DrumBeat: September 13, 2006
Posted by threadbot on September 13, 2006 - 9:14am
Topic: Miscellaneous
Just 18 percent of global oil tapped, Saudi says
VIENNA, Austria - The world has tapped only 18 percent of the total global supply of crude, a leading Saudi oil executive said Wednesday, challenging the notion that supplies are petering out.Abdallah S. Jum’ah, president and CEO of the state-owned Saudi Arabian Oil Co., known better as Aramco, said the world has the potential of 4.5 trillion barrels in reserves — enough to power the globe at current levels of consumption for another 140 years.
And not only that... Saudi, U.S. Officials Confident Technology Will Boost Reserves
"Technological transfer occurs more quickly in this industry than in any other," Guy Caruso, head of the U.S. Energy Department's Energy Information Administration said at a conference in Vienna today. High oil prices will speed up such advances, he said.Saudi Aramco Chief Executive Officer Abdullah Jum'ah said he has challenged his oil engineers to boost recovery rates by 20 percent in 25 years, a move that would add 1 trillion barrels to reserves. In time, worldwide reserves may grow by between 3 trillion and 4 trillion barrels as technology improves, he said.
[Update by Leanan on 09/13/06 at 9:46 AM EDT]
Prominent CERA official – “Peak Oil theory is garbage”
G7 to call for vigilance over oil prices, inflation
Refinery bottlenecks to dog oil industry until 2010
High oil prices are still being propped up by a shortage of refinery capacity and there is little sign of the bottleneck easing until 2010, industry executives and officials discussing OPEC's future have warned.
IMF warns on US slowdown and oil risks
A great of ink and phosphors being spilled over oil prices...
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OPEC official: High and volatile crude costs may signal "a new price era" |
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Gas prices heading south: Motorists benefit as speculators' worst fears fail to pan out. |
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Will Oil Stay Soft? With expected disruptions so far absent and U.S. consumers cutting down on consumption, some experts think lower prices will stick. |
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Quit griping about gas prices: By some measures Americans are paying half of what they did in 1980. |
Averting an energy crisis in South Asia
South Asia has a problem: it doesn't have enough energy. Pretty standard stuff, really, but what is notable is that grand energy-policy visions are drifting dangerously far from the realities on the ground.
US accused of pushing GM cassava for biofuels from Africa
In a saga that has been raging for a while now, controversy has deepened over a multi-million dollar USAid-supported cassava research programme, which proponents had said would help boost millions of East Africans' food security, but which critics have dismissed as an attempt by the United States to develop alternative sources of starch overseas, from which to make ethanol.
Energy Crisis Impacts Ghana's Mining Industry
"Cutting back [electricity use] by 50 percent means that, it is almost like cutting back production by 50 percent, because, although we have installed capacity for self-generation, it's extremely expensive," said Joyce Aryee, the chief executive of Ghana's Chamber of Mines. "It will mean getting regular supply of diesel, at the cost that we get it will perhaps mean generating power at 15 cent per kilowatt hour, which is almost three times what we get from VRA."
New Dell Desktop Cuts The Power: Dell announces their first desktop computer designed to help corporations slash energy costs.
The move is the latest in a series of feverish efforts from computer and server makers to help customers bring down the costs associated with running several machines on a network or data center.
Cuba oil prospects cloud US horizon
Free energy fair about Living after cheap oil (Wilson College, PA)
[Update by Leanan on 09/13/06 at 10:46 AM EDT]
Weekly Petroleum Inventory Report For the Week Ending September 8, 2006: Crude stocks down, distillates up, oil prices slip below $64.
Come and listen to a story about a man named Jed
A poor mountaineer, barely kept his family fed,
Then one day he was shootin at some food,
And up through the ground came a bubblin' crude.
Oil that is, black gold, Texas tea.
The LOGIC then has to be - When refineries runs at 100% - we should PAY ALOT OF $ for crude and keep the full tankers standby.... for some days...just in case
My logic gos opposite
High oil prices are still being propped up by a shortage of refinery capacity and there is little sign of the bottleneck easing until 2010, industry executives and officials discussing OPEC's future have warned.
As Jay Hanson has pointed out ad nauseum, the game stops when an energy source becomes an energy sink, when it takes more than one barrel of oil (or some energy equivalent) to produce one barrel. Something the oil sands are toying with, to say the least, in their natural gas use.
The energy sink concept will probably remain hidden as long as dollars are used, instead of BTU's, or even calories, to calculate the cost of a barrel of oil; it allows us to slip from source to sink without noticing it. Oil prices will rise so much that more and more oil looks economically recoverable. Again, not the point: what counts ultimately is whether it's "energetically" recoverable.
Once it's clear that overall resources are shrinking, this should become much more obvious (one may hope). It then gets pretty crazy pretty fast to lose lots of energy in the process of turning natural gas into petrol (the same applies to virtually all conversions).
Until then, and who knows how long after, the unlimited potential of both the rise in prices (dollars), and the ability to add more money to the system, will continue to conceal the obvious,
¿What if it does not make sense? I mean, the SUV does not make sense anyway. It is their money, and if they want to burn it that way, it is their God Given Right (tm). You will have to pry it from the cold fingers of their dead bodies.
Although it is usually someone else who ends up dead.
Good point. The earth's atmosphere is 78% N, but try fertilizing your tomatoes with it.
And then there is the slightly more random trick of loading the atmosphere with greenhouse gases to stimulate more violent weather, bringing on lightning and rain storms. My garden got a great fix of nitrogen this way last week. Hmmm...maybe I should send a letter of thanks to the coal lobby. On the other hand there was that damage to my roof...I wonder if I can sue for damages? It's all so confusing.
Sure, I know that. But it happens on The Great Spirit's terms. You don't pour it out of a bottle.
So, the economic system would ensure either an inflationary Big Rip or a Recessionary Big Crunch - either way Malthus wins.
(maybe not zillions but I'm too lazy to do the math right now)
The "unofficial" numbers are based on a Reuters report of comments by a Saudi minister that they are producing "about 9 mbpd."
http://static.flickr.com/97/240076673_494160e1a0_o.png
Assumptions: 5% annual decline rate in production; 2.5% annual increase rate in consumption.
For comparison, the North Sea is showing about a 6.5% annual decline rate since 1999, and the Arab oil producing countries had about a 5% increase in consumption from 2004 to 2005.
On the graph, note that a 20% drop in production, and about an 8% increase in consumption over a 4.5 year time period results in a 50% drop in net oil exports.
Big Oil Tells Consumers Use Less Fuel
Reuters story from Vienna
Big oil companies are telling consumers to conserve. The Total CEO states that oil will peak in 2020.
In other words, through the first half of the year, estimated net oil exports (by the top 10) are falling three to four times faster than world oil production is falling.
I think that the EB is going to add a "Net Energy Exports" category.
Saudi Arabia and many other producers have economies dominated by oil exports. If they use the oil, they eliminate their ability to import anything and eventually shut down the global economy.
Sooner or later these countries will begin to see growing domestic demand - which is boosted by export generated income and subsidized prices - as a threat to their existence and will curtail it.
This reminds me of the old Soviet Union posters proclaiming their plans to equal the west. Sounds easy on paper, but reality is a different story.
First, if they stop exporting oil, what will happen to the rest of the world? Who will they sell all of their products to? Or do you think Saudi Arabia will be self-sufficient?
Second, most of these countries have masses of young uneducated people living on subsidies and foreigners doing much of of the work. How can they possibly compete with the low labor costs in China or the established legal frameworks of the west? Petrochemicals, OK. The rest of unlikely.
All that this can lead to is either destruction of the glaobal economy or massive incentives to develop alternative sources of energy. It's a pipedream.
I think much of this analysis is based on a faulty concept that resources alone underpin economic growth. In a modern world it is far more important to create an environmnet that encourages investment and risk taking.
China imports massive amounts of resources but has has a booming ecomomy. Oil exporters may have grown with oil prices, but haven't done anything to show that they can transition to being more than giant pumps. I don't see that changing.
Export land is doomer's dream material. But in reality it can only go so far.
It won't happen overnight. The ME and Russia will gradually use more and more of their oil production for their domestic needs. In the UAE, it will be banking, insurance, tourism, manufacturing, aerospace. Russia is planning a major modernization of their military, which will allow them to take advantage of greater economies of scale to sell their hardware all over the world at more competitive prices. SA is concentrating on petrochemicals and planning on following the UAE model by getting into a wide variety of other industries. Just because the U.S. is in for some hard times economically doesn't mean the whole world is.
"Second, most of these countries have masses of young uneducated people living on subsidies and foreigners doing much of of the work. How can they possibly compete with the low labor costs in China or the established legal frameworks of the west? Petrochemicals, OK. The rest of unlikely."
"Foreigners doing most of the work?" That's what they said about the U.S. in the 20th century. In my opinion, having high levels of immigration is probably the most reliable indicator of future economic growth.
"Established legal frameworks?" They have them there too. And countries like the UAE and now SA are doing a great job of establishing large-scale duty free zones. These duty free zones basically act as a subsidy for businesses and industries of all kinds to move their operations to the ME. They've proven wildly successful.
"The rest unlikely?" It's already worked in the UAE. Now other countries in the ME are making plans to follow the same model. Russia, of course, has its massive military-industrial complex to channel its oil-bonanza money through, and within a half-century or so, will no doubt rival the U.S. on all fronts.
"...a faulty concept that resources alone underpin economic growth?" They might not underpin it completely, but it sure doesn't hurt, especially if you know how to leverage it.
"...an environmnet that encourages investment and risk taking." No country in the world has done this better than the UAE. It's being taken as a model in the ME.
"...haven't done anything to show that they can transition to being more than giant pumps. I don't see that changing." It's already changed. Welcome to the 21st century.
Dubai and the UAE have undergone a massive transformation, as you note. But - correct me if I am wrong - I believe that was spurred by a lack of oil.
I haven't seen any convincing data that shows any of the major oil producers have been able to significantly develop non-petroleum-based industries. Despite your optimism about a Rusian military based revival, it seems they are moving towards being a traditional petrostate rather than forward into a modern economy. And what aboutr other sectors?
I am a huge believer in immigation. I think in countries, like the US, where immigrants could become full citizens and access all of the benefits of their labor, it has been almostr uniformly a positive transformative force. However in other places where they remained "they", the success has been less clear. France has had big troubles with lack of integration. In the Middle East, immigrants are largely contract labor. Anyone who said foreigners were doing most of the work in the US was wrong.
Dubai is certainly moving towards establishing the legal framework needed to compete in the modern economy, but relatively it is tiny. In Saudi Arabia, women can't drive, Iran is executing gays, Russia is hardly a model of transparency.
Massive revenues from high oil prices have inevitably raised living standards and boosted consumption at home. But using oil wealth to drive more and transforming economies are different things. I think we are seeing the former and that it is a blip rather than a trend.
Nothing startling to say other than the market is controlled by supply and demand - wow. With high prices, consumers everywhere are incentivised to use less fuel and producers are incentivised to produce more. So I think we are seeing demand destruction - mainly in the poorer countries. Also a lot of new supply came on in June and July that will provide some temporary relief on the supply side.
RE: The UAE as a model for the new global economy. Use oil to desalinate water to water golf courses - that's a neat idea should be popular all over the developing world.
British Airways are top of my don't under any circumsatnces buy list - but then rumours arise that Emirates may bid for BA. Now that's a neat business startegy - to own the only airline that has a reliable supply of jet fuel.
Seems like whenever you bring up the subject of ME economic developement on here, all you get is either racist, 1970's stereotypical, or completely clueless responses.
Meanwhile, Smekhovo makes a very concise, but incredibly insightful remark and all he gets is abuse.
Nothing that I have said is remotely stereotypical or racist. If something is clueless, point it out. How about a fact? Some data? Evidence?
But if you think Smekhovo's remark was "incredibly insightful", it would seem this would be expecting too much of you.
Jack, your comments weren't at all racist or clueless. The comment made by Cry Wolf that the economy of the UAE somehow consists of, "using oil to desalinize water to water golf courses" is entirely clueless. I think you know that the UAE has one of the most diversified and open economies in the world, becoming more so with each passing day. You make a very good point that a lot of this has to do with the fact that Dubai had very little oil and that forced them to get involved in other industries.
The other thing you get a lot of here, and I guess this is probably a phenomenon across America in general, is people pretending to be anti-Bush, anti-war, etc., but then they begin to drool at the thought of the U.S. wiping Iran off the map, although they take great pains to pretend like they're against it, while they continue to count the days until it happens.
It is a fact that the ME is growing faster than almost any other region on Earth. A lot of this has to do with the high oil prices of the last four or five years. Personally, I think high oil prices are here to stay. Middle Eastern countries, led by the UAE, have also been making remarkably successful efforts to diversify their economies, using their oil money to get involved in other industries. This is another trend that I anticipate will continue. Most TODers seem to be hoping that the US will derail this trend through genocide. Personally, I don't think that is going to happen. The world put together a containment strategy when the US began planning to take over Iraq. The idea was to make sure that the US footed the entire bill, draining the country of money, while at the same time working to make sure that Iraq succeeded in establishing an independent governement. That strategy has worked. The world is now working to make sure that the US doesn't invade Iran and that meaningful sanctions won't be imposed. That strategy is working as well. Because of the very coherent US strategy the world has put together, I think we will see the US enter a period of paralysis foreign policy wise. The Iraq war will probably be the last war the US will wage as an empire.
Rather than trade insults, let's trade predictions. About a month and a half ago, oil was at 76 and I told people it would fall to 57. Most people said I was crazy. At about the same point, everyone was getting all hyped-up, drooling about the prospect of a war against Iran (while claiming to be against it, of course). I told them it wasn't going to happen. The world has succeeded in reining in the US, I said. Well, they have. I hope everyone here will be around 15 to 20 years from now to witness the economic powerhouse the ME will become.