Thursday, May 22, 2008

In the twin killing of an eye

By Carl

Overnight, oil prices jumped more than $5 a barrel.

They had been heading upwards, inexorably, all year, with one or two hitches in the road. This past week, however, has seen it rapidly soar past $130 a barrel.

Conventional wisdom on Monday pointed to such obvious things as the heated rhetoric in the American political campaign, the situation in Africa, a jump in demand from Asia, the summer driving season, all of which together could explain a spike like that. some of us guessed, there was
a bigger story in play:

Oil prices leaped above $135 in overnight trading on Thursday, a new record that underscored the growing pressures that runaway energy prices are placing on some of the biggest names in global industry.

By midday Thursday, oil had fallen back and was trading at $131.95, down $1.22 from Wednesday’s close. But in a week that has seen the oil price rise by $4, the economic consequences of high fuel costs continued to mount.

[...]Thursday’s gains came after a series of unsettling reports that suggested world oil supplies may not be able to keep up with future demand, a situation that could potentially lead to even higher prices.

On Wednesday, weaker-than-expected weekly inventory data in the United States stoked fresh worries over oil supplies in the world’s biggest economy ahead of the busy summer driving season, sending oil prices up $4.19 a barrel on the day.

Some investors reacted to a report on Thursday in The Wall Street Journal that the International Energy Agency, an Paris-based policy advisory group for industrialized countries, was concerned about a reduction in the long-term world supply of crude oil.

The IEA usually uses the reports of the individual nations of OPEC and other oil producers to estimate world oil supplies.

Needless to say, nearly every nation inflates their reserves. The report, therefore, is clearly unreliable.

Indeed, in this month's
National Geographic magazine comes a report about a renegade industry analyst in Saudi Arabia who's estimates indicate that, not only has Saudi Arabia passed peak oil, but that its reserves are draining faster than anticipated.

Many skeptics point to several reserves of oil that are a litle harder to get to, but now that oil prices have climbed, are cost-effective.

However, when we've seen oil prices spike in the past, they have been accompanied by fervent & frenzied attempts to find more oil, discoveries of which have provided smaller and smaller finds. Indeed, the price drop of the 80s and 90s in crude prices was due in large part to the discovery of oil to tap into.

In this current spike, there has been zero, nada, nil, increased effort to find new oil sources. For example,
Exxon Mobil, while increasing the exploration budget over 20% this year, still spends more on maintaining existing oil wells than it does on exploration, and their goal is to increase oil production by 2010 by a measly 725,000 barrels a year, and that 20% increase barely makes up for the past eight years of sitting on a budget line item like they were drowning it in the bathtub, as prices steadily inched, then rocketed, upwards.

I predicted earlier this year that once oil hit $130 a barrel, we could expect to see $5 a gallon gasoline.

I was wrong, but I had not anticipated that it would take weeks rather than months to reach that level, and expected that interim oil prices would be absorbed into the price structure. However, I can report that here in NYC, premium gas is bumping andexceeding $4.50 a gallon already.

OK, so that's the good news.

Here's the scary part:

[In 2005, the IEA] said that if investments didn’t keep pace with the growth in consumption, the world might face a shortfall of as much as 15 million barrels a day by 2030. Instead of growing to reach 116 million barrels a day, global supplies would struggle to increase to 100 million barrels a day by then, up from today’s average of 86 million barrels day.

Contrast that with this (from NatGeo):

Last fall, after the International Energy Agency released a forecast showing global oil demand rising more than a third by 2030, to 116 million barrels a day, several oil-company executives voiced doubts that production could ever keep pace. Speaking to an industry conference in London, Christophe de Margerie, head of the French oil giant Total, flatly declared that the "optimistic case" for maximum daily output was 100 million barrels—meaning global demand could outstrip supply before 2020. And in January, Royal Dutch Shell's CEO, Jeroen van der Veer, estimated that "after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand."

That is, within the next ten years, we will literally and effectively be running out of oil.

Get used to it, folks. This is going to hurt. A lot. And in ways you can't even begin to expect.

(Cross-posted to
Simply Left Behind.)

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  • 20 years of oil available off the Pacific and Atlantic coastal shelves (ANWAR, too, and oh so PRISTINE!) -- held up by left-wing environmentalists.

    Nuclear power quite doable, but it takes 20 years to build a plant becuase of all the insane regulations.

    Wind and solar are nice but are basically only affordable for she-she limousine liberals, with a fleet of 10 Prius's.

    Ethanol is just as bad for global warming as anything else.

    Decomcratic Governor Sebelius blocks more coal facilities in Kansas, and people think she could be Obama's Veep.

    A few years ago, Bush begs his brother, Jeb, to drill off the coast of FL, but Jeb caves to the whackos.

    What a disgrace!

    By Blogger QueersOnTheRise, at 3:19 PM  

  • Enough of your recycled, bottom of the barrel Limbaughian platitudes. There's nothing emptier than this kind of vapid sarcasm unless it's the inane lies you tell.

    What do you mean by 20 years of oil? That's meaningless. The oil available in the ANWR would not give us substantial price relief or even a tiny bit more energy independence, and any small price reduction it might provide would disappear before it occurred.

    Perhaps you think nuclear regulations are insane - but then that's the only argument you can pull out of your lying ass, isn't it? Let's build a new Chernobyl or Three Mile Island without them pesk regulations upwind of your trailer park, blowhard, or maybe an oil rig or coal fired power plant. You can just get into your limousine and move to Beverly Hills, right?

    And what is it you have against people with money and education anyway, Dicky boy? As if I didn't know.

    I've yet to see you post anything with a germ of truth in it or anything that didn't depend on some conveniently inflammatory straw man like "Limousine liberals." Wanna talk about '87 Hyundai "conservatives" with delusions of sanity?

    And thanks for insisting that Florida needs to destroy thousands of miles of coastline and half its economy so Exxon and Halliburton can make a few more bucks. Again, there's hardly enough there to make any kind of difference - that's just another one of your forest of scarecrows.

    You're not that stupid -- nobody is that stupid -- so what the hell is your game? Do you type with one hand when you post this crap? Is your keyboard all sticky, Mister Tricky?

    By Blogger Capt. Fogg, at 4:07 PM  

  • Carl

    The latest bit of neurotic denial is a book claiming that oil generates itself in some mysterious process and is not the product of the decomposition of ancient biological material.

    The consumption isn't going to stop until our economy collapses, and neither will the lies and scapegoating. I think it's almost too hopeless to waste time being upset about it. Let them scream about "left wing liberal environmentalists." I'll just be satisfied to see the contradiction in terms they're not smart enough to see.

    By Blogger Capt. Fogg, at 4:18 PM  

  • I think most of my facts came from The Economist. Then I spiced it up with straw men.

    By Blogger QueersOnTheRise, at 7:32 PM  

  • I drive an '07 Lexus, by the way, stickered at $55K. Ivy League undergrad and also a graduate degree -- living in a blue state. But if your picturing me in an '87 Hyundai makes you feel good, so be it.

    By Blogger QueersOnTheRise, at 7:36 PM  

  • Just a dose of your own medicine; I would have thought you'd recognize that. I think most of your "facts" come from your sphincter, but whatever. If you want to portray conservation as alien to conservatism, you've written yourself off as a moron anyway.

    My neighbor, the environmentalist Nathaniel Reed ( look him up ) used to work for the real Trickey Dick and other presidents and is as conservative as it gets. I really need to show him how he's really a "far left radical pinko radical liberal" along with your other laughable glossolalia.

    A lexus - how middle class and how unAmerican. You don't want to play this game with me, believe me you don't.

    By Blogger Capt. Fogg, at 9:29 AM  

  • Why don't I want to play this game with you? If you "win" it, is there a special prize to be won? By the way, our other car is a Buick. But its parts are all probably made in Mexico. At any rate, I'm just "messing" with you, Fogg. Who gives a shit what you or I or anybody drives?

    What's an example of a lower class car? (El Camino) What's an example of an upper class car? (Rolls Royce, of course, 6 MPG Highway, 2 MPG City)

    But please, while you're at it, what's your solution to the energy crisis. I bet there's one thing you and I can both agree on: let's get off of our dependence on foreign oil. I don't want to ruin coast lines either. Maybe wind power is a good idea, but Mr. Socialist, Walter Cronkite, thinks it messes up his ocean view. We all just cannot have our cake and eat it too. We also could all buy Priuses, and send then sue Toyota Motor Corp. when we're rendered ill from the electromagnetic field.

    By Blogger QueersOnTheRise, at 10:16 AM  

  • You don't get it. I'm not bragging that my car is more expensive than yours although it is and so is my yacht for that matter. I'm trying to point out how silly it is to frame your arguments with stereotypes and categories and acting as though I and others really fit into them.

    If you can link me with communists and psychos and all sorts of extremist things by categorizing me according to your game, then perhaps you would like a dose of the same - that's what it's all about. If the pigeonhole doesn't fit you, then perhaps you might consider that yours doesn't fit me.

    By Blogger Capt. Fogg, at 6:01 PM  

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