Posted on 04/14/2013 10:46:26 AM PDT by nickcarraway
Theres a new twist in the peak oil debate. Is it good news for the climate?
Peak Oil Question Remains, Debate Continues
Ever since M. King Hubbert advanced the theory of peak oil in 1956, experts and non-experts alike have been debating about timing and relevance. (See here, here, here and here.) Hubberts argument seems like a no-brainer. Oil is a finite natural resource, so there must come a time when oil production peaks and begins to decline. The question is, when? And for a world economy that is largely fueled by oil, that when question is quite germane. If peak oil hits while oil demand is rising, it could spell worldwide economic disaster.
The world of oil punditry is replete with predictors of an imminent arrival of peak oil. (See here, here, here and here.) Folks bullish on oil, on the other hand, have long held that that time is way in the future, that there is plenty of oil in the ground and that whenever supply begins to be outstripped by demand, new technologies will be developed to get at what had been deemed to be economically unrecoverable.
History Shows That When Oil Prices Rise, Oil Production Responds
The historical verdict, so far, seems to be in favor of the oil industry bulls. Each time dwindling supplies and/or surging demand have caused oil prices to rise, the economics of high oil prices have spurred the development of new sources to quell the imbalance.
The latest ups and downs in the economy and the oil industry seem to follow that scenario. Remember the skyrocketing gasoline prices of 2005 and 2006 before the July 2008 peak? As in previous oil shocks, there were warnings that peak oil had arrived and that we should all get ready for even higher prices at the pump.
But that didnt happen. First we were saved by the economic crash of 2008 which some argue was actually a direct result of peak oil. The crash caused demand for oil and therefore prices as well to fall. Lots of folks, myself included, assumed that the reprieve from the economic slowdown was temporary and that oil prices would rise, possibly even more sharply than before once the global economy got going again.
(Source: U.S. Energy Information Administration)
Fortunately that hasnt happened. The economic recovery, while tepid, is underway. And while oil prices have recovered somewhat, they have not hit the July 2008 peak, let alone shot above it. (See related: Outlook for U.S. Gas Prices: A Bit Lower This Summer)
So whats going on? As you might expect, there are a variety of opinions. Some continue to warn that a spike in prices at the pump is just around the corner for example see these predictions (here and here).
Others claim that we are seeing the same demand-and-supply response that weve seen in the past. The runup of oil prices in 2007 and 2008 sparked new investments that have increased production and moderated prices. And this argument is supported by data showing an approximate 10 percent uptick in world oil supplies since 2009.
A New Paradigm Proposed
But now two new reports Global Oil Demand Growth The End is Nigh by Seth Kleinman et al. of Citigroup and The End of an Era: The Death of Peak Oil [pdf] from Robin Wehbé et al. of the Boston Company argue that something entirely different and rather unprecedented is underway. Both reports argue that we have entered a new era, one characterized not by the spectre of a supply peak, but by a demand peak that will assure that demand will not outstrip supply for quite some time to come.
The reasons for peak oil demand:
Fuel economy. Recall the new fuel efficiency standards (known as CAFE, short for corporate average fuel economy) promulgated by the Obama administration with the support of the automotive industry? They will certainly have a moderating influence on U.S. oil demand. But the United States isnt alone. Fuel economy standards are tightening throughout the world, including in China, the European Union, Japan and Canada. Fuel efficiency is expected to rise for trucks as well. The net result global fuel efficiency on cars and trucks, which has languished for decades, will increase annually by about 2.5 percent. Substitution of natural gas for oil. The authors project that the revolution in natural gas supplies wrought by shale extraction will have a major ripple effect on the oil industry. Huge new supplies of natural gas [pdf] will continue to lead to low prices in natural gas and that in turn will lead to substitution of natural gas for oil. (Indeed this has already begun.) As a result. well see a shift in the following: Transportation, especially for trucks and other large vehicles currently powered by diesel. Power generation. Though not very common in the United States, oil is still used to generate electricity. For example some 8 percent of New York States electricity is generated from oil, and in 2008, worldwide, about a trillion kilowatts of electricity (out of a total of 19 trillion kilowatts) was generated from oil. Kleinman et al. predict that is about to change as old oil-fueled power plants are replaced by gas-fired ones. Petrochemicals too. Currently the petrochemical industry primarily uses oil as a feedstock. But natural gas, especially so-called wet gas, contains ethane, which can also serve as a feedstock for chemical synthesis. Low natural gas prices have already begun the substitution that the authors predict will accelerate into the future. Of course for this to happen on a global scale, natural gas must become a global commodity that can be traded and transported from producing regions to consumers. No problem, say Kleinman et al. the answer will be liquid natural gas (LNG). They opine:
[O]nce the next wave of LNG export projects comes to market global LNG markets should loosen materially. This raises the prospect of lower spot prices, and a greater incentive for gas for oil substitution to spread and accelerate globally. Hence, the assumption that substitution outside of the US starts to accelerate post 2016.
But thats not all. The Boston Company goes even further, arguing that the emergence of peak oil demand is being also driven by an unprecedented shift in consumer behavior. For years the accepted wisdom has been that consumer demand was inelastic with respect to price in other words, even if prices change, demand remains much the same. The Boston Company report points to data since 1970 showing that each time the price of oil rose above 3 or 6 percent of gross domestic product, demand was reduced or quickly curtailed. Thus, they argue, price, not supply, now limits demand.
Suffice it to say and Ill note this is par for the course when it comes to the peak oil debate not everyone agrees with these predictions (see chart).
Citigroup forecasts a very modest increase in demand that plateaus near 2020 (see also Fig. 1, page 2) while BP and the International Energy Agency (IEA) project a larger, steadily increasing demand of 0.7-0.8 percent. I expect the projected demand growth in the U.S. Energy Information Administration (EIA) forecast will be revised downward in the report due out this spring. ExxonMobil projects a 1.5 percent annual increase in demand from 2010 to 2025. (See End Note for sources.**)
Could Climate Be a Winner?
At least on the face of it, the projections of Citigroup and the Boston Company if they pan out would be good news for the climate. The world is replete with hydrocarbons and it may very well be true that, as the oil bulls have been telling us, technological innovation will make it possible for us to economically pull all the hydrocarbons in their various forms out of the ground to burn them if we so choose. And it certainly seems like advances in fracking and horizontal drilling have moved us a big step closer in that regard.
The questions we should be asking ourselves are: Do we want to pull all this stuff out of the ground, and How much is too much before the climate price is too dear to pay for cheap oil?
The fact that oil demand may be flattening out is a positive sign for the climate; at least the near-term pressure to pull all the oil out of the ground as fast as possible has lessened. (A caveat here: some of the oil demand flattening is due to switching from one fossil fuel oil to another natural gas, which while cleaner than oil, still puts carbon dioxide in the atmosphere when burned.)
Interestingly enough, this peak oil demand phenomenon, if it comes to pass, will have occurred of its own accord without a global accord on carbon emissions. Is the system somehow correcting itself on its own? If so, the system better get busy because theres a lot more to do not just flattening demand but actually turning the demand curve downward, and not just for oil but for all hydrocarbons. Tall order. Maybe the systems response will be to engineer a global climate treaty. And if that happens, who gets the credit?
__________________ End Note ** Sources for chart: Global Oil Demand Growth The End is Nigh, Seth Kleinman et al., Citigroup, March 2013. Energy Outlook 2030, BP, January 2013 (data [xls]). North America leads shift in global energy balance, IEA says in latest World Energy Outlook, International Energy Agency, November 2012. International Energy Outlook 2011, U.S. EIA, September 19, 2011. The Outlook for Energy: A View to 2040, ExxonMobil, 2013.
“The questions we should be asking ourselves are: Do we want to pull all this stuff out of the ground, and How much is too much before the climate price is too dear to pay for cheap oil?”
Bugger off Bill!
There is more oil here than ever imagined before. The amount of fuel in the ground must have doubled since the last time they were talking about peak oil. It looks like they are trying to manipulate market and politics with the new peak oil effort.
It seems like a no-brainer most especially if you don't have a brain. How do we know it's a finite natural resource? We don't even know where it comes from. It could be forming all the time, for all we know.
It looks like they are trying to manipulate market and politics with the new peak oil effort.
Supply + Demand = What?
And lookie who who funds "they":
====================
So, who are these guys at the NRDC? Well, its an interesting list.
Natural Resources Defense Council Board of Trustees
Chairman
Frederick A. O. Schwartz, Jr.
Partner, Cravath Swaine & Moore; (a British Law Firm) Former New York City Corporation Counsel (under Mayor Ed Koch)
Executive Director
Frances Beinecke
Co-founder, The New York League of Conservation Voters (with RFK Jr.)
Trustee
Laurance Rockefeller
Private philanthropist; Former Chairman, Rockefeller Brothers Fund; Former chairman, Citizens Advisory Committee on Environmental Quality; Trustee, the Laurance Rockefeller Charitable Trust
Trustee
Thomas A. Troyer
Partner, Caplin & Drysdale; Former Chairman, the Foundation Lawyers Group; Former member of the IRS Commissioners Advisory Group on Tax-exempt Organizations; (no conflict of interest there?) Board member, the Carnegie Corporation of New York
Pres & Co-founder
John H. Adams
Former Assistant US Attorney (New York)
Vice Chair
Adam Albright
Board member, Redefining Progress; Board Chair, Population Communications International; Program Chair, Conservation International
Vice Chair
Alan Horn
Chairman & Chief Operating Officer, Warner Brothers
Vice Chair
Burks Lapham
Chairman, Concern Inc.; Director, Chesapeake Bay Foundation (a relatively benign group)
Vice Chair
George Woodwell
Founding Director, Woods Hole Research Center; Co-founder, Environmental Defense Fund (they banned DDT, Alar, etc.)
Co-founder & Treas
Richard E. Ayres
Partner, Howrey & Simon; Former Chairman, National Clean Air Coalition
Trustee
Patricia Bauman
Member, Pew Environmental Health Commission; Former Manager, National Institute for Environmental Health Sciences; Co-Director, The Bauman Foundation
Trustee
William Richardson
Former US Secretary of Energy; Former US Ambassador to the United Nations; Former US Congressman (D-NM)
Trustee
Michael Finnegan
Managing Partner, J.P Morgan Securities
Is this "Natural Resources" defense, or natural resource SUPPLIERS defense?
Now, lets look at who gives the NRDC money, shall we?
Top Funders of NRDC
Funder
Total Donated
Comments
Descriptions in bold are major energy investors
Pew Charitable Trusts
$11,568,000.00
Sunoco money
Blue Moon Fund
$7,818,735.00
This is W. Alton Jones Money (Citgo)
Energy Foundation
$6,965,000.00
Launched by The John D. and Catherine T. MacArthur Foundation, The Pew Charitable Trusts, and The Rockefeller Foundation. The Joyce Mertz-Gilmore Foundation joined as a funding partner in 1996, and The McKnight Foundation joined in 1998. In 1999, The David and Lucile Packard Foundation joined to support two programs: the U.S. Clean Energy Program (now the Climate Program) and the China Sustainable Energy Program. In 2002, the William and Flora Hewlett Foundation joined to support advanced technology transportation and clean energy for the West.
John D. & Catherine T. MacArthur Foundation
$5,636,500.00
Bankers Life and Casualty money (investment portfolio unknown)
U.S. Environmental Protection Agency
$4,681,097.00
Your tax dollars at work subsidizing the interests of whom?
Turner Foundation
$3,795,167.00
CNN, and a lot more
Public Welfare Foundation
$3,500,000.00
Too confounded to determine
Joyce Foundation
$3,309,445.00
Timber Wealth
Charles Stewart Mott Foundation
$3,022,340.00
General Motors
Ford Foundation
$2,733,300.00
Ford
Beinecke Foundation
$2,150,000.00
Major player at Yale.
J. M. Kaplan Fund
$2,057,500.00
William Bingham Foundation
$1,995,000.00
Homeland Foundation
$1,733,000.00
San Francisco Foundation
$1,654,739.00
Rockefeller Brothers Fund
$1,377,510.00
Them again
McKnight Foundation
$1,365,500.00
Robert Sterling Clark Foundation
$1,310,000.00
Geraldine R. Dodge Foundation
$1,310,000.00
Bauman Family Foundation
$1,226,000.00
Nathan Cummings Foundation
$1,220,000.00
Educational Foundation of America
$1,210,000.00
Richard & Rhoda Goldman Fund
$1,205,000.00
Mertz Gilmore Foundation
$1,201,000.00
Carnegie Corporation of New York
$1,200,000.00
Park Foundation
$1,198,010.00
New York Community Trust
$1,186,821.00
Overbrook Foundation
$1,182,585.00
Surdna Foundation
$1,147,000.00
Bullitt Foundation
$1,122,675.00
William & Flora Hewlett Foundation
$1,075,000.00
Note also the participation with the Energy Foundation
Quod erat demonstratum.
Most, if not all of these people at NRDC are energy investors.
=================
http://www.wildergarten.com/wp_pages/articles/nrdc_energy_racketeering.html
(with the usual Kudos to FReeper Carie Okie)
If you ever wanted proof positive that liberals are a stupid and unscientific lot all you got to do is dig up all the dire predictions about “Peak-Oil”. These are same people who warned about the impending global ice age in the 70s and then switched global warming in the 90s. Every single prediction they have made has turned out wrong. I would rather take financial advice from the local Arby’s cashier than listen to liberals on any matter of importance.
Does the author get paid by the word? We need to burn more oil to get the temperatures back up. The last warm year was 1999 and most would say this has been a very cold year. Peak oil went out the window a decade ago and with the Dakota finds and now new southern states finds peak oil is obsolete.
Fifteen years ago I dumped my National Geographic Society membership (after 30 years of being a member) because I could not stomach the man made global warming crap they were feeding their members.
Two other reports to consider:
1. BP predicts US energy independence by 2030 at: http://www.bp.comextendedsectiongenericarticle.do?categoryId=9048887&contentId=7082549
2. The Green River Formation: World's Largest Oil Shale Deposits
www.thenewamerican.com Sci/Tech Energy May 15, 2012 The Green River Formation of Utah, Wyoming, and Colorado may hold more oil than the rest of the world put together: an estimated three trillion ...
http://energy.usgs.gov/OilGas/UnconventionalOilGas/OilShale.aspx
>>Obama doubled the gasoline price by his policies.
Don’t forget to factor in the speculative effect of QE1,2,3...{ ad infinitum } Benny Bernankie Inflat-O-bucks.
Physical demand is relatively static - Cyberian demand, being manufactured within the domain of the same jackwagons who funneled all that AAA A$$paper through their systemically corrupt pipeline, not so much.
http://www.google.com/#hl=en&sclient=psy-ab&q=Oil+speculation+site:www.zerohedge.com
I never saw supply and demand added together before. They are opposing forces and are usually graphed on different axis. Supply goes up, price goes down. Obama cut the local supply to OPEC got a bigger share of the pie. The US people end up giving more money to OPEC.
>>I never saw supply and demand added together before.
http://en.wikipedia.org/wiki/Supply_and_demand
And what’s water going to cost after the ground water is all fracked up?
“oops”
Silly AGWist -- tell that to the Dinosaurs who used to live in the Tropical Gunnison Valley.
http://www.google.com/#hl=en&sclient=psy-ab&q=Gunnison+River+Tropical+Dinosaurs
See Spot.
See Spot Hide.
Where's Spot?
Brrrrr.
oops
Our liberal governor here in Colorado drank some fracking fluid at a press convergence so it was not that bad. Frackiong for natural gas has liberated millions of cubic feet of otherwise unaddressable gas dropping the price of natural gas which was a good thing, supply went up and price went down. There have been several water wells fracked around here and no one has complained once.
The only thing that proves is that Chickenlooper is a liberal Useful Idiot.
Almost as silly as your AGWist assertion that human induced carbon emission can warm the planet.
Try harder.
My family has only been in Colorado 150 years so it was not them that killed off the dinosaurs.
The last “hot” year was 1999 and it has cooled much since we have been forced to use less “carbon” to save the world. Someone over did it and were seem to be headed to an ice age quicker because of it.
There have been several water wells fracked around here and no one has complained once.
Not once you say?
http://www.denverpost.com/business/ci_19502307
Oops
Listen, hear that gurgling sound? Thats your credibility circling the toilet bowl.
Not only has the writer bought the whole glo-baloney warming nonsense (and not heard the news a few weeks ago that temps have been flat the last couple of decades), but he apparently didn’t hear of the abiotic oil theory, which mechanisms the Soviet scientists concluded over 60 years ago were the source of oil. Hydrocarbons formed in the upper mantle (far below the 18,000ft depth where organics have been found) that migrate towards the surface. Calcium carbonate, extreme pressure, heat and viola! You’ve got oil!
Someone over did it and were seem to be headed to an ice age quicker because of it.
There you go with those silly AGW assertions again.
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