Oil Price Touches $100 a Barrel; Signal of Pending Oil Shortages Ignored
Posted by Heading Out on January 6, 2008 - 7:30pm
Topic: Supply/Production
Tags: oil, oil prices, peak oil, press release [list all tags]
The price for West Texas Intermediate (WTI) oil touched $100 on January 2, 2008, a new milestone. According to TheOilDrum.com, WTI oil price has been giving a very clear signal of pending shortage for over five years now, and in breaching the symbolic $100 a barrel mark, continues to do so. Those driving the world economy have steadfastly ignored this red warning light. In doing so, they are steering the world toward an energy disaster characterized by shortages, high energy prices, inflation, growing inequity, civil unrest and famine.
Data for graph (PDF warning).
(PRWEB) January 4, 2008 -- A Signal Ignored
Coming as it does on the eve of the Iowa caucuses, the breaking of the $100 dollar barrier for oil prices will likely be treated by many as an almost imperceptible change in our world. By Friday it will likely be lost in the discussion of the political events unfolding.
The $100 a barrel price is a sign that times will never be the same again. According to TheOilDrum.com, the world is entering a new era, where the supply of energy will come to dominate the political landscape in a way that is currently not recognized by any of the leading candidates.
Over the past two years, citizens have been repeatedly assured that there is no problem with future oil supply. Because of a perceived need to present both sides of the argument, the public has heard false promises of lower future prices, and been beguiled by the possibility of a price collapse in the face of excess supply.
Recently, various qualifiers have started to appear in oil discussions. These qualifiers include the need for increased investment in exploration and improved production technologies. The media fails to mention that the needed investment will be at an increasingly diminished rate of return, to the point where it becomes economically unattractive to search harder and harder for very small quantities of oil and gas.
Both oil and natural gas resources around the world are found in underground reservoirs of a finite size. Many of these oil reservoirs have now been producing for over fifty years. In that time, the vast quantities of oil that were in place have been reduced. As the quantity of oil remaining in place falls, the rate at which oil can be recovered also falls. This makes it necessary to drill additional wells into the reservoir in order to maintain the level of output.
According to TheOilDrum.com, at some point enough oil will have been extracted that no matter how many more wells are drilled, overall production from the field will go into irreversible decline. And as field after field reaches this condition, the overall production of oil for the region will begin to fall. This happened to the United States in 1970 when oil production reached a peak. US production has since declined from a maximum of over 9.6 million barrels a day (mbd), to the current level of around 5 mbd. More recently, the oil fields of the North Sea, the Alaskan fields on the North Slope, and the huge Cantarell field in Mexico have entered irreversible decline.
As these fields deplete, smaller fields have been brought into production, but these small fields do not last as long. Drilling activity must be increased in order to find even smaller fields. These, in turn, deplete more and more rapidly, exacerbating the need for new wells.
According to TheOilDrum.com, the world is now reaching the point where all of the oil fields of the world are in aggregate coming to peak production. As peak world production draws near, the rate of increase in oil production can be expected to stall because of constrained resources. This can happen even with rising demand. Once production falls short of what is needed, oil prices can be expected to increase, so that demand is brought in line with available supply.
At this point, countries that still have a surplus of oil to export are seeing their economies boom. This growth brings an increase in their own demand for oil, which reduces the amount that can be made available for export. This higher oil use by exporting countries reduces the available supply to importing countries, further accelerating the rise in price. The countries least able to afford the increase are likely to be affected most.
The consequences of energy supply shortages can be surprisingly great. Energy shortages can lead to public unrest, such as occurred recently in Myanmar. In times of inclement weather, energy shortages can lead to a loss of export supply, if the supplier finds that domestic demand is consuming all that is available. Problems for importing nations then suddenly become worse. One such example is the Iranian gas import situation this past week, and the consequent cut in exports to Turkey.
According to TheOilDrum.com, the world has now entered a period of fragile balance between demand and available supply. Unfortunately the situation cannot be expected to improve. The increasingly limited ability of nations such as Saudi Arabia and Russia to increase oil production is already becoming evident, leading to a reduced potential for raising world production.
It now appears unlikely that the world will ever see a daily oil production rate of 90 mbd, even when natural gas liquids and condensate are included. Thus, future projections that speak glibly of numbers above this level are foisting a canard on the world's population that all will come to regret.
In the coming months, the $100 per barrel marker will be lost in the debate over other issues. According to TheOilDrum.com, limited oil supply is not an issue that will go away. Rather, it is an issue that will steadily increase in importance. Eventually, the cries for action, and for culprits to blame will become over-riding -- at a time well within the first term of the presidential candidates.
These candidates now pay little attention to energy policy, but that must and will change. Hopefully, greater concern for energy policy will occur before events force a change, but so far the grim markers along the way have largely been ignored.
About The Oil Drum
The Oil Drum is a web-based community that discusses all aspects of energy -- from science and technology to its societal and geopolitical impacts. The editors and readers are drawn from many disciplines in academia and industry. The Oil Drum has a staff of more than twenty including individuals from the United States, Canada, Europe, and Australia.
The Oil Drum's parent organization is the Institute for the Study of Energy and Our Future, a 501(c)3 corporation. The Institute is funded solely by private contributions and advertising revenue from The Oil Drum's website.
More information on peak oil and its impacts on energy security is available on The Oil Drum website (www.theoildrum.com).
Many thanks to Gail, Nate, Kyle and others who provided feedback for this press release.
I think this site could and should raise an initiative for a new international meeting - the "Peak Oil Kyoto".
The TOD press release is very concise and to the point. However, it is all but inevitable that PO awareness will NOT enter the mainstream until 2009. At that point, the deafening Wurlitzer organ of the rightwing corporate media will be brought to bear on whichever hapless Democrat becomes the new president. That in turn will set us up for another 8-12 year cycle of inaction, denial and corruption.
It's every man for himself, and that goes for the ladies too!
And what was the GW awareness before the Kyoto summit?
.....when GW awareness finally forced its way into what passes for mainstream awareness, we had already selected a perfect moron for our president, and the rest is history....Kyoto blown off by the US!
And since then, the US has set a course for doom, following the trade winds of fear, ignorance and greed, driving ahead under sails woven out of Brittany Spear's bra and a zillion foreclosure notices......
See, you should give a speech! Tell them that the capitalist machine will not stop until it squeezes the last drop of oil from this planet, like from a lemon. Tell them that common folks don't deserve better fate but drowning in their own ignorance. And tell them that "Brittany Spear" is pathetic, dumb and disgusting, just as they are, as well as their new-born president. They go to heaven, they don't give a damn. Anyway..
Everyone would hate my speech. really, I am very impressed with the work done here. But today is one of those days where I just don't see much hope......
Hope for what?
This is just another mess, the world has seen many of them so far.
And when it comes to your president, listen to this:
...And in the debates, Bush tried his best to come off sounding smart and serious. He made references to complicated economic policies. Difficult as it may be to believe now, many voters in the 1978 campaign were turned off by George W. Bush's overt intelligence. They figured him for some kind of brainiac.
-------------
But George W. Bush is fully aware of how his enemies perceive him, and this is precisely how he wants them to react. His personality and mannerisms are actually the result of deliberate effort. This is not to say that it's all an act, but he does emphasize these elements of his personality for the benefit of the press and general public. And yet these affectations continue to be astonishingly effective; his act still manages to fool even his political opponents, who really ought to know better. After all, the basis of Bush's phenomenal political career has been people's underestimating him. As his political advisor Karl Rove said in 2002: "I can't explain why they underestimate him, but they do. Whatever the reason, I hope they keep doing it."
http://www.rotten.com/library/bio/presidents/george-w-bush/
In other news, I hear the 'Round Britain Powerboat races are going swimmingly.
I get the statistics from PRWeb on what is happening with the press release, from their perspective.
Most of the people who have read it, read it because they subscribe to PRWeb's news feed. Those who have read in on search engines generally seem to find it by doing a search for "peak oil", either with or without quotes. It is currently on page 2 of Google News using "peak oil" as a search term. It will probably migrate back, as it gets farther and farther from January 4.
http://news.google.com/news?hl=en&q=%22peak+oil%22&ie=UTF-8&sa=N&start=1...
How does that work? Is it the number of links? The number of hits?
Would it have been better to post this the day the press released went out?
Yep, probably so...I didn't think about it from that perspective. Gah. Next time, I guess.
We're hoping to do more of these in the coming year with the various insights we generate, I am hoping for one every three or four weeks. But, it's a project in and of itself...
These people I work with: freaking amazing.
Would you like a mega MSM email list to send this PR to?
I shall not turn it down P.E. theoildrum@gmail.com.
Cheers!
The way we (GPUS) do press releases is to try to have most of the main points as quotes. Sometimes these will be candidates for office to get them some exposure, but mostly this is to make it easy for the press to make a story out of the release. They don't need to do any interviews, just check with the press contact if there are any questions. There are usually three of four poeple quoted. It works sometimes. Might want to give it a try. Here is a recent example.
Chris
Thanks, that's a great tip.
The PRWeb guidelines suggests that most of the main points be in quotes also, because of a feature PRWeb has that uses the quotes.
What PRweb does, if this feature is used, is show a box near the top of the post with one or another of the statements in quotes in large type. Over time, the statement in quotes is changed, to be one of the other statements in quotes. The intent is to make the press release look "new", as far as search engines are concerned. Thus the January 4 release date for search engines would change, so it would stay up longer.
We are fairly close in this press release to using quotes. We use "According to TheOilDrum.com" several times. The sentence after these statements are generally important points in the story. If we had put quotes around the sentences, this feature could have been used. I am fairly sure we could change the web version of the post at this time, to add the refreshing feature. It would take the post off line for a short time while the editors reviewed our changes, but it could be done.
I would suggest that this site stops sutomatically making 'no follow' default - most of us here use nom de plumes anyway, so it would hardly be intrusive, and would improve the ratings of this site on Google no end
"No follow" is not for privacy. It's to discourage spam in the comments. Most of the spam we get is not actually trying to sell us anything. It's "link spam" - trying to get higher in the Google ratings.
Like this:
http://www.theoildrum.com/node/2143/161352
How about using one of those things where you have to read weird letters and numbers to prevent spam?
It's just seems to be making life difficult in attaining more recognition for the subjects raised here not to get the highest possible Google ratings.
That prevents folks who are blind from posting comments. I myself know a blind person who uses this site.
I don't think it would work. These aren't spambots. They're human beings, cutting and pasting those blocks of links.
Links in the comments don't increase Google ratings for us. They increase Google ratings for the sites linked to (if there's no "no follow" tag). So there's an incentive for people to post links to their sites in our comments, but no benefit for us to allow it. Google ratings-wise, anyway.
I am not sure how Google works, but I think the rating is based on how many high rated sites link to the post. Thus, a front page TOD link is important, or an Energy Bulletin link. Energy Bulletin linked to this press release the day it came out, and reprinted it in full, and I think that helped. Thanks, Bart!
If wouldn't hurt to duplicate. A link in Drumbeat the first day would have been helpful. I put a link to it in the comments, but since it was only a comment, it had a "nofollow" attribute, so it didn't count as far as Google was concerned.
This press release moved into Google News right away, thanks to the links people made to it. We tried a press release relating to the Wall Street Journal peak oil article earlier, but it took five days to get into Google News. By that time it wasn't considered news any more. The earlier press release was only on Yahoo News, because Google didn't find it in time.
I was going to put it in the DrumBeat, but since you posted it, I didn't. :)
Are you sure that's the reason? I could see the ranking of stories being affected by links and things, but whether Google finds it all? Could it be that the difference this time was using PRWeb, rather than trying to go it alone, and not incoming links?
We used PRWeb for the Wall Street Journal response post, so that wasn't the difference. This time I started asking about getting links to the press release, early on, because of the problems we had with the earlier press release.
I think we need as many high quality links the first day as possible, to make the process work well.
Wow, I didn't even realize we'd used PRWeb the first time. Or if I did, I didn't remember it. All the links went to TOD. PO.com, EB, AlterNet, dKos, etc.
Maybe that was the problem. Perhaps delaying posting it here was the right thing to do, to make sure the links go to PRWeb instead.
If people know $100 oil than they probably know, even if they don't realize it, that peak oil is here.
Most people seem to know that the oil will someday run out but nobody puts 2 and 2 together.
I think it is very important to explain that there is no real alternative to oil. If you just tell people about the peak oil situation, they will tend to think that if we don't have oil, we'll be burning something else.
The Big Media has not so far been of some great help, giving a false hope of all sorts of technical solutions like ethanol, hydrogen, batteries, biofuels, etc. None of these can replace oil in any significant proportion. Plus, they all use oil, this or other way, as their input.
I talk to people. These are the answers I usually hear:
- it's not a big deal, otherwise would be in media,
- our government will take care,
- we are going to drive less, problem solved,
- it's all just a financial speculation (i.e. oil price),
- you can run a car on water / paper / crap, there are inventions, it works, but the big oil companies do not allow it because they would lose their profits.
To me, PO is not really a geological or financial problem. It is more a psychological one. There we should try to find the solution.
the question really is how much oil do we need, if at all?
http://en.wikipedia.org/wiki/Chevrolet_Volt
http://en.wikipedia.org/wiki/Tesla_roadster
http://www.calcars.org/
http://www.treehugger.com/files/2007/09/volvo_recharge.php
http://www.hybridcarblog.com/2007/10/chinese-plug-in-hybrid-on-sale-in-2...
some of these electric cars you can plug-in at night and you might not need much gas at all if you don't travel far to work every day.
"If at all"?
Do you mean that we can all drive cars that are as functional as the cars we drive today and that use no oil in their manufacture, delivery, operation or maintenance? Which of these cars can claim that?
However, in answer to your question, ultimately we need no oil.
Such a car could very very easily be designed today, it would just cost a lot more.
I doubt that, very much. Especially on a large scale.
Oh, sorry, it could probably be designed but probably not manufactured, delivered or maintained, in significant numbers - today.
Well, if John15 wasn't saying that, I'll say.
We can (that mean, it is possible to) build cars that are as functional as the ones we have today and use no oil or any kind of fossil fuels on any life stage (unless you consider ancient infrastructure used to bootstrap it) on sufficient numbers for the current Earth's population.
The real question is: Are we going to? I have no answer for that.
Why do they need no oil to produce today? we still have half the world's oil left.
There are a lot more people wanting the oil that is left - Tata in India is producing a car for around £1250 - and it won't go far.
It will also be darn expensive.
"and it won't go far."
today is won't go far. most PHEVs have an electric range that is right in line with the average daily commute.
john15 said:
Fair enough. How about tomorrow?
Except that none of these cars (except maybe the Tesla, I'm not sure) is actually on sale for someone to buy today, and the Tesla is $100K + As far as I know right now the EV's / PHEV cars on the road are all owner built customs or a few earlier ones that escaped the car co's attempts to crush them. (see "Who killed the electric car?" movie)
In terms of what has actually been made and sold this is the high point to date I think...
The "Detroit Electric" produced from 1907 to 1938. Up to 200 miles on a charge at about 20 miles per hour using "Edison cells" (Nickel Iron with an alkaline electrolyte, they last pretty much forever under deep discharge usage unlike Lead Acid)
How far have we not come in 70 years? :-<
milton- many of these cars will be on the road within 3 years. costs will come down. the chinese PHEV is supposed to cost only $25,000. My point is the technology is out there. the incentive to buy these cars is out there in the form of high gas prices and lower maintenance costs. there are so many other benefits. I read cars that use electricity have 80% less parts(or 80 less parts, I cannot remember which one). that's potentially hundreds of millions of parts not shipped thus using less oil.
Don't get me wrong, I support EV's, I'm just saying that right now they are "promise ware" not actual products available for purchase on a mass scale as they were in the past, and really until I see them being sold again I have little choice but to see these promises by the big car makers as "Greenwash".
The very points you make about reduced parts count etc are in my opinion some of the things that have up till now given car co's a big incentive NOT to bring them back to market, spare parts sales and short vehicle life are profit makers.
Whats good for General Motors is NOT good for America (or the rest of the world)
I agree milton. either the car companies are too stupid to make fuel efficient cars or they want to keep their spin-off auto parts businesses in business. I don't understand why they don't get it that they need to build fuel efficient cars to stay in business.
it would be a mistake if the domestic car companies got beaten again, as they did in the 70's, by imported more fuel efficient cars.
A question: the press release mentions the "Institute for the Study of Energy and Our Future"...what's that all about? First I've heard of it...