When it comes to matters oil and energy, the globby hand of oil influence seems to smear all in the industry, even those whose mandate is to look after the interests of consumers and national economies. And that now pertains to the otherwise-esteemed International Energy Agency (IEA).
The IEA is an energy forum of 28 industrialized nations committed to taking joint measures to meet oil supply emergencies, to co-ordinate their policies to insure energy security, as well as maintaining emergency oil stocks. They are further mandated to operate a "permanent information system on the international oil market." And here lies the rub. Information that is fully objective, or weighted toward given interests?
Consider the following. Back in June Nobou Tanaka, the Executive Director of the IEA, the agency that according to its own house literature is meant to "promote free markets in order to foster economic growth," went out of his way to pay tribute to that icon of free markets, the Organization 0f Petroleum Exporting Countries (OPEC), complimenting them for keeping their oil output "steady," after OPEC had made clear their intent at reaching an oil price objective of $75/80 bbl. He permitted himself to make this comment of outrageous obsequiousness, "Our message to OPEC is they made a sound decision." Of course, no mention of the near 4.5 million barrels of oil production capacity being shut in by Saudi Arabia alone, not to speak of the rest of OPEC. Free markets, yes, if ever higher oil prices is your goal.
Then, lending their prestige to one of the great misnomers of the oil market: that speculation has little to do with oil prices. This after the Commodity Futures Trading Commission announced that they would be issuing a report that speculators played a significant role in driving wild swings in oil prices, explaining that previous conclusions, pinning the price swings primarily on "supply and demand" had been based on "deeply flawed data." And then the joint communiqué of none less than Prime Minister Gordon Brown and President Nicolas Sarkozy calling for "transparency and supervision in the oil futures market in order to reduce damaging speculation."
Yet the good souls at the IEA know better. As reported in the Financial Times ("IEA warning over oil trade rules distortion," 08.13.09) that, "The watchdog, using guarded language also cautioned against capping speculators' abilities to trade commodities such as crude oil and natural gas, repeating its view that the relationship between speculators and oil prices was 'not significant.'" Here was a position that certainly elicited "bow-wows" of praise from Moscow to Riyadh, to Tripoli and Caracas (and are those the guys and gals from Houston and Nome, Alaska waving their hands, happy to join in?).
Then, of course, there is the chicken-little pronouncements of Fatih Birol, the Chief Economist of the IEA, who garnered much press recently by rehashing the depletion theories of that star peak oil prankster Matt ($500/bbl oil) Simmons. Thereby aligning himself with such soothsayers as Sam Kier's Pennsylvania "Rock Oil" of 1855. The U.S. Geological Survey of 1885 predicting California having "little or no chance" of finding oil. The California Kern Field written off as depleted in 1942 with forecast of 44 million barrels remaining, only to produce 10 times that amount since, with another 970 million/bbls to go. On to 1914 when the U.S Bureau of Mines assessed America's supply of oil to be adequate for only ten more years, and then upping the rhetoric two years later, predicting "a crisis of the first magnitude." Continuing to the forecast of the prestigious Club of Rome in 1972, predicting the world would run out of crude by 1990. And the myriad others echoing the same theme, too many to mention.
Thus Birol, once more stirring the peak oil pot with hardly a mention that along with depletion has come a vast increase in accessible oil and gas due to new exploration techniques, spectacular advances in secondary and tertiary recovery, with reserves of natural gas in the United States alone having increased by almost a factor of five in the last half dozen years because of new drilling techniques accessing shale gas deposits, while proven oil reserves, according to BP, are some 25 percent higher than they were 10 years ago.
Of course, bringing the imprimatur of the IEA to his theories gives Birol a semblance of authenticity. And this at a time when the world is literally awash in oil, a good time for the industry to pull the peak oil theorists out of the woodwork in the hope of countering decreasing demand by interjecting a fluctuating state of alarm over the supply of oil since looming shortages are invariably invoked to justify ever higher prices. Under the circumstances, could it just be coincidence that Mr. Birol spent six years working in the Secretariat of the Organization of Oil Exporting Countries before joining the IEA?
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Brazil Seeks More Control of Oil Beneath Its Seas
This month, Brazil’s government said it wanted the national oil company, Petrobras, to control all future development of the deep-sea fields discovered in 2007, which international geologists estimate could hold tens of billions of barrels of recoverable oil.
The oil lies beneath about 20,000 feet of water, shifting sand, and a thick layer of salt. This so-called pre-salt region, stretching hundreds of miles, is the biggest oil reserve being developed in the world today, especially given the lack of headway in gaining access to Iraq’s extensive deposits, said Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, an energy research consultancy.
Freddy adds the new dimension of a "Data Wunderkind" whose data can be used, for the most part, to back up your own thesis that Geologic Peak Oil is not a problem- it is certainly more credible than the silliness last year with you wondering if abiotic oil has any validity.
Should Freddy post here again, us McPeaksters will no doubt have pleasant disagreement with his rosy scenarios of Reserve growth, those pesky 'spare capacity' statistics, and production growth based on a continuum of BAU.
One factoid from our new cornucopian friend that should be taken to heart by all who read your blog is this:
"Regular Conventional Crude peaked in 2005 @ 68-mbd and is in terminal decline. It is a mere 61-mbd today and is only 72% of All Liquids production."
The question we all need to consider is how are we to make up the difference with unconventional sources and what ecological and financial price we are willing to pay to keep our non-negotiable lifestyle going.
Anyway, it will be a good discussion.
"McPeaksters have failed to recognize over the decades that rising crude prices increases URR. Thus, Peak Year & Peak Date are forever being revised. Lynch & Adelman brought this into mainstream sector discourse in 1998. 3P Reserves becomes 2P. 2P becomes 1P. In short, for every $1/barrel increase in crude price, URR increases by 67-Gb. Over the past ten years, URR has grown an avg 124-Gb/yr ... while consumption is only 30-Gb annually."
Please keep posting these facts--your balanced view is greatly needed here.
Peace
Re the above quote:
You do know that URR (Ultimately Recoverable Resources) like many of the issues we are discussing here, is a highly debatable future reference point, and just because it is all "numbery" and stuff, doesn't mean it is a fact.
All it means is that some McPeaksters are just a little skeptical of numbers that are theoretical by nature, (or that can be manipulated) as opposed to actual production figures. But then McPeaksters are not monolithic in their thinking. Freddy is a good example- he knows there is Peak Oil, but has it charted out to 2048, so why worry.
Some Peakers think that technology will save us, some are doomers, and some fall somewhere in between.
There is always room for disagreement, and some consensus.
So, y'all come back now!
but have you ever sen this graph?
http://www.theoildrum.com/files/FIG%2003%20OECD%20EUROPE%20OIL%20CONS.PNG
:-)
Let’s see…,
Learsy (commodities trader) or Colin Campbell, Kenneth Deffeyes, and M. King Hubbert (petroleum Geoligists)
Who to listen to…?
I chose the Petroleum Geologists!
Brazil's Big Oil Find Challenges Peak Theory
http://www.menafn.com/qn_news_story.asp?StoryId=%7BB2270599-E462-4A56-AAA5-107EBFC2C320%7D
The Great Find
Petrobras sent out shock waves in late 2007 when it announced what analysts quickly described as one of the most significant finds in the last 30 years- an ultra deepwater discovery in the Santos Basin that could hold anywhere from 5 to 8 billions of valuable light crude.
What's more, subsequent finds in nearby and adjacent fields suggest that the Tupi field is connected to a larger oil-rich geological formation that taken together could hold between 50 and 70 billion barrels of crude. Enough to vault the nation among the top 10 list of world petroleum reserves.
http://nextbigfuture.com/2008/04/brazil-may-have-new-sugar-loaf-oil.html
Brazil may have new Sugar loaf oil field may have 33 billion barrels of oil
Brazil's National Petroleum Agency President Haroldo Lima is talking about a 33 billion barrel offshore oil find (not Tupi another find) deep-water exploration area off the coast of Rio de Janeiro.
But thanks for pointing out how much more oil we would need to find just to keep it up. It's about one Brazil's worth every year.
:-)
Will Brazil Be the New Saudi Arabia?
http://seekingalpha.com/article/73778-big-oil-asks-where-will-tomorrow-s-oil-come-from
Big Oil Asks: Where Will Tomorrow's Oil Come From?
5-8 billion barrels of oil
12 billion barrels for Kazakh
Come one
Sugar loaf field is the only one you should be bragging about
Ghawar in KSA
Produces about 5 million barrels of oil a day
It was orignanlly estimated to have about 170 billion barrels of oil
Of which 60 billion barrels would be recoverable.
Since 2005 KSA has recovered 60 billion barrels and is still going
It may contain 73-83 billion barrels recoverable or more.
The Burgan Field in Kuwait is 66 to 72 billion barrels
Cantarell field in Mexico is 18 billion barrels
Plus, this field is 155 miles off shore. I don’t think oil fields that far offshore should be counted as cheap oil.
and it would have to be large fields to delay peak by much
Of course, that by itself is not a problem. What is a problem, especially in the US, is our inefficient use of available liquid hydrocarbon reserves. If the US had embarked on a transportation efficiency program 30 years ago, peak oil would still be more than a decade away and the transition would be less bumpy and much less costly.
Sadly, America is not known for its successful long term decision making.
Of course, that by itself is not a problem. What is a problem, especially in the US, is our inefficient use of available liquid hydrocarbon reserves. If the US had embarked on a transportation efficiency program 30 years ago, peak oil would still be more than a decade away and the transition would be less bumpy and much less costly.
Sadly, America is not known for its successful long term decision making.
If you control the media, you can become a rich bitch, just like the energy companys
Seriously Raymond, your 1885 USGS type arguments seems much like the AGW warming argument that some so-called 1970's scientists were "predicting" an ice age(!) therefore the whole idea of climate change is ridiculous.
Silly predictions made 70 to130 years ago have nothing to do with the study of Peak Oil which was not posited until 1956.
Why not make a reasoned argument why M.K Hubbert was wrong about the US 1970 peak rather than using the most ridiculous pronouncements made before there was even a theory of P.O.?
Yes Matt Simmons has made price predictions that have been wrong, but neither have you EVER offered ANY argument as to what in your view makes the ACTUAL theory of P.O. wrong.
And no, making points about speculation in oil markets is no substitute for proving Hubberts hypothesis or P.O. wrong.
Would I find this argument in your book?
I think not.
And, as I have asked before, why don't you join the discussion here on your own blog as other bloggers do with theirs?
oh, ok your funny!
McPeaksters have failed to recognize over the decades that rising crude prices increases URR. Thus, Peak Year & Peak Date are forever being revised. Lynch & Adelman brought this into mainstream sector discourse in 1998. 3P Reserves becomes 2P. 2P becomes 1P. In short, for every $1/barrel increase in crude price, URR increases by 67-Gb. Over the past ten years, URR has grown an avg 124-Gb/yr ... while consumption is only 30-Gb annually.
McPeaksters also are commited to a worst case scenario where Megaprojects are assumed to run out based on the (six year) visible horizon. As new projects are announced down the road, revisions to future production are again inevitable. The accurate long term forecasts assume that the industry will maintain the current 3.5-mbd/yr trend for new capacity 'til faced with resource constraints (around mid century).
There seems to be a strong reliance on BAU though for the models to be borne out.
of all the stats I read, URR is the BIG unknown, the second is EROI, and as you say, Peak year and date (for all liquids) are forever being revised.
I am not that analytical (funny word at the front, eh?) but even giving human and chaos factors a low weight, those can make any future speculation a silly exercise.... this includes us McPeaksters as you say.
These "gray swans" will have the last say.
What is your worst case scenario BTW?
This will create an economic boom that will lift all boats, benefiting every American and commerce...!
We are still suffering under a 19th century economic model that is unsustainable and destabilizing of our nation and even endangers national security and any hopes for peace..!
Todd DiRoberto
http://www.merchantcircle.com/business/American.Satellite.Inc.presented.by.Todd.DiRoberto.and.Caleb.Wickman.866-512-4714
Your concern surrounding the marginal price of liquids will not affect the marketplace so long as surplus capacity is significant ... a situation that is likely 'til 2025 based on current projections.
2) Even if that was not the case, it is evident (or at least ought to be) that the economies of a dozen important, in some cases major countries would collapse were oil to stay even at $50 a barrel for any extended period.
Now, as to Peak Oil, the Club of Rome and presumably any other warning as to looming, critical shortages of essential resources:
Simmons' argument was that it was cheap, quality crude that was peaking, particularly in Saudi Arabia. You actually think the States blundered into Iraq by accident? When it just happens to hold the world's second largest (largely untapped) reserves of quality crude? You actually believe that unconventional oil or imagined Arctic Oil can be brought on in sufficient quantity at anything other than ruinous prices? You think China is desperately trying to secure assured supply from anyone willing to sell and that the States is not doing everything it can to make that difficult? You think the Pentagon's publicized studies about the high likelihood of a global scramble for scarce resources leading to potential war is just for laughs? That the impact of food prices alone is not going to be catastrophic for billions?
I won't bother to bring up runaway climate change - I'm sure you'd think it meant someone who bolts when they're caught tryin' to cash in a bad climate for the meter.
Glad I read this article - always good to know whose books not to
Today on CNNmoney.com there is an article about how China has been spending a lot of money (US$ no doubt) around the world on oil reserves. But then they take the long view regarding their needs rather than sitting around whining about the price of gas, or setting up shop in hostile parts of the world which is as sophisticated as we get here in the US.
Ya, what of the Pentagons Climate change war gaming? They are apparently concerned enough about Peak Oil to be going forward with syn fuel production to have stable fuel supplies. The Pentagon hopes that about half its fuel with be synthetic by 2016.
I wonder how much (what is left of) the airlines industry will be paying by then?
Anyway, welcome to our little corner of HuffPo.
Way I see it, we will not recognize 2016, for good or ill - the current economic crisis is just the opening Act. We're all headed for a "fight or switch" moment & "fight" looks odds on to win. But we ain't down yet and in the flux of crisis there are paths to victory.
Take care (and remember to duck if a rogue Health Care missile goes off in your area).
Of your 3 arguments re IAE and the past, current and future price of oil, you managed to get 1 right: there is no doubt whatever that speculation (fed by a constant slew of misinformation and/or manipulated information) created the parabolic spike in prices. It might have been useful though, to direct the reader's attention to the regulatory change introduced in early 2006 at the behest of Goldman Sachs' operatives that enabled their ensuing criminal behaviour in this arena.
With respect to your characterization of the IAE's stance vis a vis OPEC, 2 points:
1) Again, you may wish your readers to consider that US policy, initiated by Kissinger when Nixon unilaterally trashed the gold standard, has consistently been one of high oil prices, both as an enormous boon to big oil companies, but more importantly as a critical source of capital inflows into the US, because of all these new petrodollars only a fraction could be absorbed by the economies of the major producing countries. This policy continues to this day.
Plus, a "free market" includes the freedom of Saudi Arabia to sell its own oil or not.