DrumBeat: July 12, 2007
Posted by Leanan on July 12, 2007 - 9:11am
Topic: Miscellaneous
Energy for China: More diversity of supply, but demand is growing fast
China's energy challenges are monumental. The economy is in the midst of a highly energy-intensive stage of growth, but domestic reserves—especially of oil—are far from adequate to meet burgeoning demand. As a result, the government faces a series of policy challenges: to expand supply while increasing efficiency, to allow fuel prices to increase and risk more social unrest, and to acquire energy assets overseas while China's international conduct is under close scrutiny. If the government fails in any of these delicate tasks, in the medium to long term the resulting energy crunch could pose a serious threat to China's economic growth and political stability—and hence to the global economy as well.
In a world of Peak Oil, oil-rich states like Kuwait and their OPEC allies would rather string us junkies out as long as they can by promising bountiful future flow.Patting us on the back and saying the oil won't run out any time soon is paired with threats of supply reduction if major consumers like the United States pursue other energy options, like renewable energy and other alternative sources.
If the Dreamliner really does prove to be 20% more fuel-efficient than the aircraft it is replacing, U.S. air carriers will have a built-in competitive disadvantage every time a pilot advances the throttles and spools the engines of an older model aircraft.
Water World: Slipping Toward Climate Catastrophe
The IPCC predicts that sea levels could rise by as much as 59 centimeters this century. Hansen's paper argues that the slow melting of ice sheets the panel expects doesn't fit the data. The geological record suggests that ice at the poles does not melt in a gradual and linear fashion, but flips suddenly from one state to another. When temperatures increased to 2-3 degrees Celsius above today's level 3.5 million years ago, sea levels rose not by 59 cm but by 25 meters. The ice responded immediately to changes in temperature.
Gasoline prices on the rise; fuel shortage due to flooded refinery
By the end of the week, prices could reach $3.25 to $3.50 a gallon in the Midwest, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service. He said Tuesday that the prices consumers pay in the next 10 days could be the highest of the year.(The comments under this article are kind of interesting.)...“Coffeyville lit the fuse,” Kloza said, adding problems at a Valero refinery in Ardmore, Okla., and the BP refinery in Whiting near Chicago also are contributing to high wholesale prices. “Ardmore was a basic hiccup for a U.S. refinery. But having a hiccup on the backside of kind of a major organ disappearing is pretty serious.”
Coal plant: Process worked, so now what?
First, we still face an uncertain energy future. All of the "alternative energy" sources discussed to date simply will not meet our community's growing energy needs. There is no simple answer, no magic potion or easy fix. We may wish that compact fluorescent light bulbs, smart thermostats, biomass plants and solar panels will fill the ever-growing void in our projected needs. But they simply will not. Each of those solutions provides single-digit answers to triple-digit questions.Second, we have to choose something, and we need to do it soon. If we don't, we could see our utility bills skyrocket beyond their already high levels and find ourselves having to buy power (and yes, coal-generated power) on the open market or suffer rolling blackouts and power shutdowns similar to what we saw in California a few years back. Our near-singular reliance on a petroleum product, natural gas, has near-term calamity written all over it. The something (or combination of somethings) we choose must provide real power in large doses in order to meet our growing needs. While our ultimate mix may contain experimental and burgeoning technologies, the bulk of power must come from a reliable (and affordable) source.
Media Help Keep Power Supply Switched Off
Sweltering heat is sweeping the nation, ushering in fears that the “slammed” power grid won’t be able to meet the demands of consumers desperate to keep cool.But as much as journalists are now focused on that threat, they have largely ignored nationwide power issues while rabid environmentalists have battled nuclear and coal power plants.
Biofuel Boom Driving Up Pasta Prices
Mamma mia! The price of a plate of pasta is expected to rise 20 percent this summer as a bad wheat harvest and increasing competition from biofuel manufacturers send the price of delicate, delicious durum wheat skyrocketing.
General Motors is abandoning plans for its luxury Cadillac Sixteen could be the first in a long list of large cars, light trucks and SUVs scrapped by automakers, as they face more strict fuel economy standards in the near future.
Castro decries squandering of resources in Cuba
Cuban leader Fidel Castro has warned that the squandering of fuel and other resources is threatening Cuba's viability and sovereignty.
Pipeline explosions show weakness in Mexican industry
A series of gas pipeline explosions triggered by a leftist guerrilla group has rocked Mexico with a powerful warning about the vulnerability of the nation's oil and gas industry.
Diplomat says U.S. would support Chile nuclear energy
“We know that Chile needs energy. We have invested $5 billion dollars into the investigation of clean energy, and we can cooperate on this issue,” said Burns. “There is a debate going on right now in Chile, and we do not want to intervene. But, if they decide yes, and this is what I was talking to Minister Tokman about on Monday, of course we could help them. We have experience and expertise on this issue and there are many American companies working in nuclear energy.”
Nebraska: Some Gas Pumps Run Dry - Governor Declares State Of Emergency Related To Fuel
Truckers spent more than an hour waiting to fill up with fuel for delivery as some gas pumps ran dry across the state on Wednesday.Nebraska's governor has issued an executive order that will allow gasoline truck drivers to alter their hours of service.
Gas supplies in the state have been tight after flooding in Kansas last week. Industry experts said high waters submerged a Coffeyville, Kan., refinery and waters could keep the 108,000-barrel-a-day facility shut down for most of the summer.
Brendan Nelson’s admission that Australia has to help secure oil supplies at least brings some honesty into the rhetoric about our ongoing military involvement in Iraq. However, it also reveals a dangerous and blinkered vision of how the oil have-nots expect to secure preferential treatment from the oil haves when the peak oil crunch finally comes.
Interview with King Abdullah II
You know the funny thing is, three years ago we went to the States and said our national agenda, which is a reform program we've sort of outlined for ourselves in Jordan, had stipulated that we need to look for alternative forms of energy and one serious one is nuclear energy, because we don't have natural resources here. So we went to the West 2½, three years ago and said okay now, this is one of our priorities, and nobody said: "Fantastic. We will work with you." Only [when] I was interviewed in an Israeli newspaper and it was like this – the last question in a very complex interview about the peace process – that I said, yes we are interested in an energy program. The next day we know is headline news: Jordan talks nuclear power.
Brookside Farm a one-acre success
Both have political and philosophical concerns that go far beyond the traditional farmer's squinty-eyed lookout for prices, weevils and weather. Both are interested in the implications of "Peak Oil" the culmination of world oil production which, some experts say, is already upon us and which must necessarily lead to a decline in global oil production that could fundamentally alter the American way of life. Both are laboring to demonstrate what life will look like in a post-oil world.
The US' KBR has won the project management contract from Saudi Aramco and Dow Chemicals for the construction of the Ras Tanura petrochemical plant, Aramco and Dow said in statement. KBR beat Fluor and Foster Wheeler to the project management contract, while the three companies were also competing for the front-end engineering and design contracts, according to Reuters.
Devon Energy Wagers $100 Million on Repeating Chevron's Success
Devon Energy Corp. is making a $100 million bet on a potential oil bounty this week, drilling an exploration well 33,000 feet below the seabed in some of the Gulf of Mexico's deepest waters.That's a lot to lose when the chance of success hovers around 30 percent, said Tony Vaughn, vice president and general manager of the Oklahoma City-based company's Gulf division.
But potential from discoveries near Devon's Chuck field about 240 miles southwest of New Orleans, most notably Chevron Corp.'s Jack field, makes it worthwhile.
Canadian households a paler shade of green
Canadian households have gone green in some areas, but still have a few bad habits to break, according to a Statistics Canada report made public yesterday.
U.K.: 'Smart meters' get £10m trial
The government has announced a two-year trial of 'smart meters' it hopes will help consumers monitor – and lower - their energy consumption.
Prof's hydrogen research draws Chrysler's notice
A University of Windsor chemistry professor may be holding the keys to hydrogen-powered vehicles of the future.David Antonelli's breakthrough in hydrogen storage research is attracting worldwide attention -- and investment from Chrysler.
Rensselaer County leaders have directed the New York State Public Service Commission to investigate why National Grid, hoping to avoid bigger power problems, chose to shut down power to Troy customers on Tuesday.A National Grid spokesman admits the power company could have done a better job communicating with municipal leaders during the power outages.
At one point, those outages left 80% of customers in Troy without power.
The Vatican to Become World's First Carbon Neutral Sovereign State
By agreement with the Vatican, Planktos/KlimaFa is now pleased and honored to announce that the Holy See plans to become the first entirely carbon neutral sovereign state, and it has chosen KlimaFa ecorestoration offsets to achieve this historic goal. In a brief ceremony on July 5th the Vatican declared that it had gratefully accepted KlimaFa's offer to create a new Vatican Climate Forest in Europe that will initially offset all of the Holy See's CO2 emissions for this year.
News Analysis: Why does Kuwait keep its oil reserves secret?
Asked whether the 100 billion barrels represented exploited and unexploited reserves, Al-Olaim, also Minister of Electricity and Water, said, "What is invested at present is not part of oil reserves ... there is no doubt that Kuwait has not exploited its oil reserves."But industry newsletter Petroleum Intelligence Weekly last year said it has seen Kuwait's internal records showing reserves were about 48 billion barrels - half the officially stated 99 billion. Former Oil Minister Sheikh Ali al-Jarrah al-Sabah, who resigned in late June, refused to disclose reserves during his tenure saying this is related to the country's security.
Kuwait's analyst Jamie Etheridge said in an article published here that there's sound logic in keeping the real figure secret. First of all, within the energy industry there is a significant difference between proven, probable and possible reserves.
The Peak Oil Crisis: A Tale of Two Reports
In the last few days, two important reports on the prospects for world oil production were “released.” While these reports reach diametrically opposite conclusions, each of them, in its own way, is likely to make a contribution to the debate over just when the economic troubles occasioned by the peaking of world oil production will occur.
South Korea sends oil as hopes rise on North Korea
A South Korean tanker left Thursday with a first shipment of fuel oil for North Korea, a delivery expected to prompt the North to start shutting down its nuclear weapons programme.
7 kidnapped oil workers freed in Nigeria
Gunmen have released seven kidnapped oil industry workers — five foreigners seized from a rig a week ago and two senior Nigerian managers taken captive last weekend, police and company officials said Wednesday.
Kurds speak out against key oil law
Kurdish leaders spoke out Wednesday against a key oil law, raising further doubts over efforts to pass one of the political benchmarks sought by the United States at a time when the Bush administration is trying to fend off critics of its Iraq policy.The political wrangling in Baghdad is having an impact in Washington, where a growing number of Senate supporters of the president's strategy are now pressing for a change — pointing to the failure of Iraqi Prime Minister Nouri al-Maliki's government to make political progress.
Gazprom Chooses Total as Shtokman Partner
"Gazprom has made a decision on the choice of a foreign partner to implement the initial phase of Shtokman field development, and named French Total S.A. as such. A respective agreement is to be signed in Moscow tomorrow," declared Alexey Miller, Chairman of OAO Gazprom Management Committee.
Don’t peak? Sorry, the oil crunch is inevitable
With gas prices rising again and global warming still in the headlines, a new Washington County group is looking at the issue of our dependence on crude oil.
The gauges do not lie: oil pressure is building
Now the International Energy Agency tells us demand for oil will grow at 2.2% a year, not 2% as previously estimated, as China and India consume more. The result, says the agency, is a supply "crunch" in five years' time and, in the end, insufficient supply can only be balanced by a drop in demand.That may be the eventual result - in other words, a proper recession - but in the very short-term, it is hard to see how the pressure can be relieved.
Northeast faces flood risks from global warming
New York's Wall Street, Boston's historic areas and Atlantic City's casinos may all suffer frequent devastating flooding by the end of the century unless the world sharply cuts greenhouse emissions, a new report said on Wednesday."The very character of the Northeast is at stake," Peter Frumhoff, director of science and policy at the Union of Concerned Scientists, said in an interview about the report, called "Confronting Climate Change in the U.S. Northeast." UCS collaborated with 50 scientists and economists to produce the peer-reviewed report about climate impacts to the Northeast.
Lawmakers unveil anti-pollution proposal
The nation can begin to address the risks of climate change while avoiding harm to the economy, senators said Wednesday in unveiling anti-pollution legislation.The bill would establish a mandatory cap on carbon dioxide emissions from power plants, refineries and industrial plants but allow companies to trade emission credits and avoid making emissions cuts if the costs become too high.
Edwards wins online poll on climate change
John Edwards has the best approach to fighting climate change of any 2008 Democratic presidential contender, according to an online straw poll of members of the liberal activist group MoveOn.org.
U.K.: New topics to be taught in reformed curriculum
Students will soon be taught climate change and how to manage their finances as England's school secondary curriculum is overhauled to make it more interesting and relevant to children.
Florida to introduce tough greenhouse gas targets
Florida, the fourth most-populous U.S. state, will impose strict new air-pollution standards that aim to reduce greenhouse-gas emissions by 80 percent of 1990 levels by 2050, according to draft regulations released on Wednesday.
Think tank: Families should have no more than two children
Families should have no more than two children if they want to help combat climate change, according to new research by a thinktank.According to the report, published by the Optimum Population Trust, Britain's high birth rate is a major factor in the current level of climate change, which can only be combatted if families voluntarily limit the number of children they have.
The report calls for a 'two-child' policy in the UK that would reduce the nation's population from 60 million, as it currently stands, to no more than 55 milllion by 2050.
Read this one by Joe Bageant, This guy is a GREAT writer, give him a listen to...
http://www.joebageant.com/joe/2007/07/the-ants-of-gai.html
http://www.joebageant.com
John Carr
I have seen the sentiment above written in many ways, but this version is quite good. Great article.
I just finished Joe's book yesterday. He's a very entertaining writer who isn't afraid to "tell it like it is" and has seen both sides of the track along the way. His book repeats many of the ideas from his essays, after most of the language is cleaned up for that portion of Middle America that still thinks one's mouth needs to be washed out with soap after uttering a four letter word. We need him and many more like him to break thru the Disney World TV delusions that most of us have as a world view, given that we may be only one hurricane away from a revolution. There's a story in today's NYT about the lives of some former residents washed out of New Orleans, people who find their former lives completely gone and no hope of anything other than being kept in a Federal warehouse for the lost.
http://www.nytimes.com/2007/07/12/us/nationalspecial/12exile.html
The hurricane season is just winding up for the first big pitch. For the past 3 days, the minimum temperature at Key West set records at around 85 F. Key West is located out in the Gulf of Mexico very near the Florida Current, which drains the Gulf. Those air temperatures are close to the water temperatures seen from satellites. All that thermal energy in the Gulf can be expected to fuel some big storms, when they roll in, producing major damage in their wake. Better get ready and batten down the hatches, as the old saying goes. I'd say we're in for another rough ride.
E. Swanson
There is a quote in a fictional novel I am currently reading (Pompeii: A Novel - Robert Harris) that I found particularly interesting...
Don't misunderstand me - I'm not saying that we don't have something to do with global warming, but at the same time I do think it's a tad conceited to think humans control the planet, that we have all the answers, that the earth is just another large building needing us to manage it's climate control systems...
Food for thought!
Garth
Now that is funny! AGW has absolutely nothing to do with us controlling anything!
Read all words in a sentence, please...
Actually I did read all the words in the sentence. What got me is that nobody is claiming that humans do control the climate of the planet, it would indeed be conceited to claim such. However, whether we affect it, is beyond doubt.
This is a logical fallacy. What we can control is our net carbon footprint. We control us, not us controlling the Earth.
Or rather we fail to control ourselves...
Re: Why does Kuwait keep its oil reserves secret?
If you are a major oil exporter with flat to declining production, facing an ongoing or imminent permanent decline in oil production, do you: (1) Tell the truth to the world, and thereby encourage emergency conservation and alternative energy and transportation efforts or do you (2) Tell the world that you "choose" not to increase production and/or that your production is only "temporarily" down for a number of reasons (fill in the blank)?
The latter course of action would tend to encourage consumption (because high oil prices are temporary) and to discourage emergency conservation and alternative energy and transportation efforts (because high oil prices are temporary), thus maximizing the long term value of your remaining oil reserves.
Net Oil Exports From Top 16 Net Oil Exporters:
http://bp2.blogger.com/_kdcZbozWthI/RnbjgrSk5YI/AAAAAAAAAOU/NwFg57zOqd0/...
OECD Days of Supply Commercial Oil Stocks:
http://www.eia.doe.gov/emeu/steo/pub/gifs/Slide25.gif
I think that "Mr. 5%" did the top 16 monthly graph (87% of net oil exports in 2006), showing about a 5% (coincidence?) decline in net exports since the monthly peak in 2005.
Philhart posted the OECD graph yesterday. Note that the vertical dashed line is the dividing line between actual and projected data. Apparently, OECD data cover about 58% of world oil consumption.
Questions:
(1) Are non-OECD countries poorer or richer than OECD countries?
(2) Wouldn't poorer consumers be more likely to be forced to reduce consumption as oil prices increase?
(3) As poorer consumers are forced out of the oil markets, and as net oil exports continue to decline, does the bidding for declining net oil exports move up "the foodchain?"
Jeffrey,
Maybe the Kuwaitis would like to come clean, or at least some of them. After all, they have diversified their investments much more than for instance KSA.
But if they do admit to bungled reserve numbers, there'll be a media and industry frenzy clamoring for the rest of OPEC, too, to explain why their numbers shot up so much in the 80's, and to explain and prove the numbers.
It doesn't seem like there's much reason to doubt that last year's leaked report was real, but the consequences of admitting all this are stupendous, and dangerous for many in power in the region. What would happen internally in some of the countires is impossible to foresee, but it likely won't be a celebration of national unity.
The Saudis must be following this very closely, and be involved too. Somehow they've managed to hush the fall-out for about a whole year by now. While the Kuwaiti parliament has been discussing it behind closed doors. For a year?! The veracity of the report was established within a week, I bet.
Deserts are full of rocks and hard places.
In Jerome's new piece on a Claude Mandil (IEA) interview with Le Monde, Mandil accuses OPEC of, well, lying...
They've had enough excitement for one week, I think. The walls are crumbling, and power may be more of an issue than money at this point.
Kuwait's consumption increased by 17% from 2005 to 2006, and in 2006, their consumption was 20% of production.
I applied my "what if" 5%/5% model: 5% decline rate in production and 5% rate of increase in consumption. Kuwait's exports would be down by 60% in 10 years.
What if Kuwait and most other OPEC countries implement rationing just like Iran?
Kuwait's consumption increased by 17% from 2005 to 2006
Them ungrateful bastards, who do they think they are using our oil after we liberated them.
I agree, Power trumps money issues at present.
Yesterday the dollar jumped from descending 80.4 to a whooping 111.45 in a few min. Then back down to mid 80's.
I still can not find out what happened.
Just a glitch?
Sending a message?
Anywhoooo, I think the political situation is tougher to make disappear.
I know I need to get a tinfoil fedora. Will aluminum foil work?
Brillo pads spun and crocheted into a toque?
I had a WTF moment yesterday as I checked the US$ index also. I also got all tinfoil hattish too.
I'd guess that someone influential was able to sell their dollars when they were high.
I am not sure what "Mr. 5%" refers to. Concerning the exports graph, what is the source (or sources) of this data?
I know that overwhelming simplicity is highly valued by some commenting here at TOD, but how does the export data (assuming it is any good) correlate with the OPEC cuts? — disregarding for the moment the issue of whether these cuts have been voluntary.
He is using EIA (Total Liquids), except for BP, where noted:
http://netoilexports.blogspot.com/2007/06/net-oil-exports.html
In any case, Rembrandt showed the same pattern, for total net world exports, using annual data.
Actually, I think that the combination of numerous exporting countries at advanced stages of depletion and frequently rapid increases in domestic consumption in exporting countries does result in an overwhelmingly simple conclusion: rapidly declining net exports. The math regarding the net export outlook has been very clear to me since early 2006.
Eyeballing the spreadsheet, it appears that my view regarding OPEC is in part correct. I'll have to do a more thorough analysis, but the data only goes back to November, 2006.
Russia -- slightly up in that period.
Nigeria -- accounts for a lot of the loss
UAE down -- this must be due to OPEC cuts
Etc...
Re: The math regarding the net export outlook has been very clear to me since early 2006
Well, it's certainly good to know that you're entirely on top of things. What would that math be? Is it this?
Exports = Oil Production - Internal Consumption
You are aware that there are refined product imports and exports all over the world, right?
What did you do, get up on the wrong side of the bed today?
I agree that the HL method combined with the Export Land Model are both simple, and I never claimed to be doing completely original work. As I have said several times, I was building on work by Simmons & Deffeyes, and of course indirectly, on work by Hubbert (using Khebab's graphs).
Having said all of that, I recall lots and lots of vigorous disagreement last year with my conclusions, and I don't recall a whole lot of people joining me in predicting an imminent problem with net oil exports.
You might want to check out Khebab's comparison of Mexico's production, consumption and exports to the ELM, on the Mexico thread.
I think that most of us understand the definition of "net exports."
You might want to go back and read some of your comments regarding my original post on the subject in January, 2006: http://www.theoildrum.com/story/2006/1/27/14471/5832
One of my final comments on the January, 2006 thread:
http://www.theoildrum.com/story/2006/1/27/14471/5832#210
January 30, 2006
If anyone missed it:
If anyone missed it:
This emphasis is supported by the rest of the article:
The article you quoted suggests that Russia's oil industry will start having problems due to high taxes preventing development of new fields, not due to lack of oil.
I know what the bank's opinion was, but I think the key point of the article was their observation that production was declining because of rising water cuts. Note that the situation has materially worsened in four months.
And I disagree - the article talks roughly equally about heavy taxes and increasing water cuts, and uses phrasing like "Combining these observations" to make it clear that their conclusions are based on both of those factors.
Your link has gone behind a paywall since yesterday; the full text of the article is available here.
Well, yes. As the article quotes an analyst, "taxes in the oil universe [are] high, but [it is] unrealistic to expect the government to lower them in the run up to State Duma elections in December". Similarly, "[t]he increasing proportion of water in total output [is] a major source of concern".
i.e., they see closing windows of opportunity on both fronts, and do not appear to tag one as "the key point".
Overall, it's sort of silly to say that production declines are "because of" only one factor or the other. Mature oil fields decline in production - that's always been true, even in regions with growing production. The key is to add new fields faster than the old ones decline, and any decline or growth in overall production is due to the difference between those two factors, not just one or the other.
Now, it might be worth focussing on only one if the other one was artificially constrained, such as new fields would be in the case of serious geological constraints. The article, however, doesn't even hint at such a situation; it lays the blame for insufficient new supply at the feet of the tax structure (and, to a lesser extent, inflation and cost increases).
So the article suggests that Russia's oil production is likely to stop growing or even decline soon, but does not support the contention that Russia's oil production has reached any kind of geological peak. In that way, it's in perfect accord with the IEA's recent analysis suggesting a near-term Russian peak (3-5 years), a shallow decline, and renewed growth thereafter.
It's possible you're right that Russia is geologically peaking, but that article doesn't support you one bit.
Interesting to note that Russian C+C production was down 104,000 barrels per day, March to April. March was the all time peak so far, (since the collapse of the Soviet Union). I am betting Russia has peaked, or at least very, very near her peak.
I have always supported your position WT, but you were just so good in explaining your position that I felt there was nothing constructive I could add.
Ron Patterson
If memory serves, I don't think that you and I have ever varied our positions on Russia and Saudi Arabia to any significant degree.
In the interest of full disclosure, I should add I did slightly amend my Russian position to be a predicted decline probably in 2007, no later than 2008. In truth, predicting a Russian decline was not nearly as controversial as predicting a Saudi decline. And I did concede the point that areas in Russia that are highly depleted are the mature basins in Russia.
What was controversial about the Russian prediction was not so much a near term secondary peak; it was the implied decline rate, which the HL model suggests will be horrific.
If you look at the totality of the HL predictions versus production data so far, inclusive of the Mexican prediction that Khebab made, it makes a pretty compelling case for the HL method, which in turn suggests that the export predictions based on HL are probably going to be reasonably accurate, i.e., we are in deep do-do.
No, I did not get up on the wrong side of the bed this morning. I have had a problem with your simple exports model for a long time now, and I am just now saying so.
It is way too simplified view of how things work so as to depict reality accurately. What is needed is a sophisticated model of oil/products exports over time to capture what is really happening.
You have not countered the objections I have brought up because you can't. Take a country that devotes some part of their produced oil to internal refineries, and then exports the refined products (gasoline). Does that count in your world-view? Take Russia. Suppose they took away their small subsidy on internal gasoline consumption. That would affect their usage. Suppose, as an example, that they decided to tax gasoline over the "world" price just as the European OECD nations do. That would certainly cut their consumption. They might do this for that very purpose, to increase exports and state revenues. Where in your model does such a thing occur?
I have no problem with the hypothesis that exports will decrease as oil production decreases — that seems right. I would like to see a serious study that I could believe that demonstrates it. I don't have the time or inclination to do it myself, but since you apparently do, why don't you make a serious effort?
Do you actually think that peak oil outsiders versed in economics would believe the Export Land model? I don't.
To be fair, I think the model is meant to be qualitatively illustrative, rather than quantitative in any way. It's a good way of making the point that internal consumption can make the rock to declining production's hard place, with exports squeezed in the middle.
It's too simple to use for calculating anything meaningful, but it's valuable as an explanatory tool.
Dave,
As Pitt pointed out, the ELM basically asks a hypothetical question for a hypothetical country (consuming 50% of production at peak production): What happens to net oil exports if production declines at 5% and consumption increases at 2.5%?
The answer is that net exports go to zero in 9 years, and only about 10% of remaining production would be exported. In any case, I suggest that you check out the ELM versus real data in Mexico post that Kkebab did. Also, the UK went from peak exports to zero exports in about six years.
In regard to statistics, the EIA tracks production and consumption in terms of total liquids, which generates the net exports numbers. I fail to see why this is such a hard concept.
In regard to economics, my premise is, and was, that once net exports started declining, oil prices would rise, generating increasing income for the exporters, even as their net exports fall. This would tend to have the effect, in short term at least, of increasing domestic demand in exporting countries. This is precisely what we saw in 2006. For example, the top five showed a 1.3% decline in production, a 5.5% increase in consumption and a 3.3% reduction in net exports (EIA, Total Liquids from 2005 to 2006).
In regard to your Peak Oilers comment, I think that you are basically right. Almost everyone (Matt Simmons being a notable exception) in the Peak Oil community has been focused on the wrong thing--total production--when what counts is net exports.
In early 2006, when I looked at the HL plots of the top exporters, combined with my expectation for increased consumption in exporting countries, I was convinced that we were quickly headed for a net oil export crisis.
First Contract to Enlarge Panama Canal
http://uk.biz.yahoo.com/08072007/323/first-bid-widen-panama-canal-awarde...
This will unplug the bottleneck of the Panama Canal (@ 100% capacity for decades) and allow substantially larger ships to use the 3rd set of new locks.
Larger ships are more fuel efficient/ton of cargo. Panamax container ships will go from 5,000 containers to 12,000 containers. There is only one container ship currently in service that will be too big for the new locks.
And New Orleans is the US port closest to the Panama Canal :-)
Best Hopes for Speedy Completion,
Alan