Author: aspo-usa

The IEA decision to release 60 million barrels from strategic petroleum reserves (SPR) of member nations has been criticized as politically motivated, too small and too late to matter, or, at best, as a desperate attempt to fend off economic woes. The reality and impact of the decision are more complex than that. The move is a bold, price-suppressing “poke in OPEC’s eye” from nations that have been perpetual price takers in the world oil market. The short-term rationale for the decision, however, should not obscure our real oil problem – geopolitics is combining with economics and geology to put us in an oil crunch that is not likely to abate until our nation moves beyond oil.

The timing and volume of the decision make sense, and one need only to look at the vigorous complaints from Iran to gauge its significance. The Libyan conflict became a factor in February, and it took time to recognize that its 1.3 million barrels per day export volume was lost to the market on a relatively long-term basis, and to fully grasp the impact on the OECD economies. It took time to see that OPEC’s promise to cover the loss had little substance, as confirmed by the recent OPEC meeting.

Recently President Obama, under pressure from Republicans and the public to bring down gasoline prices, announced a plan to expand domestic oil production in Alaska and the Gulf of Mexico.

The media appeared to joyfully trumpet the idea that with expanded oil drilling in the U.S., oil production would ramp up. No one in the media appeared to question that idea although I’ve made the case on several occasions that U.S. oil production will, in general, trend down in the future even if every last acre of U.S. territory were soon opened for oil development.

The belief among the media, politicians and the public, in general, is that with increased drilling and expansion of available territory, oil production absolutely increases.

The world oil production data below tell a story about: 1) nations that are past peak (see “Peak Year,” turquoise fill), because of geologic limits (e.g., US, Norway, etc.) or other reasons; and 2) nations that have yet to peak (see “na” under “Peak Year;” Saudi Arabia, UAE, China), or if they have peaked it is not yet clear. An equally interesting trend is–irrespective of peaking–whether or not nations are increasing (first column; Brazil); have either flat or volatile production (second column, in blue; Iran, Iraq); or are experiencing decreasing production (third column, in red); the 2009 OPEC quotas continue to complicate the overall numbers here. Also, follow the trend of oil production nations whose exports are declining. Six non-OPEC nations increased by over 100,000 barrels/day-year (vs. 12 in 2004); two non-OPEC experienced declines over 100,000 barrels/day-year (also two in 2004). Peak appears to be close but not yet; we were on relatively plateau production during 2005-2008, then down in 2009, up strongly in 2010, up so far in 2011. Keep following the increasing roles of economic-driven demand destruction, violence, the Arab Spring, resource nationalism, timing of production investment and peak oil exports.

There are so many challenges facing us as a result of Peak Oil and related issues that it is easy to miss something important. ASPO-USA asked more than 50 leaders on Peak Oil to share what they felt was the most critical issue we’ve all been missing, the thing every one of us should be talking about – but aren’t. The answers were eye-opening, and have started a discussion that continues. This is the last in a three part series (First two parts available here and here), in place of a traditional commentary, Peak Oil Review will run a range of perspectives on this issue – from geologists to food experts, from social critics to scientists – what are we missing? Where should we be putting more attention, more resources? All of us miss things – but between so many working minds, we have a better chance of covering the expansive ground that we have to address. We thank all of our contributors for expanding our vision!

(Note: Commentaries do not necessarily represent the position of ASPO-USA.) There are so many challenges Continue Reading

There are so many challenges facing us as a result of Peak Oil and related issues that it is easy to miss something important. ASPO-USA asked more than 50 leaders on Peak Oil to share what they felt was the most critical issue we’ve all been missing, the thing every one of us should be talking about – but aren’t. The answers were eye-opening, and have started a discussion that continues. Over the next three weeks, in place of a traditional commentary, Peak Oil Review will run a range of perspectives on this issue – from geologists to food experts, from social critics to scientists – what are we missing? Where should we be putting more attention, more resources? All of us miss things – but between so many working minds, we have a better chance of covering the expansive ground that we have to address. We thank all of our contributors for expanding our vision!

As Pogo said, “We have met the enemy and he is us.”

I think that a large portion of the US oil & gas industry has basically shot itself in the foot, by agreeing with, or failing to confront, assertions such as the following by CERA, ExxonMobil and OPEC:

CERA: “Rather than a ‘peak,’ we should expect an ‘undulating plateau’ perhaps three or four decades from now.”

Robert Esser, Senior Consultant and Director, Global Oil and Gas Resources Cambridge Energy Research Associates
December 7, 2005