Friday open thread
Posted by Yankee on March 3, 2006 - 11:19am
Topic: Miscellaneous
Fears of more violent attacks against Nigeria's oil industry and international tension over Iran's nuclear plan helped push up prices to their highest level in nearly a month and discouraged traders from going short into the weekend.On the other hand, Chevron is going to take its windfall profits and develop a giant oil-sand project in Canada's Alberta province.U.S. light crude <CLc1> for April delivery climbed 36 cents to $63.72 a barrel by 1015 GMT, taking four-day gains to more than 4 percent. Prices hit their highest level since February 7.
Update [2006-3-3 12:7:12 by Yankee]: Oh, and let's revisit the whole "is flying for pleasure bad?" issue. 'Cause, you know, we're masochists around here. George Monbiot has a piece up at Alternet arguing that even though people seem to know that flying is a large contributor to global warming (not to mention being a sinkhole for oil), they get glassy eyed and ignore him when he asks about their vacations to Rome or Florida. "The moral dissonance is deafening," says Monbiot.
Update [2006-3-3 13:4:52 by Yankee]: Davebygolly comments that yesterday, ExxonMobil ran an ad in the New York Times called "PEAK OIL? Contrary to the theory, oil production shows no signs of a peak." Here is the pdf of the ad from the ExxonMobil website.
When oil is 64?
[Sung to the economy upon which we all depend.]
Up until now, I think traders believed that the current price spike was geopolitical unrest and hurricane and expected many new projects coming online in next few years. It appears now they may be starting to believe in higher decline rates.
NY Times article probably started some new research efforts who though PO was a fringe idea 6 months ago.
That, my friends, sounds like the bargain of the century
a)large scale bird flu
b) global recession/depression
c) some bizarro weather event or natural disaster
that all could cause oil to go to $30 since its priced at marginal barrel between now and 2012. i think the most likely path is that we have 3-6 month trends in oil prices with higher peaks and higher troughs until 2012 - i think the asymptotic rise in oil prices (from say $150 to $1000 per barrel wont happen until 5-6 years post peak and AFTER the governments have attempted at privatizing oil, rationing coupons etc). In other words, the futures market might not exist for the REALLY big run up in prices in the next 10-15 years. Unless Coal to Liquids is extremely successful.
Richard Heinberg told me yesterday that he visited SASOLs CTL operation in South Africa - SA produces 150,000 barrels a day despite having large reserves of coal and they still import 400,000 barrels of oil per day. He also said that the Sasol CTL plant is the only structure in Africa that can be seen from space (the pollution clouds).
My real fear is not Peak Oil per se but using coal on a grand scale circa Britain 1700's. Soot everywhere, lung problems etc.
thelastsasquatch,
Re: "My real fear is not Peak Oil per se but using coal on a grand scale circa Britain 1700's. Soot everywhere, lung problems etc."
Today's (3/3/2006) Wall Street Journal has a page one article:
"China Stumbles In Attempt to Cut Use of Coal and Oil - Beijing Pushed Natural Gas, Which Is Now Too Costly; New Strain on Crude Prices."
http://online.wsj.com/article/SB114132068187387733.html?mod=home_page_one_us
Here's one quote:
"Meanwhile, in the 18 months through July 2005, the government approved 168 power plants, nearly all of which are coal-fired. In the past year, China has built enough coal-fired power plants to provide electricity to all of Italy, all but ensuring coal will remain a dominant fuel for decades."
As an ex-hedge fund manager, you still get the Journal, no?
I was particularly taken with admissions that some capacity will probably never return and also that they are using an icebreaker. Must be some climate change expected :)
Map of the GOM showing where Rita and Katrina tracked. Shows where all the oil rigs are and how much they each was damaged.
Thanks, this was an interesting site.
Co2 to the rescue
Of course they also say that prices may rise up to 80% to pay for it.
Thus continuing to make it possible for China to attack Taiwan regardless of what the oil markets may look like at any time in the future.
It is obvious we are at Peak. I'm eager to learn how long the world will be able to maintain the bumpy plateau of peak production? Any suggestions anyone? Stuart?
That's because to me timing is of utmost importance.
Since reading TOD I've been eager to answer Bob Shaw, in Phoenix, Arizona: Individually, yes, people are smarter than yeast. More brains enabling them to alter circumstances. Collectively I'm affraid they are not.
Thanks to you all.
Paulus from Holland
But there is something you have to realise, economic impact is felt as soon as demand shots up above suply. So when you're on a plateau you're not coping with demand and prices will rise, like now. The moment production will decline prices will already be higher, they will just climb faster.
My best guess (using that 8% decline for major oil fields) is that during 2007 Saudi Arabi and FSU won't be able to fill the gap to the decline in the rest of the World - and that's it.
If Iran cuts production, or if like prof. Bahktiari says the decline rates are much higher than what we might think a decline will probaly be felt still this year.
And demand is projected to go beyond 87 MBD by the end of the year...
I don't pretend to guess at the economics, but here's one thought on renewables. If we're getting both Peak Oil, and Global Climate Change at the same time, then I'd say we ought to prepare for some more great (ie, REALLY great, TOO great) opportunities in wind energy. Of course, weather events 'might' be heavier, but would almost certainly be less predictable, too. You'd need equipment that could protect itself during excessive conditions.
There's a Finnish site www.windside.com with a Vertical-Axis windmill that seems to be better suited for really heavy weather..
The wind crowd seems down on Verticals for their efficiency, but if you get cheaper engineering (lower towers, reduced Gyroscopic stresses) and more durability, the numbers might be better. Also takes better advantage of smaller winds and quick directional changes, as it doesn't lose time aiming into a new source..
(And did Bush really say Nuclear was a Renewable today? Maybe it was a replay of an older speech, but I don't know if that is funnier than their calling it 'Clean'.. the fuel-waste that can poison us for more millenia than we've had agriculture)
IMO, other types of WTs may one day fill certain niches (sites on islands, sites with low wind conditions or gusty, high wind conditions), but if we ever get 50% of our electricity from wind, well over 90% of the WTs will be the Danish model.
Perhaps non-engineering reasons affected the development of the Danish model over all others, but I think that was a minor and not a major force in the evolution of wind turbines. After all, the other models got LOTS of Gov't R&D put into their approaches, the Danes did not. The market forced the evolution of Danish WTs simply because they worked and the next larger size worked a bit better..
The Danes (and their copies) work today and make money. The others do not, yet.
Then the Danes found knowledge where it could be found and subsidized building of wind turbines that then grew in the local subsidized competition. Since other countriels also started to subsidize wind power it grew into a large export industry for the Danes.
Subsidizing of wind power started later in Sweden and it was smaller. It now depends of forcing everybody to buy a percentage of "green" power. Myself I do not like it, I bought 100% nuclear power when I got a chance to make a microscopic statement with my power bill, I find this "green" to be as good as the "greens green".
The ammount of money spent on different kinds of energy research in Sweden following the peak ;) in the local nuclear power debate is about the same as the cost of a full scale nuclear reactor. A little of it has yielded practical results that are being used, its very hard to figure out how usefull it has been. The debate and research has probably led to more energy efficient building code, better energy efficiency in some industries and a lot more biomass heating then would have been strictly short term economical. But I am only guessing based on how I view things.
That is not so obvious. You need at least 4-5 years of flat or declining production to confirm Peak Oil is here.
>how long the world will be able to maintain the bumpy plateau of peak production?
IMO many many many years. The consequences will be 1) permanent process of reallocation of leftover oil resources: less on individual transportation, more on mass transit and chemical production 2) more oil substitutes will come 3) more technical inventions in auto industry etc. (you name it)
In sum: new stage of technological revolution.
I joked in other thread about removal of Dutch guys to Antarctica after Holland will be drowned. Don't take offence. I like Dutch guys :)
Andrei, 3500 km to Moscow.
Think boom towns. Think Chinese restaurants and laundries. Think massage parlors for all those tired backs and "complete relaxation" for the managers;-) Query: What is the price of a drink at a bar today in Fort McMurray in northern Alberta?
http://www.craigdailypress.com/section/frontpage_lead/story/19021
I see a pastoral pond.
Sheep feeding peacefully on the green and breezy pastures around the pond.
I see a sail boat rental shop.
I see the proprietor floating on a pile of money 'cause all those miners need communion with nature after a hard day in the pits. :-)
You think meth, I think hot yummy food.
Rum came to Canada roughly four hundred years ago; along with brandy, whiskey, beer, etc. it has been popular ever since. Taverns have been around for at least 3,000 years, and mining-camp saloons provide great opportunities for some--even for piano players . . . unemployed musicians, go north!
Also, what is the price of a woman up there? Long ago, while grappling with the problem of how to construct a long-term price-level index and failing on the grounds that commodities change in their qualities (even basics such as wheat or pig iron), a foreign student who had travelled a lot proposed the oldest profession as a way to solve this problem.
To track inflation over the past fifty years, for example, just track the price of a call girl in the parts of Nevada where this is legal (because it is hard to get good data on illegal activities).
For Internet dating of Houston oilmen, the price of an out-of-town first-class woman is now $3,000 per night, plus hotel and a good restaurant meal, and a tip on top of that is expected. The Net has been a huge boost to reducing information and transaction costs in high-end prostitution, which is not only an old profession but probably a rapidly growing one as income and wealth inequalities increase.
One of my former students (female) was summa cum laude in Electrical Engineering; she gave that profession up in favor of exotic dancing and Internet "dating." She specializes in Texas oil men because they never give trouble.
Who would have thunk it?
Every time that you see this phrase, remember that no one--as best that I have been able to tell--differentiates between heavy, sour crude oil stocks and light, sweet crude oil stocks.
IMO, growing inventories of heavy, sour crude are obscuring flat to declining inventories of light, sweet crude. But again no one counts. The only real evidence is the considerable spread between light, sweet and heavy, sour crude prices--which supports my thesis.
Light, sweet yields the largest amount of liquid transportation fuels for the least expenditure of money and energy. It only makes sense that light, sweet has peaked before heavy, sour.
http://www.econbrowser.com/archives/2005/08/sweet_and_sour.htmlhttp://www.econbrowser.com/archives/2 005/08/sweet_and_sour.html
Excerpt:
"The graph at the right shows the price differential (in dollars per barrel) for European Brent (a relatively light, sweet crude) over Mexican Maya (a heavier sour). The price premium for light sweets had typically been about $5 a barrel up until last summer, when it began rising quickly, now standing at triple its earlier value. To put the size of the current price spread in perspective, if the price of light, sweet crude had only risen as much (in dollars per barrel) as the heavy sour, the increase in the price of light, sweet crude during the last year would have been a third smaller than what we actually observed."
http://www.econbrowser.com/archives/2005/08/sweet_and_sour.html
Wow! The decline in light sweet since 2000 is startling!
Antarctica Cannot Replace Ice Loss
Here is the science paper:http://www.sciencemag.org/cgi/content/abstract/1123785
A subscription is required to read the whole thing, but here is the abstract: