Peak Oil

mapesy · May 21, 2008, 8:16am

Oil reached an all-time high above $130 a barrel today:

[Oil</a> tops $130 haunted by future supply worry | U.S. | Reuters](<a href=“http://www.reuters.com/article/newsOne/idUSSYD3274320080521]Oil”>http://www.reuters.com/article/newsOne/idUSSYD3274320080521)

…while Saudi Arabia’s energy minister Ali Naimi says demand forecasts do not warrant an expansion past the 12.5 million barrel per day capacity Saudi Arabias fields will reach next year.

[Business</a> Spectator - The oil transition](<a href=“http://www.businessspectator.com.au/bs.nsf/Article/peak-oil-ESSA9?OpenDocument]Business”>http://www.businessspectator.com.au/bs.nsf/Article/peak-oil-ESSA9?OpenDocument)

Meanwhile, Saudi Arabia’s King Abdullah said in April: “I keep no secret from you that when there were some new finds, I told them, ‘no, leave it in the ground, with grace from god, our children need it’.”

[Saudi</a> King says keeping some oil finds for future | Markets | Reuters](<a href=“http://uk.reuters.com/article/oilRpt/idUKL139687720080413]Saudi”>http://uk.reuters.com/article/oilRpt/idUKL139687720080413)

Could King Abdullah’s remarks, coupled with Saudi Arabia’s refusal to raise capacity, be a clue that Saudi Arabia’s aging fields are in terminal decline, as oil industry expert Matthew Simmons has vigorously asserted?

Do high oil prices necessarily foreshadow a deep global recession?

What can we do, as American citizens, to protect ourselves for the future if we have reached the end of the age of cheap oil?

Most importantly, how can our children prepare themselves ?

mapesy · May 21, 2008, 4:23pm

A Senate Judiciary Committee met with oil execs today to demand answers and place blame (political posturing?) for high oil prices. Robert Malone, President of BP America said: “Today’s high prices are linked to the failure both here and abroad to increase supplies, renewables and conservation.”

[Oil</a> executives go before Congress - May. 21, 2008](<a href=“Oil executives go before Congress - May. 21, 2008”>Oil executives go before Congress - May. 21, 2008)

IMHO, if anyone is to blame, it’s our elected officials. Many experts saw this oil crisis coming years ago.

I have to wonder what our elected representatives in Washington are smoking. Yesterday, the House passed a bill allowing the Justice Department to sue OPEC over oil prices:

[House</a> passes bill to sue OPEC over oil prices | Reuters](<a href=“http://www.reuters.com/article/wtMostRead/idUSWAT00953020080520]House”>http://www.reuters.com/article/wtMostRead/idUSWAT00953020080520)

Wonder what they have in store for us tomorrow?

mommusic · May 21, 2008, 4:38pm

“House passes bill to sue OPEC?”

What kind of idiots do we have in Congress? Next they’ll be trying to repeal the law of gravity. Bleh.

UCBChemEGrad · May 21, 2008, 4:39pm

^ I agree mapesy.

Oil prices are up again, let’s bring in the execs for the top American oil companies and yell at 'em…That should solve the problem.

This political cartoon says it all:
[ALLIE</a> Cartoon Page](<a href=“http://www.cnsnews.com/cartoon/ALLIEArchive/2008/cart43200893131AM.asp]ALLIE”>http://www.cnsnews.com/cartoon/ALLIEArchive/2008/cart43200893131AM.asp)

mercymom · May 21, 2008, 5:41pm

Thomas Sowell agrees with the cartoon in post 44. Supply and demand is not sexy and it doesn’t get you votes.

[Thomas</a> Sowell](<a href=“http://jewishworldreview.com/cols/sowell051308.php3]Thomas”>http://jewishworldreview.com/cols/sowell051308.php3)

mapesy · May 22, 2008, 8:56am

Great cartoon, UCB!!!

I’m reminded of the e-mail that’s forwarded to me at least once a week by well-meaning friends. They want to boycott “Exxon” and “Mobil” to force the oil companies to lower prices. Yeah, right.

mapesy · May 22, 2008, 11:51am

While our politicians are passing legislation to sue OPEC and playing the blame game with Big Oil, the International Energy Agency is preparing a report for release in November in which it will sharply revise downward its oil supply forecast. The IEA will report that future crude oil supplies could be far tighter than previously thought.

‘‘The oil investments required may be much, much higher than what people assume,’ said Fatih Birol, the IEA’s chief economist and the leader of the study, in an interview with The Wall Street Journal. ‘This is a dangerous situation.’’

[IEA</a> warns of production crunch - Forbes.com](<a href=“http://www.forbes.com/afxnewslimited/feeds/afx/2008/05/22/afx5037411.html]IEA”>http://www.forbes.com/afxnewslimited/feeds/afx/2008/05/22/afx5037411.html)

I don’t think people realize how big this story is. In fact, it’s HUGE. It’s probably the biggest story of my lifetime, and I’m not young anymore.

It’s not just transportation and heating costs that are affected by high oil prices. Petrochemicals play a role in just about every aspect of our lives. From food production to pharmaceuticals to water distribution to plastics production to national defense (etc.), we are entirely dependent on cheap oil.

I’m worried about my children’s future. I want our government to do something worthwhile TODAY about this problem, instead of pointing fingers and passing ridiculous legislation.

mapesy · May 24, 2008, 10:39am

A link to this week’s sobering Wall Street Journal article that resulted in oil’s first-spike-ever above $135/barrel:

[Energy</a> Watchdog Warns Of Oil-Production Crunch - WSJ.com](<a href=“http://online.wsj.com/article/SB121139527250011387.html?mod=WSJBlog]Energy”>http://online.wsj.com/article/SB121139527250011387.html?mod=WSJBlog)

Of note in the article:

"But the direction of the IEA’s work echoes the gathering supply-side gloom articulated by some Big Oil executives in recent months. A growing number of people in the industry are endorsing a version of the “peak-oil” theory: that oil production will plateau in coming years, as suppliers fail to replace depleted fields with enough fresh ones to boost overall output. All of that has prompted numerous upward revisions to long-term oil-price forecasts on Wall Street.

mapesy · May 25, 2008, 8:27am

An advisor to the World Bank and the UN Industrial Development Organization, Dr. Mamdouh Salameh, says Iraq is the only oil-producing country with enough reserves to substantially increase the flow of oil in the world. He says production has already peaked in 8 countries-the US, Canada, Iran, Indonesia, Russia, Britain, Norway, and Mexico-and will soon peak in Saudi Arabia and China.

Dr. Salameh says that three years before the Iraq War, Iraq offered the US a deal that would have opened up 10 new giant oil fields on generous terms in return for lifting of sanctions. He goes on to say: This would certainly have prevented the steep rise of the oil price. But the US had a different idea. It planned to occupy Iraq and annex its oil."

[Oil:</a> A global crisis - Green Living, Environment - The Independent](<a href=“http://www.independent.co.uk/environment/green-living/oil-a-global-crisis-834023.html]Oil:”>http://www.independent.co.uk/environment/green-living/oil-a-global-crisis-834023.html)

Is this just another colossal miscalculation on the part of the US regarding possible outcomes of the Iraq War?

On another note, I came across a great newspaper series by Sam Roe that ran in the Chicago Tribune in 2003. Its an in-depth discussion of the exciting development of an 80 mpg Supercar and its subsequent demise due to a hostile US auto industry and political maneuvering. Ironically, the Japanese hybrid auto is an unintended consequence of the Supercar project. The Japanese asked to be part of the US project, but were rejected. As a result, they developed their own line of fuel-efficient cars because they didnt want to be left in the dust by Detroit.

This sad story is a perfect example of why our elected representatives in Washington cannot pass meaningful legislation to reduce our dependence on oil.

The series is a long, but worthwhile, read. The Chicago Prius Group has archived a .pdf of the series. Click on the link and scroll to the bottom of the page to the piece titled Supercar: The Tanking of an American Dream:

[url=<a href=“http://www.chicagopriusgroup.com/links/resources.htm]Downloads[/url”>http://www.chicagopriusgroup.com/links/resources.htm]Downloads[/url</a>]

If you werent already cynical about our democratically elected leaders in Washington, I guarantee that you will be after reading this piece.

pmrlcomm · May 25, 2008, 9:35am

You all are much more educated and versed on this topic than I so if this is a stupid question I apologize in advance. One thing occurred to me. As a country we have a lot of places off limits to drilling (ANWR, off-shore, etc…). Is there any credence to the thought that we don’t want to tap and use that oil now? Wouldn’t we, as a country, be better off using up all of the oil available to us from foreign sources before we exhaust our internal supplies? Imagine if we drained ANWR and any other reserves this country had. We would be soley at the mercy of the middle-east and other oil producing regions. It would be best to be the last man standing in regards to having oil. Maybe it’s just my limited view on the subject so I thought I would throw it out there. Thanks for all the great information and stimulation!

mapesey, 3 years prior to the Iraq war would be the very beginning of the Bush Admin. Can you clarify. Was the deal from Iraq offered to the end of Clinton Admin. or the very beginning of the Bush Admin. or did it start with Clinton and end with Bush?

mapesy · May 25, 2008, 12:06pm

pmrlcomm, I don’t know the answer to your question. In fact, the link I posted today is the first I’ve ever heard of such a proposed deal. (If anyone knows, please post!)

Does it really matter, though? Both the Clinton and Bush administrations made serious mistakes regarding Iraq. Even if the deal were proposed and rejected under the Clinton administration, the Bush administration could certainly have re-opened negotiations with Iraq on such a deal.

As for maintaining the oil in ANWR for the future, that’s exactly why some of our elected representatives are against drilling at the present time. Along the same lines, could that be why the US has allowed Iraq’s oil infrastructure to deteriorate to such a large degree? Surely the US could provide better security and protection to the oil infrastructure there. Perhaps the US wants to save Iraq’s oil for the future, just as with ANWR. IMHO, it’s no coincidence that the US invaded a country with the 2nd largest proven reserves of oil behind Saudi Arabia.

pmrlcomm · May 25, 2008, 12:27pm

Good point about Iraq. If anyone believes it isn’t about the oil (which I’m ok with with…have to protect the countries interests) is fooling themselves. The day there is no oil coming out of the middle east is the day we let that region go to H***. If there was oil at stake in N. Korea we would have gone in there already. You have to do what you have to do as a nation…like it or not.

razorsharp · May 25, 2008, 1:23pm

Politicians think in terms of “now”. They don’t think in terms of “later generations.” Politicians who oppose drilling in ANWR oppose drilling because of the environmental lobby, not because they are concerned about future generations. They were opposed to drilling when oil $25 dollars per barrell.

We did not invade Iraq becuase of oil. We invaded because we believed they had WMD. Iraq had oil many years before we believed they had WMD and yet we didn’t invade them. If it was about oil, we would have taken their oil. Instead they get a market price for oil. I think it is foolish to belive that we invaded Iraq for oil.

mapesy · May 25, 2008, 2:01pm

But Peak Oil wasn’t looming.

I respect your right to your opinion, Razorsharp, but I will never believe oil wasn’t the primary reason for the invasion of Iraq. My opinion means nothing to anyone except me, however!

The following piece makes a good case for oil and petrodollars being the primary reason for the war:

[Bush’s</a> Deep Reasons for War on Iraq: Oil, Petrodollars, and the OPEC Euro question](<a href=“http://ingush.berkeley.edu/~pdscott/iraq.html]Bush’s”>http://ingush.berkeley.edu/~pdscott/iraq.html)

Alan Greenspan also believes oil was behind the Iraq War. He said in his book:

I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil."

[FOXNews.com</a> - Greenspan: Oil the Prime Motive for Iraq War - Politics | Republican Party | Democratic Party | Political Spectrum](<a href=“http://www.foxnews.com/story/0,2933,296938,00.html]FOXNews.com”>Fox News - Breaking News Updates | Latest News Headlines | Photos & News Videos)

Mr_Payne · May 25, 2008, 2:08pm

Oil was the only good reason to invade Iraq. Too bad the Bush administration doesn’t have the balls to actually take our cut (I don’t know why, we did invade the country).

razorsharp · May 25, 2008, 2:42pm

mapesy, You could not have cited two more unreliable sources of information about Iraq – Berkely and Greenspan. Berkely has been the home of the anti-American, blame america first school of thought for decades. Greenspan was not a member of the Bush Administation and had no insight into how the Bush Administration made its decisions. Greenspan demonstated his incompetence as a Federal Reserve Chairman by causing the stock crash of 1999 (he raised interest rates to 6.5 percent without any evidence of inflation) and causing the current housing bubble (he lowered interest rates in 2003 to 1 percent and kept them there for too long).

The bottom line is that if American went to war in Iraq for oil, we would have taken their oil (we didn’t), we would have caused them to increase their oil production (we haven’t), or we would created econoimc stability that would have caused the price of oil in the world to drop (we didn’t). In addition, the price of oil in 2003 was quite low and there was no economic incentive to invade Iraq.

momof2inca · May 25, 2008, 2:55pm

[If</a> $4 Gas Is Bad, Just Wait - MarketWatch](<a href=“Latest News - News Viewer - MarketWatch”>Latest News - News Viewer - MarketWatch)

mercymom · May 25, 2008, 2:55pm

No, I think mapesy may be on to something, namely the influence of the dollar/euro battle in pricing oil that is driving up the price of gas here in the US. This is my H’s theory and it is only just now popping up in newspaper articles, but not discussed at length. That cited article above shows a trend to pricing oil in euros instead of dollars and how the value of the dollar was going down compared to the euro. If oil is sold to the US and we pay in dollars, but it’s priced in euros, as the value of the dollar goes down the seller has to raise the price to keep their profit margin the same when they convert the dollars paid to euros.

Furthermore, if you go back to issues of Foreign Affairs, the journal of the Council on Foreign Relations, in early 2003, prior to the invasion of Iraq, you’ll find Douglas Feith and crew explaining in detail how the invasion was all about gaining stability in the region with democracy to secure oil, among other things, and had nothing to do with WMD.

mercymom · May 25, 2008, 2:58pm

The main reason the results in par. 2 of post 56 never happened was the aftermath of the invasion was so badly bungled and wrongly planned that we are too busy fighting insurgency and chaos to do the other stuff.

mapesy · May 25, 2008, 3:49pm

Razorsharp, It really doesn’t matter to me who wrote the above-cited piece on the Iraq War, oil, and petrodollars, but it summarizes nicely what I’ve read and believe about the reasons for the Iraq War. Nothing else makes sense to me. The US never engages in war unless it is economically advantageous for our nation. (pmrlcomm makes a good point in his post above about North Korea.) Sorry, but I didn’t buy the WMD argument before the war, and I’m not buying it now.

No matter what I believe about Greenspan’s abilities as our Fed chairman, I believe he had some knowledge about why the US went to war with Iraq. I remember reading somewhere that he was obsessed with oil in the later years of his tenure and fearful of its deleterious effect on the US economy.

We don’t need the oil yet (although the recent high price of oil might change things.)

Peak Oil

CONNECT WITH US