Peak Oil- what it is and how it will impact your life

Re: Peak Oil; what it is and how it will impact your life

Saw 3.19/9 today in Tunkhannock at a Valero station. Paid 3.25/9 yesterday at my local Pump 'n' Pantry.

 

Analysts: 1 million barrel OPEC cut not enough

CAIRO, Egypt – A crude oil production cut of even 1 million barrels per day at OPEC's upcoming emergency meeting is unlikely to reverse slumping prices in the short term, analysts said Sunday, amid mounting calls by several cartel members to take action to keep prices at the $80 per barrel level.
A decision by the Organization of Petroleum Exporting Countries to hold an emergency meeting next Friday clearly signaled the group's concern that the recent pummeling of crude prices would erode revenues needed to sustain government spending and weather broader fallout from the global financial crisis.
The meeting had initially been moved up to mid-November, about a month earlier than scheduled, but was pushed to Friday as the oil price dropped below $70 per barrel.
Analysts said some key producers may be eying the meeting as the first step in reasserting control over the market — particularly as the cartel has argued that record rallies earlier this year were driven more by speculation than supply and demand.
"What they really want to do is position themselves now in a situation where they can manage markets ... a lot more comfortably next year, and potentially for the recovery in 2010," said Raja Kiwan, a Dubai-based analyst with the Washington-based oil consultancy, PFC Energy.
Kiwan and other analysts expect the 13 member group, which produces about 40 percent of the world's crude, to slash production by at least 1 million barrels per day. OPEC is looking to buoy a market in which the price of a barrel of benchmark West Texas Intermediate crude has fallen about 50 percent from record highs of $147 in July on the New York Mercantile Exchange.
Over a three day period last week, the November-delivery contract on the Nymex dropped $11 per barrel, rebounding slightly on Friday only on the back of OPEC's announcement of the emergency meeting.
But even that gain could be short lived, say some analysts, as the market factors in the anticipated cut ahead of the meeting.
"In the very short-term ... OPEC will likely prove unable to significantly alter the prevailing market sentiment, particularly as crude traders look to equities as a barometer of global economic health (and hence oil demand)," said a recent PFC Energy report.
That presents OPEC with a dilemma. If they announce too big a cut, they risk fueling the global financial crisis. But, cut too little, and $80 per barrel will be wishful thinking. Some OPEC officials have said prices closer to $100 per barrel are ideal.
"I don't think there's been this sense of urgency since the Asian financial crisis," said Kiwan, referring to the market collapse in Asia in the late 1990s. "I think those memories are still seared into the minds of (OPEC) ministers."
Independent Kuwaiti oil analyst Kamel A. Al-Harami agrees. He argues that given such a delicate balancing act, disagreements are likely at the meeting between dovish Saudi Arabia and traditional price hawks like Iran.
Even if the members agree on a production cut, 1 million barrels will not be enough and "there will be cheating on the quotas from day one," said Al-Harami, who served as former president of Q8, the retail arm of the Kuwait Petroleum Corp.
Al-Harami believes the group is being hasty in moving to cut production and believes they should hold off until at least the winter when demand for energy for heating picks up.
But OPEC is making it clear that the time for waiting is over.
Chakib Khelil, Algeria's oil minister and OPEC's current president, said Saturday that the cartel "is going to take the decision that favors keeping market prices stable."
"There will be a reduction, and it is necessary that it's significant to establish balance between supply and demand," Khelil was quoted as saying by the country's APS news agency.

The stakes are high — both for a meaningful production cut and for quota compliance, something on which OPEC has typically fared poorly.
Over the past few weeks, the slide in prices has become more pronounced as the global financial crisis sapped demand for crude oil in the developed countries.
The International Energy Agency, the U.S. Energy Information Administration and, most recently, OPEC have all lowered their forecasts for energy demand heading into next year.
Such revisions, in tandem with the price drops, are particularly worrisome for some top producers like Iran — the cartel's second largest crude exporter, which relies on oil revenue for about 80 percent of its government budget.
Iranian officials have repeatedly said crude at $100 seems fair. Others, including Qatar's oil minister and Venezuelan President Hugo Chavez, have pushed for levels closer to $80-90.
Iran and Venezuela, in particular, have reason for concern because their production is heavier and more sulfurous and, as a result, sells at steep discounts to lighter crudes like the U.S. benchmark WTI.
The OPEC basket — the weighted average of prices for crudes produced by OPEC countries — stood at $63 per barrel on Friday, according to Kiwan.
The Saudis have so far stayed quiet.
But analysts said Riyadh is well aware that developing nations, in particular, will not be silent if presented with steep cuts that could undermine U.S. and European-led efforts to stave off a global recession and shore up financial markets.
PFC Energy's Kiwan said while other cuts could follow the expected reduction of 1 million barrel per day, the immediate focus is on halting the price slide.
"One of the keys here is that OPEC is not judging its failure or success on the short-term," he said. "What it's hoping to do is provide fundamental support for recovery in the long-term," a plan which requires them to keep supplies tight going into next year. Ultimately, added Al-Harami, "the biggest player is Saudi, and what Saudi decides, the others have to follow."

 

Re: Peak Oil; what it is and how it will impact your life

If you have loose change, look into natural gas producers stocks and wind generation companies. T. Boone is not far off the mark. With prices for petro products where they are, gas and wind are both starting big time in PA. VESTA has some wind machines up, more to come, and there are several gas companies drilling into the Marcellus Shale across the northern part of the state. The Marcellus is pretty tight, but horizontal drilling and frac'cing makes the yield possible and economically attractive.

 

Re: Peak Oil; what it is and how it will impact your life

Yup Vestas is on the Copenhagen market.

 

Re: Peak Oil; what it is and how it will impact your life

I am just as happy about these lower gasoline prices as anyone. Much lower than I and many others expected. But, I don't really see why these rosy reports are posted in this thread. "News" or "General Discussion" sure, but today’s lower prices really have nothing whatsoever to do with "Peak Oil". If you read this entire thread, and follow the links, you would see that the "peak" of world oil production follows a bell curve, the top of which is not an immediate drop in production and ergo increasingly higher oil and gasoline prices. But rather a plateau period of peaks and valleys lasting between 3 to 7 years after the "Peak". This is exactly what we have been seeing for the last couple of years. With the peaks getting increasingly higher and the valleys lasting a shorter period. We have just come from the highest peak we have seen and are now in a valley. Does that mean that "Peak Oil" doesn't exist? Of course not. It exactly fits the Peak Oil model.

There are only two ways to significantly lower the price of oil and therefore gasoline. Either increase production levels or reduce demand. The recent high peak started the demand reduction and would have lowered prices to some extent, as was expected, and predicted by all Peak Oil scenarios. What wasn't expected was the extent of that demand reduction due largely to the recent, unforeseen, worldwide near economic meltdown. A bit of a game changer that.

But the fact is that production levels have not increased. Despite the oft promised, yet unachieved, production increases by Saudi Arabia.
This is very similar to the scenario in the 70's. After Dr. Hubberts Peak Oil model was proven on U.S. domestic production (he nailed it) people started to take it seriously and applied it to world production. The model showed a world peak in the late 90's. But, the unforeseen factor of the OPEC oil embargo, manufactured oil shortages and the resultant forced conservation measures resulted in the peak being delayed. It didn't happen in 1998 like all models forecast. So did that mean that the model was wrong, that peak oil wasn't a real and predictable event? Not at all, unforeseen factors merely delayed the inevitable. A lot of Peak Oil followers believe that we reached that point on Dec. 15th, 2006.

So then is the current economic chaos fueled demand reduction and resultant drop in oil and gasoline prices "proof" that peak oil isn't real, or that it hasn't occurred? Of course not. It has nothing whatsoever to do with it. We are in a peak and valley plateau period that exactly follows all peak oil scenarios. Can unforeseen factors affect those peaks and valleys? Of course. Those unknown factors can cause the valleys to be lower and the peaks to be higher. Does that alter the fact that world production appears to have peaked and is in a steady decline? Not at all.

Does that mean that other unforeseen factors won't affect prices? No, anything is possible. A worldwide nuclear war would certainly drive down demand and price. But, is it likely? That is the question. Some new discovery of a heretofore unknown reservoir of massive amounts of crude oil would raise production levels and drive the price down. But is it likely? Some new discovery of a cheap and efficient energy source would drive demand down. But is it likely?

Peak Oil is not about prices. It is about production. The peak is not the peak price of gasoline at the pump, it is the peak of oil that we are capable of producing. And nothing that we do, and nothing that is remotely likely to happen, can change that peak.

That peak level of production has occurred in every field in the history of oil production. It has happened in every oil-producing region, every oil-producing nation. And it will happen for world production. Or already has. And there is nothing whatsoever that can change that fact. Unforeseen factors can postpone it, but nothing can prevent it. The following peak and valley plateau will end. Factors may postpone it, but nothing can stop it. Production levels will start on an ever steeper and irreversible decline. Factors may postpone it, but nothing can prevent it.

So my advice is to enjoy these cheap prices (still much higher than just a couple of years ago, funny how today’s cheap was exorbitant then. People have short memories) while they last. Because they won't last for long. The world’s production has not increased. Demand has fallen and that is what is causing these price reductions. And even if we maintained this reduced level of consumption it still does not stop the eventual cresting of the precipice at the end of the plateau. It merely postpones the inevitable. One major international crises, natural disaster, devastating terrorist attack, and the price of oil will shoot back up much faster than we are seeing it come down now. Every peak in the last couple of years has been increasingly higher. The next peak will be no different. $5 -$7 a gallon at the pump is likely and probably a very low prognosis.

So what I am saying is don't let this temporary lull in rising prices fool you into a false sense of complacency. Prices will rise again, production levels will continue to fall and we will look back at this brief reprieve with furtive longing. I live in the country and I am looking into setting up several above ground fuel tanks (common in farm areas). I will be taking advantage of these low prices and storing as much gasoline and diesel as I can before the next peak comes along.

 

Re: A fork in the road

(I'm copying the following posts from another thread. Got a bit off topic and thought it would be more relevant here. MM)


........
Seems like all of the oilfield jobs in the US have dried up. Drilling is coming to a standstill. The prognosis for future exploration is bleak. There will be pockets of activity but nothing like we have seen for the last several years. Not under this admnistration.
It's the Carter years all over again. We are giving control of our energy needs back to OPEC. A bad, bad move. God help us.
The only jobs that I have seen in the last few months are international, OPEC countries. They know that this administration is gutting the domestic industry and they are ramping up to take advantage of it.
Time to brush up on my Arabic.

 

Re: A fork in the road

Bush opened up the outer continental shelf for exploration, Zero nixed it as soon as he got in office.
As to all the predictions of massive amounts of oil here or there you have to take that with a grain of salt. A lot of those figures are projections which are notoriously over optimistic and or include things like shale oil which is "bigger than Saudi" but which is very expensive to extract. Not even fiscally vialble at todays prices.
We do have a lot of domestic oil (affordable oil) that we could be drilling for and extracting but are forbidden access to. Like federal lands. And the greenies in Kali keeping the offshore ban there in effect. I love it when thier price of gasoline leads the nation. Pay through the nose you greenpeace, tree hugging wimps.
Florida has just approved offshore drilling in thier coastal waters, pending state senate approval. A good step forward.
But with this administration pushing thier pie in the sky "alternatives" the domestic industry is going to be so decimated and cut back that we will see our dependence on foriegn oil skyrocket in the future. We were actually starting to make a dent in it the last couple of years, but that's over.

 

Re: A fork in the road

A bit off topic but I had this in a newsletter today. Reminded me of this post.

Energy firms object as Interior steps up protection for polar bears
The Interior Department has ordered that oil and natural gas companies must have approval from the U.S. Fish and Wildlife Service for any operations that could put polar bear habitats at risk. The move overturns a ruling from the George W. Bush administration that excluded those companies from such a review.

 

Re: Peak Oil; what it is and how it will impact your life

During the last spike in oil prices domestic exploration and production ramped up and was producing at maximum output. (and demonized for it, because they, gasp, made a profit). The ramp up helped to pour more oil and natural gas into the domestic market thus preventing OPEC from having unfettered control of supply outputs and therefore driving the prices even higher than we experienced. Without the increased domestic production we would have been entirely at the mercy of foriegn producers.
The current glut brought on by high prices and a global economic nosedive has brought prices down temporarily but they will rise again as the economies of the world begin to recover and people start to drive more and consume again.
But now we have an administration that is systamatically gutting the domestic oil and gas industry.
This plays well politically with the far left nutjobs, what they don't realize is that once the economy starts to recover (providing that it does) the demand for thier products will rise also. And with crippling restictions on domestic production we will not be able to provide anywhere near the levels of production that we have in recent years.
So where will it come from? OPEC mainly. Venezuela, Mexico, Saudi, etc.
So our 60% dependence on foriegn oil will skyrocket and we will have no way to counter it. It will take years to ramp up to the levels of production that we had just last year.
But, maybe that is this administrations plan. Gut domestic oil and gas production and force people to adopt thier pie in the sky alternative energies. Hmm...


Court orders review of Interior offshore program
The American Petroleum Institute is warning about what it says will be the negative economic effects of a federal court decision Friday that nullified the Interior Department's five-year plan for oil and natural gas leases. The court said the department's review of new leases in the Gulf of Mexico and Alaska was inadequate and should be revised. CNNMoney.com/Dow Jones Newswires
　
Experts call new Interior Department report dated
Thursday's Interior Department report, which promotes renewable energy and downplays domestic oil and gas development, uses old information about recoverable, undiscovered oil on the Outer Continental Shelf, industry experts say. The information is based on a 2006 U.S. Geological Survey report, and experts expect an upcoming report will have higher estimates on oil reserves. "They're reshuffling the same documentation," said Richard Ranger of the American Petroleum Institute.

 

Re: Peak Oil; what it is and how it will impact your life

<DIR><DIR>Democrats working out cap-and-trade permits
Rep. Henry Waxman, D-Calif., the chairman of the House Energy and Commerce Committee, said he is willing to compromise on some details of his cap-and-trade legislation, which seeks to cut U.S. carbon output by up to 80% in the coming decades. In response to concerns from lawmakers from coal and oil states, Democrats are negotiating a proposal to give companies some carbon permits for free to ease them into the system. The Wall Street Journal/Dow Jones Newswires (4/24)
　
　
Gore says carbon bill needed now
Former Vice President Al Gore appeared before the House Energy and Commerce Committee on Friday to testify in support of legislation to reduce U.S. carbon emissions. Gore urged lawmakers to pass the bill before the end of the year in order to safeguard a leadership role for the U.S. at a December summit to draft a global climate treaty. Reuters (4/24)
　
　
California carbon measure faces scrutiny under NAFTA
A prominent Canadian lawyer says California's decision to mandate low-carbon fuels is in violation of international agreements such as NAFTA. Simon Potter, former head of the Canadian Bar Association, said the measure would penalize imports from Canadian oil-sands producers. Reuters (4/26
　
limate bill includes energy-efficiency measures, business incentives
A draft climate bill introduced by House Democrats this week proposes the first federal mandates on improving energy efficiency and using renewable sources for at least 25% of the country's energy. The measure also would include a $10 billion fund for promoting carbon-capture technology and rewarding manufacturers that operate more efficiently than competitors. The Washington Post (4/1)
　
　
U.S. carbon plan may threaten oil sands in Canada: A bill introduced this week by Rep. Henry Waxman, D-Calif., calls for stricter regulations on carbon dioxide emissions from the production and use of fuels. Critics say the legislation could harm Canadian producers because refineries would face difficulties selling gasoline produced from Canada's carbon-heavy oil sands. Calgary Herald (Alberta, Canada)/Canwest News Service (3/31)



Slowdown continues for U.S. drilling activity
Baker Hughes reported that oil and natural gas drilling decreased by 20 rigs to a total of 955. The firm said natural gas operators accounted for the bulk of the decrease as they halted activity at 18 rigs during the past week. The Wall Street Journal/Dow Jones Newswires


Schlumberger chief looks ahead to 2010
Schlumberger Chairman and CEO Andrew Gould said the firm is not optimistic about the prospects of a quick recovery for North American drilling, which the American Petroleum Institute reports is at its lowest level in five years. However, the company is optimistic about opportunities in Iraq as the country opens its oilfields to international developers. Houston Chronicle (4/24)


Mexico reduces outlook for oil exports
According to Mexico's finance ministry, the country's oil exports could drop by as much as 18% next year, meaning crude production could fall to levels not seen since the late 1980s. Pemex is planning a new refinery but it isn't expected to be operational before 2014. Reuters (4/2)


Drilling cuts may lead to spike in prices
The credit freeze has caused many oil and natural gas companies to cut spending on exploration and drilling, a trend that may lead to reduced supplies. Analysts say that shortage may cause higher oil and natural gas prices as consumer demand returns. Bloomberg (4/8)



</DIR></DIR>

 

Re: Peak Oil; what it is and how it will impact your life

There is a perfect storm scenario brewing here. If we thought $4 a gallon was bad wait until the results of these measures start to take effect.


　
Court overturns New Mexico lease plan
A federal appeals court rejected a leasing plan issued by the Bureau of Land Management in 2005 for drilling in New Mexico's Otero Mesa region. Gov. Bill Richardson was among opponents of the plan, which critics said -- and the court agreed -- did not adequately review the environmental risks of drilling in the area. The Wall Street Journal/Dow Jones Newswires (4/29
　
Colorado increases drilling oversight
Colorado Gov. Bill Ritter Jr. signed into law stricter licensing rules approved by the state's Oil & Gas Conservation Commission. Oil and natural gas companies criticized the changes, which they say will make doing business in Colorado more difficult and expensive and may drive producers to nearby states. Oil & Gas Journal (4/29)



API insists ANWR, new offshore drilling would help markets
The American Petroleum Institute's chief economist, John Felmy, rejected reports presented at the Milken Global Institute Conference this week that said drilling on the Outer Continental Shelf and in the Alaska National Wildlife Refuge would have a negligible effect on gasoline prices and that new supplies could not be transported safely through the Trans-Alaska Pipeline. Felmy said the pipeline has excess capacity and new drilling in the U.S. could put up to 1 million barrels per day on the domestic market. Reuters (4/30)
　
　
Natural gas gains traction in U.S.
Analysts say recent natural gas discoveries in the U.S. may yield enough fuel to satisfy the country's demand for up to a century. Natural gas advocates say increasing its use may help accomplish myriad goals including reducing carbon emissions and lowering energy costs. The Wall Street Journal (4/30)
　
　

 

Re: Peak Oil; what it is and how it will impact your life

all these guys suck. the .gov is way out of hand.

 

Re: A fork in the road

Waaay off topic, but it cracked me up (and kinda' fit here), so I had to share:

 

Re: A fork in the road

Hm. Polar bears eat endangered seals, so we can't eat them. Seals eat fish. We are overfishing the oceans. So, seems logical to me that if we let the polar bears die off we can have more endangered seals to eat, then the fish stocks will increase.

DRILL, baby, DRILL.

 

Re: Peak Oil; what it is and how it will impact your life

I don't know if this is of any interest to anybody else. I keep a close eye on these things because it immediately affects me because I work in the industry, but it will impact everyone soon if these trends continue.

The domestic rig count ( a barometer on the state of the domestic energy sector) has been falling at astronomical rates surpassing even the great oil bust of the 80's. The count is approaching a 1000 rig drop since last year.

A worldwide economic slump forced people to cut back on thier energy use which had been producing balls-to-the-wall to keep up with demand. This resulted in an oversupply that coupled with the credit crunch caused oil and gas prices to drastically drop. The producers could not get the capitol to continue thier record spending on developement projects to secure future supplies. So they started releasing rigs on an unprecedented level.

So now we are burning up that oversupply we accumulated, but, we are not replacing it. We are drinking from a bucket that is not being refilled.
It doesn't take an insider or pundit to tell you what the result is going to be.

With this totally incompetent, pie-in-the-sky, administration hampering energy companies attempts to secure more supply we are setting the stage for a meteoric rise in prices.

When our surplus begins to run low, and there are no new wells coming on line to replace it, we will see prices skyrocket at a rate that will make the last couple of years look like the good ole days.

It will take a long time for the energy sector to ramp back up and get the wells flowing enough to catch up with demand.
And this administrations unrealistic plans to replace those supplies with "renewables" is a recipe for disaster.

Of course when the price of gasoline hits $5 a gallon they will just blame the "evil,greedy" oil companies.
Pelosi will launch investigations into price gouging..... yada,yada,yada


Speculation abounds over Gulf-related taxes
The Obama administration said it will make clear next week whether it intends to move forward with an excise tax on oil and natural gas output in the Gulf of Mexico. The measure, potentially worth about $5 billion, was not included in a draft of the federal 2010 budget released this week. The Wall Street Journal (5/7)
　
Chevron CEO reserved on future of U.S. growth, green energy
David O'Reilly, Chevron's chief executive officer, told the Boston College Chief Executives Club that high unemployment likely will undermine any chance of an economic rebound in the U.S. for the remainder of 2009. O'Reilly also said that it will be years before renewable energy is capable of supplanting traditional fuels. Reuters (5/7)
　
Oil execs call for different perspective on environment
The heads of Chevron North America Exploration & Production, Devon Energy and ExxonMobil Exploration say that the U.S. needs to increase offshore development of oil and natural gas. The three, who appeared together on a panel at the Offshore Technology Conference in Houston this week, said that the Obama administration's expectations for renewable energy are unrealistic and that oil and natural gas companies can be trusted to work offshore with minimal risk to the environment. Oil & Gas Journal (5/6)
　
　
Chesapeake CEO: Dramatic Natural Gas Price Rebound Expected
[United States] -- Wednesday, May 06, 2009
by Randy Ellis

Wednesday, May 06, 2009
Current low natural gas prices are setting the stage for a dramatic price rebound that should begin this fall or winter, Chesapeake Energy Corp.'s chief executive officer told analysts Tuesday.

"Today's gas prices are clearly not strong enough to support a North American rig count that is high enough to prevent a very severe and unprecedented decline in North American gas production," Aubrey K. McClendon said.

"This will set the stage for a dramatic reversal of natural gas prices sometime this fall or winter," he said.

"How high will gas prices go in the recovery and rebound phase in the next cycle? Obviously, we don't know. But clearly, gas prices were too high one year ago at $12 to $13 per thousand cubic feet, and today they are far too low at $3.50 per thousand cubic feet," he said. "So my guess is the rebound will overshoot on the high side, just as it has overshot on the low side."