75 comments on The Top Energy Stories of 2006 (and Happy New Year!) from The Oil Drum
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I'd like to take advantage of this "slow news day" by inviting people to make predictions here of what they think will happen in 2007 regarding energy issues. What will happen to prices? Production? Demand? How about the Peak Oil issue itself, will it gain traction and go mainstream, or be seen as a crackpot apocalypse?
I'll start by making some rather sedate predictions. 2007 will be a year of slow economic growth globally, and oil consumption (and production) will rise only slightly. Prices will remain in the $50-80 trading band they have been in for the past year or two. Global warming will continue to be a greater concern than Peak Oil, but mitigation strategies are not so different for the two, so Peak Oilers will increasingly choose to get on the climate change bandwagon rather than pushing the "end is near" agenda. More radically, I'll predict that TOD will reinvent itself as a Global Warming web site.
What are your thoughts and predictions? And best wishes for the new year to all!
Happy New Year Haflin:
I always like your posts, because they are invariably clearly written and highly cogent.
Two challenges to your list, and they are related:
1. Oil will break out of the $50-$50 trading band that it has been in for the last couple of years.
2. TOD will not morph into a Global Warming site.
Now, reasons for my predictions--first, I think volatility is likely to be a big story in 2007. Unlike you and some other forecasters, I do not think there is much spare capacity for oil production in the world. A global recession could put oil back at forty dollars, and any number of above ground problems could make the Goldman Sachs prediction of an oil spike of $105 correct, though somewhat premature.
I've collated a few forecasts from various agencies and analysts on today's Drumbeat in this comment.
If there's one underlying theme in those forecasts, it's that there's an acceptance that capacity will remain fairly tight over the next 2 or 3 years (and prices could easily spike due to above-ground factors), but the arrival of substantial new capacity around the start of the next decade will pull oil prices significantly lower.
Making predictions is always fatal, but my own view is that we'll all be sitting here a year from now none the wiser as to when Peak Oil will occur, or indeed whether it has already occurred (I don't believe it has).
I think that as time goes on, TOD members will become less pessimistic about the prospects of a world with non-increasing or diminishing oil supplies, as it becomes apparent that a very significant demand response is possible in the face of higher prices without economic collapse. Analysis by TOD contributors seems to support this. However, that might fly out the window if Jeffrey Brown (Westexas), Ron Patterson (Darwinian), and others are right about Saudi Arabia being in decline right now, with no prospect of various Saudi field developments arresting that decline.
The only thing I'm 100% sure of is that I'll be wrong about the above.
A Happy New Year to all.
Again, note that the question has shifted--from will Saudi production decline to why is Saudi production declining.
OPEC sources put Saudi production in 12/06 at "somewhere below 9.0 mbpd." Assuming 8.9, Saudi (C+C) production is down 7% from 12/05 to 12/06, and I estimate that net exports are down about 13% over the same time frame.
The HL method shows Saudi Arabia to be 60% depleted at the end of 2006.
Number of large producing regions (60 Gb or more) showing sustained higher production past the 60% of Qt mark?
Insofar as I know, zero.
This is why I voted Richard Heinberg's (Ghawar is producing about three mbpd) story as the most significant of 2006.
But won't technology save us? Well, the very best state of the art technology, in the North Sea, has produced a post-50% of Qt decline rate that is about three times higher than the Lower 48 decline rate.
Unfortunately, let us not forget about the Iraq war. Iraq, as we all know, shares a border with Saudi Arabia. Iraq is a wild card, just as it has been for the last three years, that has not *truly* entered into play (w/r/t the spot prices). It is amusing how this is almost never mentioned in the media--the standard rule is to complain about *why* BushCo invaded, but not state the obvious. They lied, they lied! But who knows why! I find it amazing, that for some reason it is seen as unreasonable to state that the true reason we're there. They had to lie because people are to stupid to understand the real reasons even if they had it explained to them (trust me, I've tried--as I'm sure many of you have too....) Instead it is because of "freedom", "democracy", "terrorism" and stopping the "insurgents who supported the evil dictator Saddam Hussein". Bullshit. as arch-liberals love to say "Donald Rumsfeld shook hands with 'the evil dictator Saddam Hussein'" in the early 1980s during the tanker war (we had recently lost our puppet govt in Iran when the Islamic theocracy within that country was able to capitalize on angry sentiment towards to the western-backed Shah. The revolution at the end of the misery-index chart-poppin Carter Administration put the Reaganites in the position of having to support "evil dictator Saddam". I think is says something about American denial that the whole *public* conversation about Iraq is completely missing any mention of geopolitical energy strategic positioning. This is hysterical as the whole thing is so plainly about energy reserves and access to them. Saddam was essentially a secular, power hungry, pan-arab nationalist with a twist of nazism. We had no problem supporting him until his grubby power hungry hands went invaded Kuwait without approval of the Imperial masters. Of course, the only reasons anyone would want to invade kuwait is because of oil... And, umm, the only reason anyone would want to invade Iraq is... Of course, anyone with a functioning frontal lobe can lucidly see that the ex-oil executives running our country by proxy through actually existing oil company executives are no dolts when it comes to the vagaries of oil production.
Ditto your point about the "technology", which eventually only increases the rate of diminishing returns. Your ironic statement can actually be seen comparatively also in the way that "efficency" has *seemingly* improved in the last 30 years, when in fact taking into account increased automobile size, Jevons P. in electricity usage and the breakdown of our ability to continue increasing efficency at historical levels all spells difficulty (analogous to what is soon going to happen to microprocessors--when transistors can get any smaller...) People also forget that ever since much of our heavy manufacturing has been sent off into foreign markets, where labor arbitrage is is the rule of thumb--that now the energy that is used and consumed to make imported products is not counted in US energy consumption statistics. Anyway, sorry to ramble, just thought I'd state the obvious =]
The fact of the matter is that geology, as interesting as a discussion of it can be here at TOD, will probably not be what throws a wrench in the global economy. More likely, it will be geopolitical moves coupled with bands of groups that try to disrupt networks a la John Robb's global guerilla hypothesis. This is already happening at a non-lethal systems level, and could easily overflow outside of it's goblet, into a non-local and spreading phenomena.
Happy New Year and welcome to the last best year . Ever.
WHY HAS THE PASSING OF SADDAM NOT BEEN MENTIONED HERE?
Forgive typos etc, I am just back from a New Years Colider and so even less than Compos Mentis than usual (so what's different?)
This mornings papers were full of the judicial execution of a tyrant.
Saddam Hussein Al Tikriti was surely one of the worst SOB's on the planet.
Why do I feel that we have not added any kind of value to the sum total of human happiness, knowledge and wisdom by killing him?
Sure, there are many lined up for revenge, and many have just cause.
Lets look at some ''Issues'':
1. SH Al T was an Ally of the USA. 1970 +
2. His ChemWeps came from The USA.(via Germany)
3. The USA was seriously happy with his war against the Iranian Mullahs.
4. SH Al T screwed up by attacking Q8.
5. Even the Q8 thing was forgivable a childrens tantrum over Directionally Drilled Wells, put right by Daddy USA.
6.But going for the Euro and reneging on the Dollar was beyond the pale.
7. Colin Powell was correct: Leave him in place. If he is not in place, civil war and all kinds of sh1t will happen.
So what happens?
SH is removed
Iraq falls into mayhem
A country is destroyed
An entire region is fundamentally less safe and secure. And potentially on the edge of WW III
It could be thus for a generation.
Well done!
Bravisimo!
This morning, you created another Martyr in an already fractured region.
The American Gov has now become so foockyng stupid that they insult the word stupid.
What a way to start a new year....
The SH lynching show was timed to coincide precisely with the time that USA passes through the 3 egg shells territory.
Yup folk.
3,000 American troops dead and hardly any notice given to that story.
Why?
Because explicit photos of the SH lynching dominate the MSM stream of consciousness.
You've been played yet again.
Did you notice?
Don't bahhh-there.
The Good Shepherd always leads his flock in the right direction, in the new way forward.
Think my conspiracy oriented ways are worthy of ridicule?
Well how about the New York Times? Are they also stupid for seeing that something was "rushed" in a highly unusual way?
P.S.
Here is some more New York Times insight on the 3 eggshells.
P.P.S.
Sorry folk for the morbid topic on this joyous passage into a "new" year with all "new" techniques for re-painting history.
This quote was too insightful to let pass by:
--from CNN and the New York Times Execute a Denial of History
Yes. For example, if the US with its ally Israel finally decided to bomb Iran (or more), which I consider highly unlikely, then not only will US soldiers in Iraq be sitting ducks with their supply lines cut but Iran would block the Straits, and so what happens to the Japanese economy? And what happens next? Hmm. Dominoes, anyone?
I predict numbers varying in a narrow range (easy), but several moves in the Great Game. Underground, and slow, or spectacluar. (duh!)
War (not to mention lack of clean water or food) is killing more people than the looming difficuluties we envision. How exactly they are related is a matter for speculation..
The lack of food and potable water is very closely related to the high cost of energy. The whole green revolution depends on cheap energy, and when fossil fuels become much more expensive there will be a major increase in death rates.
Malthus was right, though his timing may have been off.
"The lack of food and potable water is very closely related to the high cost of energy. "
How? Energy has been very cheap until very recently. Social disintegration in Africa existed long before today's high prices.
"The whole green revolution depends on cheap energy"
I had the impression that it was more closely related to improved strains of wheat, and so on, than increased fertilizer (which I assume is what you're referring to).
Much of the Green Revolution depends on irrigation water pumped by diesel-fueled pumps. As you indicated, cheap fertilizer depends on cheap energy. Beyond that, the production and distribution of hybrid seeds depends on cheap energy.
Potable water generally has to be pumped, either from wells or through pipelines.
Thus both potable water and cheap food depend on cheap energy, and I do believe the poorest countries (such as Zimbabwe) will be the hardest hit by Peak Oil.
I do not think that production & distribution of seed requires large energy inputs.
Seed farms can be located within ox cart distance of most farmers. And even heavy trucks can move the minimal weight of seed (it varies by crop) a hundred miles or so "affordably".
Best Hopes,
Alan
I believe that 2007 will be a transition year. In particular, 2007 will probably confirm a decline in Saudi Arabia production and a flattening of Russia's production. I predict that production for Crude oil + condensate will stay flat or start declining. Production numbers for all liquids in 2007 will be close to 2006 levels. Prices will stay in the $55-$75 range with possible super-spikes (or super-drops) depending on the occurence of significant weather or geopolitical events.
Well, do I need to go back to describing the conclusions in the following article as our conclusions and not "my" conclusions? No guts, no glory!
Of course, I am wrong most of the time in the exploration bidness.
http://www.energybulletin.net/16459.html
Unfortunately, data on SA is sketchy and incomplete so I think we need to be cautious before jumping to any premature conclusion. We need to observe lower production from Saudi Arabia along with rising demand for at least more than one year before confirming what the HL result is telling us.
I agree.
Also, I need to add this: Jeffrey (Westexas), you have no data for Ghawar, none at all. Neither do any of the rest of us. When we get that data -- and, I am working on it -- then I'll let you know.
I am getting a bit tired of speculation on this website. When we have the data, we'll know the truth. Using Hubbert Linearizations (not a physical model) as a substitute for the actual data in the KSA/Ghawar case only discredits the "peak oil" view, it does not support it. Many things come into play, eg. their willingness to produce more oil with respect to the price or the discount rate they use looking into the future. They can lie or not -- but we can not interpret what they say or do (or not say or do) in some way that is self-serving and merely convenient for our point our view. See what I mean?
I hope everybody who is contributing or commenting on this website understands what I just said.
I do understand what you said, Dave. But with all due respect, I think a moderate amount of speculation is appropriate on TOD.
With regard to Westexas, I have found his posts and comments driven by the data--not by speculation. Just as Simmons was cautious in "Twilight in the Desert," I find Westexas cautious in his statements. He focuses on numbers that can be verified and has never ever stated that Saudi Arabia has peaked. (He is skeptical that they have much excess capacity, and I think such skepticism is justified. Also he has suggested that maybe they have peaked but has always left himself plenty of wiggle room.)
If I were not so sober, I might say, "Let fornication thrive!" Uh, or did I mean "speculation"? Or "moderation"?
Happy New Year!
Re: With regard to Westexas, I have found his posts and comments driven by the data--not by speculation
Give me those Ghawar numbers, Don. I'm waiting.
Re: He focuses on numbers that can be verified and has never ever stated that Saudi Arabia has peaked
Nonsense. Jeffrey continually states that KSA is where Texas was when it peaked. I can't substantiate that claim based on data. That is an article of faith.
When we get past religion and get into data, we will be more credible to The Powers That Be as we address peak oil concerns now and in the future as we try to bring this message to a wider audience.
The hard data say that Saudi Arabia has cut both production and exports by significant amounts.
You can speculate that this is meaningless data.
IMO, Westexas has provided cogent logic to support his position that verified production and export amounts support his model.
Has he proven that Saudi has peaked? No: And he has EXPLICITLY stated that he does not know what is going on with Ghawar.
Your differences with Westexas are differences of data interpretation, and in my gut I suspect that Westexas is more likely to be correct than to be wrong. BTW I fully grant that you know a hundred times more about oil than I do. That is not the issue. When it comes to the interpretation of data, reasonable people can disagree agreeably. And for ability to evaluate quantitative data, I yield to nobody.
Re: cogent logic
Happy New Year, Don!
Read the rebuttal to CERA by yours truly. Keep it in mind. Doesn't mention Saudi Arabia except to say that we don't know the data.
Re: differences of data interpretation
Yes, he is interpreting the data of the last six months one way and I am saying we have no meaningful trend yet -- although I am unhappy with the way it is going -- this data trend may or may not mean anything. I know -- it is public knowledge -- that they are doing all sorts of field upgrades. Yet, Ghawar -- which has tallied 80% of their production -- remains beyond our reach.
Your claim that Jeffrey has not already made up his mind about all this is, simply, wrong. Read his comments for the last year in 2006. I have. Why would you bend over backwards to prop up a position unsupported by a significant data trend -- you are, after all, an economist!
What if Jeffrey (and others here) are wrong? Does that make us all wrong about "peak oil"? No, No, No! I will not have it come down to that, when the facts support the idea that it doesn't matter hardly at all what Saudi Arabia does.
I hope you'll bother to read this whole comment and think about it, too, before you reply.
I have read all of your comments with care and respect.
Ambiguity is something we have to learn to live with. As one who has sailed small boats in strong winds for more than forty years I have learned to interpret the data of weather forecasts; I bet my life and the lives of my crew on the correctness of these interpretations of quantitative data. Could Jeffrey be wrong? Of course he could. Could others who have called the peak in conventional oil in Dec. 2005 have been wrong? Of course that is possible.
I think I have read every post and comment that Westexas made during 2006. Both of us know very well where he stands. He has stuck his neck out. You suggest that he should not "speculate," presumably because a false call of Peak Oil has large costs. So far we are on the same wavelength.
Why should we not interpret data as best we can--granted the ambiguity, granted the fuzziness, granted the indisputable fact that legitimate interpretations can vary?
In the debate between Robert Rapier and Westexas I stood on the fence for a long time. Either position could be correct. The data can support either view. I think it is legitimate to present alternative interpretations of data. At the end, I'll admit is not reason but a gut feeling (reptile brain?) that causes me (with much trepidation) to side with Westexas.
I found the debate between Westexas and RR to be a highlight of 2006.
I do not believe that having several Peak Oil members calling for Peak "now" does some sort of irrepairable harm to society.
There is a diversity of opinion in the Peak Oil community. Some are calling Peak, some are saying "later". EVERYONE agrees that the data quality is VERY poor. How does that discredit the meme ?
I amd unsure of Peak Oil per se, but I have a decent (75% probability) guess that we are on a Peak Exports (net of oil used in production, which is growing) plateau. The "T1" first bite.
So a technically wrong call, is politically correct if it "feels" like Peak Oil (who in the US cares about fuel inside Saudi & Russia, all that matters is OUR oil imports adn domestic production. The same is true for every other oil importer. So Peak Exports = Peak Oil
I found the debate between Westexas and RR to be a highlight of 2006.
I do not believe that having several Peak Oil members calling for Peak "now" does some sort of irrepairable harm to society.
There is a diversity of opinion in the Peak Oil community. Some are calling Peak, some are saying "later". EVERYONE agrees that the data quality is VERY poor. How does that discredit the meme ?
I amd unsure of Peak Oil per se, but I have a decent (75% probability) guess that we are on a Peak Exports (net of oil used in production, which is growing) plateau. The "T1" first bite.
So a technically wrong call, is politically correct if it "feels" like Peak Oil (who in the US cares about fuel inside Saudi & Russia, all that matters is OUR oil imports adn domestic production. The same is true for every other oil importer. So Peak Exports = Peak Oil
T-Bone you are relentless! Not sure I agree with you but you have made it clear that you feel SA is declining, kudos! I find support for the clear importance of KSA in the bizarre propensity of GB to KA to KSA at any conceivable opportunity. I have found it astonishing in this era of the "war on terror".
As this is about important posts of 2006, I believe Stuart's post on energy efficiency some weeks back to be important. I stumbled online on the first chapter of a book "The Millionare Next Door", which I hope to pick-up this winter. The author notes, and I can't find the exact quote but to paraphrase, "There is no amount of income which you cannot outspend". This also applies to energy expenditures. The solutions exist now for Peak Oil. The likely greater problem is GW, and Peak Oil is the solution to GW. Interesting that this solution will require the world to act together on a common goal or things get very very bad.
Rather new to TOD and wish to thank all of those who have contributed (er intelligibly) to this unique endeavor. HAPPY NEW YEAR!
"When we get that data -- and, I am working on it -- then I'll let you know."
How on earth, Dave, are you going to get data on KSA and specifically Ghawar? Are you planning some clandestine operation? That is why we are forced to take guesses off of modeling. No one outside of KSA can get this data.
Hi all!
First post. I agree with Khebab that 2007 probably will be a transition year. From 2008 on we´ll see higher prices and even ethanol additions (!) can´t make up for the difference in supply and demand ;)
Happy New Year
and greetings from Stockholm
Other than re-inventing ourselves as a climate change site, I agree on all counts, Halfin. End is Near? No, it's a slow but steady unraveling of world economies, starting now or, at the latest, by 2010. When this current biofuels craze hits the inevitable wall (from corn, soybeans, palm, even sugar cane), it will all be over but the crying. Cellulosic ethanol? Dream on. Large new oil supplies? Ditto.
Happy New Year! -- to all
Yeah, I was being a little facetious about the reinvention :). But I do think we will see more merging of the two concepts.
BTW on ethanol, I haven't seen it mentioned here that the latest Scientific American really rakes ethanol over the coals. Unfortunately the article is not available online, but it could almost have been written by Robert Rapier. The author even complains that ethanol is presented as a "bridge to the future" but it is more like a "bridge to nowhere". SciAm is read by a lot of policy makers so this may have more influence than some online critiques.
Read the SciAm article. It was well done. Robert has been right about this biofuels stuff all along, that's his expertise. I was looking at some Amory Lovins nonsense during the holidays -- he's got cellulosic ethanol playing a big role in America's "energy independence". I've got a bridge in Brooklyn, maybe somebody wants to buy it?
Just because so-called "policy makers" read SciAm does not alter the fact of our "friends" in BigAg circling through revolving legislative doors, or for that matter flat out electing and writing legislation, or allocations otherwise known as "budgets".
I hope that SciAm is paid attention to, but I fear money is far more powerful than actual science--even if that is a cynical view to take, it is fairly evident when the Federal govt is at things it frequently misallocates and fucks shit up, especially with our present admin., this point is particularly stark. Ethanol will continue being subsidized under propaganda campaigns until things get so bad people realize they are being fleeced. The sheeple do not stop following until almost every single one has jumped over the ledge... Science doesn't change the fact that upwards of 50% of the Americal population believe that the earth is 6000 years old, or whatever those ignorant fools believe. Science won't change Forbes' mind that ethanol is the save all end all to what Fearless Leader Bush says is an "oil addiction".
To sum up, smart people already read SciAm and know that ethanol (corn based) is a hoax akin to ID. As for others, we all know science has a well known liberal bias... That is unless your scientist is a creationist. ghahah!
Time to go party some more... Have a happy new year TODians, and here's to another rabble-rousing TOD year of debate and flame wars!
;]
Discussing ethanol on New Years Eve are we now?
.-)
I am in favor of the biological consumption of ethanol :-)
Best Hopes for continued ethanol production post-Peak Oil,
Alan
There's a very good reason that "Sustainability" proposed putting cellulose through charcoal formation and using the CO2 in the off-gas to grow algae: algae make fats and carbohydrates, not cellulose! Getting rid of all the enzymes and C5 fermenters seemed like the path of least resistance. If you can get useful energy through a simple, cheap process instead of a complex, costly one (especially if you can get more), that's the thing to do.