSQL

meh. we'll be alright on the day. in 2007 we got a little taster of what expensive oil would be like and that started a lot more research into things like more efficient solar panels

since there is so much expensive unconventional oil laying around the place it will give us a chance to move on to something different. tis not like it's going to run out over night, people aren't going to be running around the street killing each other for a cup of petrol. the stuff will never run out, but it will gradually become a less viable source of energy

things like kerosene space heating will be one of the first things to go, oil fired power stations will be closed or replaced, then petrol/diesel-only cars. flying will get more expensive since its quite hard to run planes off something that isn't derived from oil. so if you want to travel the world do it now or you'll be taking the slow boat to china

FlameoftheWest

Oil is pretty much an unlimited resource. The Russians are untapping vast wells at 18,000 feet down and more and more massive discoveries are being found all the time. The technology to extract deep wells has really come on in recent years.

All this Peak Oil talk is the oil industry pretending there is shortage to jack the price up.

silverharp

FlameoftheWest wrote: »

Oil is pretty much an unlimited resource. The Russians are untapping vast wells at 18,000 feet down and more and more massive discoveries are being found all the time. The technology to extract deep wells has really come on in recent years.

All this Peak Oil talk is the oil industry pretending there is shortage to jack the price up.

Can you find me links to "serious" geo. sites that will confirm this. Abiotic oil theories tend to inhabit the world of conspiracy websites.

probe

YourSQL wrote: »

meh. we'll be alright on the day. in 2007 we got a little taster of what expensive oil would be like and that started a lot more research into things like more efficient solar panels

since there is so much expensive unconventional oil laying around the place it will give us a chance to move on to something different. tis not like it's going to run out over night, people aren't going to be running around the street killing each other for a cup of petrol. the stuff will never run out, but it will gradually become a less viable source of energy

things like kerosene space heating will be one of the first things to go, oil fired power stations will be closed or replaced, then petrol/diesel-only cars. flying will get more expensive since its quite hard to run planes off something that isn't derived from oil. so if you want to travel the world do it now or you'll be taking the slow boat to china

While you are obviously very green in your thinking, and no doubt farsighted, it occurs to me that you might have had a problem or two when you went to school in the “How Markets Function” classroom – but no doubt you got a ***** grade in the “How to be complacent, fat and happy class” :-)

Markets are very volatile when there is a mismatch between supply and demand. I don’t expect there will be much time for procrastination once the s*it hits the fan in terms of supply not meeting demand for hydrocarbons. The oil price was $147,30 in July 2008, immediately before the economic bubble burst. It fell to $30 within 6 months or so. It is $74 today. It could be $200 within a few years.

Populations are growing, especially in Asia, and their economies continue to grow. Once the west recovers from recession – give it a year or two for most countries and you may well find the supply/demand equation will force prices to escalate and supplies of gas to become un-reliable in certain areas. In fact, it is amazing to me that oil is in the $70 to $80 range in the middle of a once in a century economic screw-up. It should be more like $20 or $30 if plentiful supplies were on tap. Which indicates that supplies are constrained.

Renewable energy infrastructure takes decades to build up. You can’t leave it up to the market to take care of things in the transition from carbon to renewable.

Cunsiderthis

I'm not a doomsayer about this. South africa, in the apartheid years, developed a means of turning coal into petrol and diesel. They have 500 years of coal reserves, and can stil manage to ship milliions of tons to china every year to power electricity stations.

As fuel has got more expensive, this means that previously uneconomical reserves around the world become viable.

I believe that technology will solve this particular problem for us, ( its already making great strides in that direction) and really think it's not a problem worth getting too excited about.

probe

Cunsiderthis wrote: »

I'm not a doomsayer about this. South africa, in the apartheid years, developed a means of turning coal into petrol and diesel. They have 500 years of coal reserves, and can stil manage to ship milliions of tons to china every year to power electricity stations.

South Africa during apartheid and Germany during the Nazi era. The two users of this technology! It is a solution for countries that have coal reserves who are under boycott or embargo. And lots of slave labour.

One wonders why it hasn't become more widespread? You need cheap labour to mine the coal for one - a filthy unhealthy occupation. It is polluting. It is not renewable. It is capital intensive. It incurs energy conversion losses. And it takes a long time to get the show on the road. Might as well opt for a renewable solution.

Cunsiderthis

probe wrote: »

...It is polluting. It is not renewable. It is capital intensive. It incurs energy conversion losses. And it takes a long time to get the show on the road. Might as well opt for a renewable solution.

I guess when technology gives us one, many of us might opt for it. In the meantime.......

Judgement Day

Cunsiderthis wrote: »

I'm not a doomsayer about this. South africa, in the apartheid years, developed a means of turning coal into petrol and diesel. They have 500 years of coal reserves, and can stil manage to ship milliions of tons to china every year to power electricity stations.

As fuel has got more expensive, this means that previously uneconomical reserves around the world become viable.

I believe that technology will solve this particular problem for us, ( its already making great strides in that direction) and really think it's not a problem worth getting too excited about.

From: http://www.mbendi.com/indy/ming/coal/af/sa/p0005.htm

'South Africa has limited coal reserves. An estimated 34 billion tons remain, and based on present consumption rates, South Africa could have a mere 7 billion tons remaining by 2040. (In 1982, reserves were estimated at 50 billion tons). South Africa’s coal reserves are hosted by Karoo age sediments, which cover most of Southern Africa and are responsible for the coal deposits mined at Wankie in Zimbabwe and Maamba in Zambia. South Africa’s coal mines are situated in the Mpumalanga, Free State, northern Kwazulu – Natal and Northwest provinces. Most collieries are concentrated around the towns of Witbank, Ermelo and Secunda.'

I think you're deluding yourself if you think South Africa is going to save the West by converting coal to oil. I think that the conflicts we have seen in the 20th century will be like a tea party compared to what may happen as the Big Powers scramble for resources in the next 50 years - a truly frightening prospect but one that can be avoided by switching away from oil comsumption.

probe

Judgement Day wrote: »

From: http://www.mbendi.com/indy/ming/coal/af/sa/p0005.htm

I think that the conflicts we have seen in the 20th century will be like a tea party compared to what may happen as the Big Powers scramble for resources in the next 50 years - a truly frightening prospect but one that can be avoided by switching away from oil comsumption.

An installed base of renewables in a country is not a very "sexy" target from a military perspective. There is no point in moving in to take over a country from 5,000 or 10,000 km away to steal their renewable electricity coming from windmills or solar panels on peoples' roofs.

It is impossible to transport this type of energy "back home" to the invading terrorist state's homeland. One can only swap renewables with neighbouring countries in a given region. This is not to say that there can't be electricity trading between Europe and Asia (eg France trades with Germany; Germany trades with Poland and Ukarine; Poland and Ukraine trade with Russia; etc... Europe can buy solar energy from Maghreb and Middle East in return for bottled water, Guicci & Hermes kit, high technology engineered products, cars, and a zillion other things)

Unlike reserves of hydrocarbons - eg oil, coal or gas - which can be put on ships and sent anywhere. However the Iraqis have shown how it is possible to make a country difficult for aspiring energy thieves!

jackofalltrades

probe wrote:

It could be $200 within a few years.

I can't see it getting that high again. Sudden oil price increases like that seen in the Middle of 2008 just lead to global recessions, whereas long term price increases will make harder/more expensive oil more economically viable. But more importantly high oil prices make 2nd gen biofuels, renewable energy and other fuel saving technologies a lot more commerical viable.

probe wrote:

In fact, it is amazing to me that oil is in the $70 to $80 range in the middle of a once in a century economic screw-up. It should be more like $20 or $30 if plentiful supplies were on tap. Which indicates that supplies are constrained.

I think a portion of that price difference can be put down to a reduction in production by OPEC member countries.

Cunsiderthis

Judgement Day wrote: »

F

I think you're deluding yourself if you think South Africa is going to save the West by converting coal to oil. I think that the conflicts we have seen in the 20th century will be like a tea party compared to what may happen as the Big Powers scramble for resources in the next 50 years - a truly frightening prospect but one that can be avoided by switching away from oil comsumption.

As I never said SA was going to "save the West" and gave the example of them converting coal to oil as an example of how resourceful we can be when our backs are to the wall, it appears to be you who are deluded about what I was saying!

probe

jackofalltrades wrote: »

Sudden oil price increases like that seen in the Middle of 2008 just lead to global recessions

Oil prices had little or nothing to do with the current global recession.

Mis-management of interest rates and mis-management of the financial markets were 90%+ to blame.

The US kept interest rates too low after Sep 11 for too long.

EUR interest rates were also too low for the many EU states aside perhaps for Germany. Leading to multiple property bubbles.

The ECB made market management mistakes by focusing solely on inflation for interest rate planning – allowing European banks to fund the US subprime meltdown with cheap Euros and also fund the credit fuelled economic bubbles in IE, GR, ES and PT, among other countries.

Markets require intelligent management – with a minimum of bureaucracy. It seems to me that they should have used a Swiss-style postcode (4 digit) rationing of credit by geographic zone and by economic sector. Eg if a bank wants to commit a billion EUR to the property sector in postcode 1004 (ie Dublin 4), the bank’s capital requirement might be increased to 20%. If they want to try lending 100 billion to some idiotic project in the same area, the capital requirement might go up to 50%. Forcing the bank in question to go to shareholders and say we’d like to lend 100 billion for property speculation in Ballsbridge – can we have 50 billion from you shareholders please? The wisdom of the crowds would play their part in a reality check that would prevent overheating of the economy and recession.

While the Chinese have a single interest rate for the CNY currency, the state requires banks in various regions to charge higher interest rates for lending to projects in overheated sectors of the economy or overheated regions.

If Ireland had retained its IEP, the funds wouldn’t have been around to create a property bubble. While I am not suggesting that Ireland would be better off with its own currency, management of EUR currency lending needs to be more fine tuned to sectors, geographic zones etc. The ECB is in no small part responsible for the mess. They didn't think it through.

1973/74 is the only "recent" period in history where oil price increases caused a material global economic downturn.

Sustainable finance and sustainable economies. The most pressing green issue of the moment...

jackofalltrades

probe wrote:

Oil prices had little or nothing to do with the current global recession.

In the absence of the credit crunch the massive increase in the price of oil would IMHO definetly have sent the western economies into recession. I never claimed that oil prices got us into the current banking crisis/ prolonged recession.

quentingargan

YourSQL wrote: »

...we got a little taster of what expensive oil would be like and that started a lot more research into things like more efficient solar panels

There are many reasons to pursue better targets in terms of introducing renewables - peak oil, climate change (disputed by some...) and over-reliance for energy supply from countries with unstable regimes.

I fear that as oil prices rise, the first thing to stop will be tilly lamps in Bangladesh, rather than weekend trips with Ryanair, but the truth is that there is an awful lot of slack in the system in terms of wasted energy. It doesn't have to be an apocalyptic change.

It is inevitable that if the world economy improves, demand will rise, there will once again be a gap between demand and supply, and prices will respond by going berserk. How expensive would petrol have to be for me to walk or cycle the five miles into town (other than for excercise)? It costs me about €1 for the round trip. Would I walk for €2? or €5? Oil represents tremendous value for money in some applications.

There is a reluctance to change behaviour in anticipation of the almost inevitable energy price hikes. The fact that energy prices are currently falling allows us to bury our heads in the sand and pretend that it ain't going to happen. That may prove to be our downfall.

gizmo555

quentingargan wrote: »

the truth is that there is an awful lot of slack in the system in terms of wasted energy. It doesn't have to be an apocalyptic change.

+1

The cheapest, most efficient, least polluting and most sustainable energy is energy that's not used in the first place.

FlameoftheWest

Silverharp2 wrote: »

Can you find me links to "serious" geo. sites that will confirm this. Abiotic oil theories tend to inhabit the world of conspiracy websites.

Actually the vast majority are on mainstream Russian websites. I think when they found vast crude oil fields 18,000 feet down (and several more since) made it had to believe in any rational sense that dinosaurs and forests ended up down there.

Which is more discredited now?

A) Abiotic oil theories?

Man Made Global Warming "facts"?

answer on a postcard to...

silverharp

FlameoftheWest wrote: »

Actually the vast majority are on mainstream Russian websites. I think when they found vast crude oil fields 18,000 feet down (and several more since) made it had to believe in any rational sense that dinosaurs and forests ended up down there.

Which is more discredited now?

A) Abiotic oil theories?

Man Made Global Warming "facts"?

answer on a postcard to...

come on, this is an obscure theory that pops up from time to time, I cant even remember the arguments why it isnt credible howver If it was true BP etc would love to tap any reserves they could get their hands on, they would have an incentive to follow the money as it were.