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davo22

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If we have in fact reached peak oil and start to decline I wonder how much influence conservationists will have. I supect we are likely to start a negative feedback loop as our society is based around cheap plentiful energy and the society will care a whole lot less about the environment if and when times get tough..

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hi davo

 

I agree that if there is no alternative to cheapish oil then the world will take whatever rubbishy dirty inefficient oil that it can find, and hang the environmental cost. But some believe that there will be a viable alternative: apparently Deutsche Bank recently put out a report titled "The Peak Oil Market" which argues that expensive oil is coming and that subsequently oil based transportation will be largely replaced by electric vehicles:

 

Deutsche Bank expects the electric car to become a truly ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“disruptive technologyÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ which takes off around the world, sending demand for gasoline into an ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“inexorable and accelerating decline.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ

 

In 2020, the bank expects electric and hybrid vehicles to account for 25% of new car salesÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâہ¡ÃƒÆ’‚ÂÂin both the U.S. and China. ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“We expect [electric propulsion] will reverse the dynamics of world oil demand, and spell the end of the oil age,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ the bank writes.

 

But wonÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢t cheaper oil in the future just lead to a revival in oil demand? ThatÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s whatÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s happened in every other cycle. Au contraire, says the bank: Just as the explosion of digital cameras made the cost of film irrelevant, the growth of electric cars will make the price of oil (and gasoline) all but irrelevant for transportation.

 

http://blogs.wsj.com/environmentalcapital/...sche-bank-says/

 

As it happened I was in Canberra on Sunday and went to the inaugural national electric vehicle festival which was on in the grounds of old parliament house. There were vintage electric cars, electric push bikes, electric scooters and motor bikes, backyard conversions of cars, a segway, some factory made hybrids (toyota, mercedes, honda) and also a real-life, production model TESLA. I'm no revhead but it is a deadset headturner, which boasts 0 to 100 k's in 3.9 seconds and a range of about 400 k's. I saw it do a few demo take-offs and it would definitely leave my Getz standing at the lights. Shame about the price tag.

 

http://www.teslamotors.com/

 

 

 

 

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Slowly the lack of investment will see decline get the upper hand and once it accelerates I dont see it is possible to return to past levels of production..

 

 

 

But Bernstein analysts said Russian production, which recovered in 2009 after dropping for the first time in a decade in 2008, was merely experiencing a temporary spike following the launches of eight new fields this year.

 

 

 

Senior oil analyst Clint Oswald at Bernstein Research wrote that 0.6 percent year on year growth in the year to the end of September, in a year when eight projects added 640,000 bpd of new production, "does not sound like a great achievement or the start of an up trend.,"

 

 

 

"With only one significant field due to come on stream in 2010 and reduced drilling activity, we continue to expect declining oil output in Russia in the near term," Oswald wrote in a research note.

 

http://www.reuters.com/article/rbssEnergyN...ndChannel=10522

 

 

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The oil analyst Gregor MacDonald has an interesting chart on his blogsite today. He has worked out "free market oil" production by stripping out of world oil production since 2003, the amounts of oil produced by OPEC and by Russia. In that timeframe oil moved from US$30 up to above US$100 and now back to above US$60: in other words the trendline for price has been fairly steadily upwards. The question he poses is whether free market oil responded to the increasing price as it should according to the economics textbooks ie an increase in oil production to take advantage of the price trend.

 

http://gregor.us/non-opec/gaze-upon-the-gl...ree-market-oil/

 

Probably the data needs a bit more processing to work out if any of it is meaningful but at first glance the clear indication is that despite the oil price trending up in that period oil production has actually been trending down. Of course seeing how long it takes to bring in new production there may be significant lags between the price trend and the production trend.

 

Nonetheless, there is no obvious sign that the production trendline is turning up yet. So, as I say, an interesting exercise.

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The debate about whether peak oil is out there in the never never or something to factor into your investment thinking is one mainly conducted amongst the wearers of different coloured tin foil hats (the end of the world as we know it'ers v the warriors against the new world order).

 

So it is good to touch base with reality from time to time and see what mainstream professionals are hearing and thinking on the topic.

 

The first link talks about a recent lunchtime debate on whether peak oil is a concern or not given to about 500 pommy oil-industry geologists. Apparently the voting went roughly 2 to 1 supporting the view that peak oil is still a concern (not that peak oil is actually going to happen in the next couple of years, but simply that it is still a concern).

 

http://www.theoildrum.com/node/5947#more

 

The second link is to a write-up of the debate in an industry periodical (same link is at the bottom of the oil drum article).

 

http://www.theoildrum.com/files/20091000%2...PO%20debate.pdf

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The head of Saudi Aramco

says there are no plans to expand production beyond development of the Manifa field, which was originally intended to add capacity of 900,000 b/d by 2011, but has since been delayed to around 2013 as demand has fallen. He says the Manifa production will offset declines rather than expand capacity. (11/13,#10)

 

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What do you get when peak oil converges with climate change? Well maybe you get lots of people commuting in electric vehicles. Well one Brazilian bloke who's ethnic Lebanese and runs a French car company and also a Japanese car company is punting the house that that will be the outcome. I reckon he needs for peak oil to bite hard into fuel prices and for some major technological advances in lithium battery technology.

 

http://www.bloomberg.com/apps/news?pid=206...t.8o&pos=14

 

Anyway as a closet world-improver I wish him all the best. But I can't help thinking about that adage that the first mouse rarely gets the cheese.

 

 

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Saudi Aramco downsizes again.

 

  • From: The Wall Street Journal
  • In association with Bloomberg
  • April 13, 2025 11:58AM
A spokesperson for the Saudi Oil Ministry announced today the planned decommissioning of another 134 oil producing wells. Saudi Aramco has now only 287 active oil wells. This is down from a peak of 1548 oil wells achieved in 2011. The decline in demand for oil has followed it own "peak oil" bell curve. From 1548 active wells in 2011, to 972 producing wells in 2018, & then a continued rapid decline until the present day.

 

The replacement of the power source in the mass produced passenger vehicle market was expected, but the pace of that change took everyone by surprise. A Toyota spokesman commented it is rather ironic that this announcement coincided with the 30th anniversary of the first mass produced electrically assisted vehicle, that being the Toyota Prius released in 1995.

 

Recently retired Toyota head of Engineering, Hiroko Mizuno, commented that, around 20 years ago, in 2005, the future of the automobile was transferred from the mechanical engineering department to the science lab. This resulted in the rapid evolution of the electrically powered automobile. Similar to the evolution of the computer.

 

The only reason for the existence of the Internal Combustion Engine (ICE), Hiroko said, is because of the existence of oil. The (ICE) is most inefficient invention mankind has ever produced.

 

The (ICE) absorbs up to 40% of its own energy it produces just for it to operate. It was invented 150 years ago, & our grand children in the future when visiting a museum will marvel at its stupidity & complexity.

 

From 2014 onwards, when lithium Ion/ electrically powered vehicles became common place the (ICE) was doomed. The consumer demand was phenomenal. Toyota & other major manufacturers immediately dropped the (ICE) from 80% of its vehicle lineup. A typical compact size electric vehicle costs $18,000. It costs 3 cents a kilometre to run, has only one moving part & therefore no maintenance costs. This saves the typical owner $3000 per year, their-by the purchaser has a "free" car after 6 years ownership.

 

Oil, once was the most traded commodity in the world. The New York Mercantile Exchange (NYMEX) where oil was traded by a frenzied mob of speculators quickly collapsed. Oil is now quietly traded on monthly set contracts between the supplier & the end customer. Apart from heavy trucks over 30 tonnes & the airline industry there is very little other uses. From a peak of 87.5 million bbls a day in 2011, current production is now at 17.8 million bbls a day. A production figure similar to 1952.The evolution of mankind will no doubt throw up other surprises. The (ICE), an ugly complex lump of tortured metal has finally been sent to its grave.

 

Long may it stay there.

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I stumbled across this article about oil demand and oil production heading up to 2030. It appears to be a mainstream scientific effort rather than the pop science that is often found in the peak oil space, and is by a couple of Swedes, a Brit and Michael Lardelli of Adelaide Uni (I don't know him or how well regarded this team is by peers).

 

Some observations:

 

  • the paper looks to question the findings and assumptions of the International Energy Agency's World Energy Outlook 2008 report.
  • on the demand side it notes a linkage between oil usage and GDP. Whilst the paper does not touch on this, my observation is that if the world becomes constrained in oil supplies it is more likely that world GDP will be pressured down rather than oil prices will be racheted up. For instance when oil hit around US$150 per barrell in 2008 the world went into a severe recession, causing oil demand to ease off and oil prices to drop. I read somewhere that anything over US$80 per barrel will tip the US back into a recession. This is a point which I think Matt Simmons is dead wrong on: he keeps predicting that peak oil will cause oil prices to surge to hundreds of dollars per barrel whereas I am beginning to think that the evidence is mounting that the main effect of peak oil will be that our living standards will fall (collapse).
  • on the production side, the headline is that they predict that oil production will drop to 75.8 million barrels per day by 2030 (from all sources of hydrocarbon) whereas the IEA report projects 2030 production to be 101.5 million barrels per day. They say that in most scenarios we have already reached world peak oil. If the industry were to rush turning on new production they see that the world could hold production at about current rates for a few more years but they note that the global finanical crash has actually caused the delay in new production being brought on stream.
  • They point out that the main difference between their projections and those of the IEA is the depletion rates of known fields yet to be developed and of fields yet to be discovered. They claim that experience shows that new production fields cannot be rushed into maximum production (which is the assumption in the IEA report). As such the new fields will not be able to produce sufficient oil as to replace the depletion in existing fields.
  • They do not see that nonconventional hydrocarbon souces are sufficiently large or profitable to have a material effect on the production figures.
  • They conclude that if the world is to have future growth in its GDP, society will need to seek driving forces in addition to oil.

 

http://www.tsl.uu.se/uhdsg/Publications/PeakOilAge.pdf

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