Weekly Review

(Note: There is so much bad news in telling the Peak Oil story that we Continue Reading

To everyone’s collective enormous relief, the IEA’s 2010 World Outlook reassured the world that while oil prices may rise and conventional crude oil production may have peaked in 2006, we don’t have to worry about dramatic, longer-term energy-price increases. IEA predicts a gradual creep towards $113 per barrel by 2035. By 2015, we do have to worry that we might get up to $90 per barrel, with the high costs that imposes on ordinary people and the burdensome effects on the economy, but we’ve got five years, we are assured.

A small subset of the public (1) believes in both global warming and peak oil Continue Reading

At the ASPO Conference in early October 2007, Robert Hirsch presented his view of the impact of peak oil on the economy and society. While most of his assertions are readily supportable, the historical record is nevertheless perhaps more nuanced and deserves consideration in thinking about future events.
To begin with, there have been to date arguably two peak oil recessions. The first of these, the period of the Iran-Iraq war after 1979, was artificial. Saudi Arabia decided to defend a high oil price with production restrictions, despite the fact that production capacity was largely adequate to meet global needs. As a consequence, oil production fell in a pattern similar to that which we might expect after peak oil. By contrast, the oil shock of 2008 was arguably the first, true global peak oil recession. Unlike the shocks of the 1970’s, there were no supply disruptions. The world simply ran out of spare capacity. While the oil supply did not peak in the accounting sense, for the first time, it was structurally unable to meet growing global demand. These two periods, then, tell us something about the future course of oil shocks resulting from peak oil.

Can the political order face up to the challenge? There is no reason for optimism.

We are likely to see pseudo-solutions, misleading alternatives and sheer sloganeering: “energy independence,” “getting off foreign oil” and the like. All of that sheer sloganeering we have seen to this point.

The political order (which abhors political risk) tends to rely on the Biblical prescription, “Sufficient unto the day is the evil thereof.”

One of the quickest and most effective responses to the realities of a post-Peak Oil economy is to electrify and expand the main-line railroads (about 35,000 miles in as little as 6 years) and later the busy branch lines (another 35,000 miles). The railroads burn slightly less than 300,000 b/d and inter-city trucking uses about 2 million b/d. Inter-city freight includes some of the most essential uses of oil today, such as delivering food and a variety of critical materials.

Replacing 300,000 b/d with electricity is good. Replacing 2 million b/day is significant. Creating a transportation system that can quickly, reliably and efficiently transport food, critical materials and people without oil is a vital national security concern.

At the recent (2010) ASPO-USA conference, we reviewed, in our presentation on net oil exports, two examples of production peaks in oil producing regions. We also reviewed “Net Export Math” and we looked at some examples of net export declines. Finally, we reviewed our projections for net oil exports from the top five net oil exporters in 2005, followed by two scenarios for global net oil exports. In this paper we will briefly review the highlights of our presentation.