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Peak Oil and Energy Resources

category international | economy | opinion / analysis author Thursday July 13, 2006 22:02author by Terry - None Report this post to the editors

An outline of the main features of the politics of Energy Resources with a focus on the important issue of Peak Oil. This is the text of talk given to Jack White Branch of the WSM on 23rd June 2006 by a guest speaker.

Energy Resources


1. Introduction


Today's talk is about Energy Resources and seeing that I have only 10 minutes or so, I will try to outline the main features of Energy Resources and attempt to focus on the important issue of Peak Oil which most people are now becoming more aware of. I will leave any of the details to the Question and Answer session that follows.

2. Background to Energy


When discussing energy, one must be aware of some key terms and ideas. Heat engines like the combustion engine or the burning of fuel to create electricity are all subject to the 2nd Law of Thermodynamics which basically says the maximum efficiency of a heat engine is 66%. The conversion of electrical energy to mechanical energy however is not under this constraint. This will help us understand that in fact we waste most of our primary energy. For example most coal power stations produce electricity at anywhere from 32% to about 38%, nuclear about the same, because they use the heat to heat steam and use the pressure of the steam to turn the turbines.

Gas power stations, often referred to as combined cycle gas turbine (CCGT) tend to be higher efficiency reaching to the mid 50s, because they use the heat from the gases to directly turn the turbine and exhaust heat for generation of steam. Sometimes they are also referred to as combined heat and power which means the low grade heat is used in nearby buildings. Efficiency figures are often quoted as high as 70% and these are estimated on the basis that they are making use of say 70% of the energy which is not quite the same thing. It is obvious then why in the last decade most new power stations in the USA and Europe have been gas power stations. It is worth noting that while it is great to have high efficiency plants, it also means that to get any more improvements they are going to be both relatively small and difficult to achieve.

Anyway you can see just at power generation we lose about half. Then there are transmission losses, but these would only be about 7%, although you do see wild figures much higher, but I don't think they are correct. Now that you have the electricity depending on what you do with it there will be other losses. For example an electrical car will not make 100% usage of the electrical energy.

Besides charging batteries is in itself a user of electricity, and typically batteries achieve 50% to 60% efficiency, while sealed Lead-Acid batteries can be as high as 95%. But high power battery is generally lower. This means that your typical electric car battery is probably somewhere in between and would be one of the biggest losses in efficiency there.

The typical car is reckoned to only be around 15% to 20% efficient at converting the energy in the fuel into mechanical motion. Its obviously worse for SUVs or other vehicles that get from around 12 or less miles to the gallon. Note there are around 130 million cars and 80 million SUVs and light trucks in the USA. And while on the subject of fuel usage for the USA, the US military uses a bit less than 1% of all the oil used in the USA. I have given that because I came across the figure recently and previous figures that I have seen have quoted grossly inaccurate figures. And for reference, globally there are about 700+ million vehicles. It is obvious that car ownership in China is never going to reach the ownership levels of Europe or the USA.

So in summary we find that in fact we simply waste the vast majority of our energy before we get our usage out of it. And for all we know, you might be just making some toast.

The main sources of energy used in society are: coal, oil, natural gas, hydro, nuclear, and some renewables like wind, solar and geothermal and biomass. By far the most important are the first three sources as they supply as with most of our energy. Until the oil crisis in the 1970s and early 1980s, oil was quite important for generating electricity, but now it has shifted to about 40% reliant on gas, with about another 35 to 40% on coal and the rest on nuclear and hydro. It of course varies from country to country.

3. Background to Peak Oil



Oil is by far the main source of energy for transport. Without it the modern car society and the sub-urban environment which is structured so that you must drive, would not exist. In the graph being passed around is a plot of past and future global oil production. Today, 2006, global production is around 85 million barrels a day, which x365 is approximately 30 Gb a year. The biggest single user is the USA at around 22 mbd, with other big blocks of users being the EU, Japan and China.

An oilfield is NOT some underground cavern of oil. It is more like a layer of sand soaked in oil and you have to draw the oil out, although in the beginning the pressure can be so high it squeezes itself out. Not all the oil can be extracted from an oil well and it ranges from mid 30% to around 50% ultimate recovery. After that you would have to use more energy to get it out. In the past 25 years, the technique of injecting water at the edges to basically create a wall of water that pushes to oil out in front of it has been used. What has been found and is important, is that the quicker you extract the oil, the lower the ultimate recovery. That way you can damage fields.

Past and Future Global Oil Production



So oilfields don't just gush from day to the last day. What happens is production gradually rises in something resembling a bell curve, reaches a peak and then falls. This is what Peak Oil is about, because collectively for all fields the total global production rises, peaks and then falls. This is well proved.

So the vast majority of predictions for the date of Peak Oil, range from late last year (2005) out to about 2010 or so. Only the extreme optimists talk of anything later, and they have been fairly quite lately.

4. Peak Gas


I don't have much time to discuss this, but individual gas field production is different. Production rises very rapidly to a plateau and basically continues like this and then suddenly falls, usually with little warning. It turns out though that collectively production behaves like Peak Oil and Peak Gas is projected to occur around 2010 to 2020. The picture is not as clear here. Gas is much harder to transport and people prefer pipelines. Most of the significant supplies of gas now remaining untapped are Siberia and the Middle East. Production has already peaked in the North Sea with the UK importing gas for the first time last year and production has peaked in all of North America, leaving them the task of rapidly building up a LNG tanker fleet and port facilities. Except 40% of electrical power in the USA is produced with gas. Not good.

5. More about Oil Fields and Reserves


Despite all the new technology the peak of the discovery of oil fields was in the 1960s and nobody disputes the hard data on this. Basically this is what happened. People tripped over the early oil (gushers), then found it useful (1920s to 1930s), the motorcar kicked in and GM ripped up tramlines everywhere. Oil production and usage began to soar and an concerted effort was made to find more of the stuff. As each geological basin was explored, relatively simple techniques were good enough to find the biggest fields. On average, a study was done of this, the 2nd field found in any oil producing region has nearly all turned out to be the largest field in that area. Then the remaining smaller and trickier fields were found, and deeper ones too. Please see the 2nd graph circulating.

The Peak of Discovery



Another interesting thing, (see graph) is that of the 14 biggest fields in the world, they alone produce 20% of the total daily global production. Think about that. The next 12 in size add another 6%, the next 29 fields add 9% and the next 61 add 12%. So just this top bunch are producing at least 35%. You will see the next 4,000 fields produce the rest. Now if you were in the oil business, it is clear you would find in cheaper, more profitable and of course cheaper to be sipping just one big field than messing around with a few hundred small fields.

The Dominance of Big Fields in Production



But as noted, very few of these big fields have been found recently and any that have were generally of the small end of the big field end. So it should be clear then what is meant by the end of Cheap Oil. And there is another thing, the best oil, that is the cleanest and most easily accessible and refineable has been in the big fields. Conventional oil is increasingly sour and heavy where sour means it contains sulphur and other stuff. Getting deep sea oil is much more hassle and extracting oil from Tar Sands is bordering on insanity.

6. Who has peaked?


Of the largest 21 fields, about 9 are already in decline. Large questions hang off the biggest field of all, Ghwar and it is allegedly nearing its end as most of these giant fields have been producing for periods ranging from 20 years to 50 years.

Well the USA was one of the first to peak and that was back in 1971. Other countries that have peaked are the UK & Norway (both down 20%+), China, Mexico, Venezuela, Indonesia, Russia*, Syria, Libya, Nigeria, Qatar, Columbia (possibly Kuwait -recent report -Burgan field) and many others.

7. The Legacy of Oil


The history of industrial revolution and it's aftermath has been burning most of the European forests for smelting Iron, finding Coal just in time and then discovering Oil and building the suburbs and driving to the shops.

A quick note about coal. There is still a lot left. We burned most of the good stuff. But if we burn what's left it will be more a case of Global Baking than Global Warming.

What has not been realized but is beginning to dawn, is the Cheap Oil has in fact subsidised all other forms of power, whether than be coal, gas, electricity, nuclear, hydro and especially renewable and made them cheaper than they really are. Same goes for modern agriculture and our "cheap" food. Because oil is used in all facets of these in terms of driving the workers and equipment, supporting the entire transport infrastructure and its operation, these have all been hidden subsidies. Besides, if you price oil cheaply, you can't exactly charge 30 times the rate for the equivalent amount of power from other sources. When oil gets more expensive, so will all these energy sources. They already are. Look at natural gas prices. And that in turn has already driven up electricity prices.

There is an enormous religious like faith in the idea of "progress". The only way is up! People confuse and interchange the words technology and energy. They are not the same thing. Something will have to replace oil and gas. There isn't anything like enough Uranium to go nuclear fission all the way even if we want to. The progress flock see their saviour in renewables. What is usually missing from the argument is scale.

Of the renewable energy resources, wind power is by far the most advanced and is at least a factor of 10 or more ahead of solar. For example wind power has been growing massively for 15 years, yet the most optimistic wind industry forecasts see it producing only around 12% of global electricity in 2020. And that is assuming we don't all buy electric cars. An interesting thing that I discovered about wind power is that generally when you install a wind turbine, say a 1 MW (MegaWatt), you only get 1 MW of power when the wind blows the optimum, anything less and it produces less than 1 MW. And because the wind is not blowing all the time, the industry figure shows that the utilization rate is only about 23%. With offshore, which has more wind and consistent speeds, it is reckon utilization will only rise to 26% by 2010.

Extending this argument to solar photovoltaic cells, assuming on average 12 hr day and 12 hr night, you would think that you are getting 50% utilization -a lot higher and better. Well, no, because the first 2 hrs and last 2 hrs of the day probably aren't much good since the sun is at the wrong angle and incident solar radiation lower, which means we at best might only get 8hr/24hrs - or 33% utilization.

So you can see that economics or rather use of resources comes into the picture quite strongly. For all the faults of a coal, gas, oil or nuclear power station, their utilization rate is bound to be much higher. So for the equivalent amount of power to be produced, you may have to effectively build the equivalent of 2, maybe 3 times as much capacity of power generation from either solar or wind.

What most people who spend anytime studying or reading the whole Peak Oil issue is that our lifestyle, -i.e. the car is going to have to change.

8. What Happens Next?


Well what you think happens depends on whether you are an optimist, pessimist or a realist. Unfortunately the realists tend to be hanging around the pessimists camp. The time to start and prepare was at least 30 years ago, but whatever we did can still have an influence. It has probably not gone unnoticed that the USA has gone for the oil grab and might is right technique. The trouble is the other superpowers like Russia and China are none too pleased.

An interesting general overview to consider is this: If in the collection of countries throughout the world, you wanted to raise the overall efficiency in the use of energy, then surely the best thing would be to remove the most profligate user of it from the picture. That of course would be the USA. Oil is traded in dollars and acts as subsidy to them and make oil cheap for them. Everyone wants to move out of trading in dollars and it is beginning to happen. Russia has already started, Norway is thinking of it. Chavez is thinking of it and Iran is ready but does not seem to have the staff of trader experience. A collapse of the dollar would all be that is needed to cause a depression over there and therefore greatly reduce demand. It is obvious that in any system under stress clearly the most inefficient user is going to suffer most and probably be effectively eliminated very early.

So it is at this point that we can take off into the political consequences which are vast. Now some people might find this a waste of time, but I don't because the potential for widespread conflict and disruption is enormous and we have to be able to understand the situation in order to react to it. The history of the last century shows that the powers-that-be, capitalists, dictators, have proved to be extremely effective in herding their populations into war and getting them to fight them. We have to be in a position to say this is bogus and this is why and there are ways of solving these problems. If we don't understand the situation then we don't know what we are talking about and are voices will just get lost in all the chatter.

9. Question and Answer Time



and are voices will just get lost in all the chatter.

10. Resource Material


www.energybulletin.net/ -Updated daily, tonnes of really good material.
www.oilcrisis.org/campbell/ -original call to action.
www.peakoil.ie/ -Contains the Newsletters from ASPO.
http://en.wikipedia.org/wiki/Peak_Oil -Wikipedia -its okay
www.dieoff.org/ -started early and got lots of people interested and worried.

www.energybulletin.net/1590.html -Article on the Natural Gas Crisis www.mnforsustain.org/images/energy_paper_fig14_depletion.jpg

And see this graph of gas production in North America showing the rapid decline in the size of fields in the article: Minnesota Energy Future: Part II-B: Energy + Resources at www.mnforsustain.org/erickson_dell_minnesotas_energy_future_part_IIB.htm

Biofuels: 'Thermodynamics of the Corn-Ethanol Biofuel Cycle' by Tad W. Patzek at http://petroleum.berkeley.edu/papers/patzek/CRPS416-Pat...b.pdf

www.kunstler.com -See The Long Emergency -probably most realistic.

www.mnforsustain.org/catton_excerpt_overshoot_1982.htm -early material from 1982 by William Catton on overshooting the carrying capacity of the Earth

'Food and Energy in Japan: How will Japan Feed Itself in the 21st Century?' -This is an unique and very important study by Tony Boys in Japan. Can be found at: http://www9.ocn.ne.jp/~aslan/21fee.pdf
The table of contents are at: http://www9.ocn.ne.jp/~aslan/fande21e.htm

More work by Tony Boys, explaining the effects on the oil shortages there due to collapse of Soviet Union. The Limits of Energy-Based Agricultural Systems and the "North Korean Food Crisis" http://www9.ocn.ne.jp/~aslan/dprkeng0409.pdf)

Planet of Slums: www.newleftreview.net/NLR26001.shtml -excellent article pointing out that billions already live in slums. So what's different for them?

www.ewea.org -European Wind Energy Association. Its publication section provides plenty of good facts and figures.

Finally, you should google The Hirsh Report which was commissioned by the US Dept. of Energy and they accept its finding at face value, which basically says preparation should have started at least 10 years ago, and there is a very strong possibility of a global economic depression.

author by Terry Spublication date Fri Jul 14, 2006 01:49Report this post to the editors

There are 3 images that go with this article and the first two can be found elsewhere on this site by clicking on:
http://www.anarkismo.net/attachments/mar2006/2004scenario.gif
which shows the historic and projected production of conventional oil for all major regions from 1930 out to 2050.

and for the pyramid of oil field sizes at:
http://www.anarkismo.net/attachments/mar2006/pyramid3.gif

and the growing gap between discovery and production. Note that discovery peaked in the mid 1960s.

This article is related somewhat to: Anarchism and the Peak oil argument at http://www.anarkismo.net/newswire.php?story_id=2672 which was supposed to be more of a discussion of Peak Oil and the ramifications for Anarchism whilst this one is from a talk given and is both shorter and more focused on presenting some key facts.

Growing Gap between discovery and production of oil
Growing Gap between discovery and production of oil

author by Andrewpublication date Mon Jul 17, 2006 17:35Report this post to the editors

I seem to have fallen into the role of the peak oil skeptic - something I think which is useful even if the theory turns out to be true. This is another angle that has been bothering me for quite some time about the peak oil analysis. I'd be interested in answers to it.

Oil is the major global commodity and like other commodities it is bought and sold on the markets years before it even comes our of the ground. If any section of capitalism secretly knew that a peak oil crisis was coming in the sort of worst case sceanerios that are predicted we can be sure that section would be seeking to make enormous profits out of this knowledge.

In the futures market this would be very simple to do. At the time of writing for instance I can buy a barrel of Light Crude Oil on the New York MEX market for 72 dollars ( http://futures.tradingcharts.com/marketquotes/ ). This actually gives me that barrel of oil in December 2012 - 6 years away. And the price is actually 5 dollars cheaper that the price quoted for a barrel next month.

Individual capitalists have made vast fortunes through spotting under priced future items and buying these in order to re-sell when the prices rises. In September 1992 George Soros sold short more than $10bn worth of pounds sterling because he reckoned it was over valued. He was right, Sterling was forced out of the European Exchange Rate Mechanism and it is estimated Soros made at least $1.1bn profit! In July 1997 with other speculators he did something similar to Thailand trigger “Asia's worst financial crisis in decades”. This illustrates that even if the cost to capitalism as a whole through such behaviour will be a major economic crash individual capitalists will still engage in such trades.

If any capitalist believed that oil supplies were going to crash they would realise that by buying say 100 million barrels today for 72 dollars they could make 1280 million if those barrels were worth say 200 dollars in 2012. And if the peak predictions are right 200 dollars would be very little to pay for a barrel by 2012. So why today is a Dec 2006 barrel only 72 dollars?

author by Rod Campbell-Rosspublication date Wed Jul 19, 2006 12:29author email rod at campbell-ross dot comauthor phone +61294162250Report this post to the editors

Good point re futures on Peak Oil.

I am not a futures marketeer and know nothing about how the futures markets operate.

I do subscribe to Peak Oil as an observation of the world as I see it. I think the reason the markets have not responded to Peak Oil is that they do not understand the issues, simple as they are. People like Browne of BP keep on saying there is lots of oil muddy the waters. The media have not picked up on it. It is no win topic for politicians and most people would rather know more about Angela Jolie's latest boob job, than pay attention to oil production. In addition there is allot of uncertainty around reserves and production generally. In particular nobody knows what is happening in Saudi. There are disturbing signs that it is in trouble. If it is, then global production has peaked and those 2012 oil futures are ridiculously under priced.

author by Andrewpublication date Wed Jul 19, 2006 18:28Report this post to the editors

It's worth looking into how the energy futures marker operates. This isn't a small insignificant corner of capitalism - it is enormous. For instance most airlines will hedge against unexpected jumps in fuel prices by buying at least a proportion of their estimated needed fuel a year or more ahead.

The companies that trade in energy employ dozens of researchers - people who spend all day, every day looking at various forecasts for future oil production. There is no possibility that they are unaware of the peak oil debate, you can't really google oil without coming across it. Also as I outlined it has already appeared in the Economist.

Therefore there are only two possibilities
1. They are agree with it but there is a conspiracy to hush it up. For the reasons I outline in relation so Soros this is not at all likely, there would be too much money to be made
2. They have looked at the claims and reckon that the theory is not likely enough to risk investment on. Given the obvious super profits to be made this must mean they judge it very unlikely indeed.

In any case this suggests anarchists should not uncritically embarce this theory as proven.

author by Terrypublication date Thu Jul 20, 2006 20:33Report this post to the editors

Indeed it looks like you have taken up the role of a skeptic and answering your 2 previous comments in turn, I find both of your sets of arguments very poor.

In the first comment you talk about markets, yet central to most marxists and anarchists is that the markets and 'prices' are not perfect mechanisms and do not always reflect the true costs or values of various commodities and I would especially say this is the case with regards energy. You quote the fact that in the future markets the price in the time frame 2012 is cheaper. Well perhaps this is because the traders believe somehow oil from tar sands will kick in or whatever. There are also many other reasons. If you were to bet it was much higher but you were wrong you could loose an awful lot. There are a lot of other factors at play here, such as risk assesment, rates of returns and so on. Obviously financial derivatives play a role. In effect derivatives are complex logic statements with lots of what ifs and options with many branches. Ultimately they are a way of packing away risk off particular investments on to other ways. Few people really understand how they work and often they are tied in with other derivaties.

But you go on to say that if individual capitalists have faith in these values and they are effectively in charge of the game (economy), then they must be right. Well first of all many of these traders or experts as you refer to them tend to read research documents from organisations like the Energy Information Administration (EIA) and the US Geological Survey, and various reports from the numerous oil companies, all of which have effectively denied Peak Oil and both EIA and US Geologic Survey estimates have been consistently way off. Both of these are of course political institutions run and owned by the state. Oil companies are interested in propping up their share values. For example as we know recently BP was caught out and fined for exaggerating its reserve figures. Likewise those buidling oil tar-sands and shale oil projects want investors.

In all of this reports from groups like ASPO get a minor look in. Same for reports from individuals which will always carry less weight in the corporate world.

One of the leading Peak Oil writers -Jan Lundberg who was an oil industry analyst for over 20 years, famously said he only started really knowing about the oil industry (and reserves) after he left the industry and was free to say and write what he thought. Other Peak Oilers like Campbell, Deffeyes and Jean Laherrere worked in the oil industry for most of their life, but after they left they were more free to look at it critical. Matt Simmons another huge voice in the Peak Oil camp is probably one of the few still working in the oil industry. Incidently he thinks oil could and should go as high as $200 to $300 per dollar and even though he is very much a capitalist, in his recent writings it is clear that he is coming around to the view that capitalism and endless growth are ultimately not possible nor desirable.

Note that all these people have scientific backgrounds in geology and the oil industry. Yet the skeptics tend to be all economists and come from the right and far right. The situation is a bit similar to the Evolution vs Intelligent design argument. On one side we have scientists and vasts amounts of physical evidence for evolution versus the religious and far right with spurious and contradictionary arguments.

But to continue, you make certain points with regards to the financials / investors and then extrapolate widely to your next point, using that as proof and you are also trying to compare the motives of different situations like the currency crisis to this. You simply cannot relate the two, because the contexts are different and the objectives of individuals were different.

You also refer to: If any capitalists believed oil supplies ...... You seem to give them greater intelligence, knowledge and insight than most people. Why do you suppose they understand the science. Many will have no background in this. Many will do what they know their bosses want. As they used to say about the computer industry. Nobody got fired by buying Big Blue (IBM). There is bound to be this effect present.

If you read the book: Wisdom of the Crowds, what comes across is of course the wisdom of diverse crowds. The author points out that in things like stock and property market bubbles that are not diverse enough presumably because they are all get the same or similar information. And this raises the very interesting observation that people instinctively look around to others -diversity in others words to see what people think of something -clearly this worked in the distant past very well -but it also shows why and how propaganda is so effective, because when much of the population is say reading just 4 or 5 different (corporate) owned newspapers, then when you ask somebody something it is very likely they will respond with what they read -given that was their only source of information on that particular subject. So now we see why all this works. And so to Peak Oil and financial investors and individual capitalists. The vast majority of publications deny it or even don't mention it. Only in the last year or so, have the number of articles on the Internet began to rise dramatically. Not so yet, in the corporate press. And in response to Peak Oil as predicted and AS HAS HAPPENED WITH GLOBAL WARMING, the corporate press/media have written many articles to cast doubt on it, or to propose various techno fixes -hence there is no problem. And so we hear a lot about Shale Oil and Ethanol. In terms of propaganda the more of these stories the more the factual articles become a small subset and effectively get dissolved. And as pointed out via the Wisdom of Crowds discussion people's instinct is to go with the majority.

Regarding your second comment: Not Convinced. You quote from a capitalist magazine that is largely for the middle investors, the ones who regularly get fleeced in various floations like Eircom here in Ireland, but you go on through your gross extrapolations to suggest that the Peak Oil theory is a conspiracy. I simply find that quite disingenious and I find it quite amazing that that is the best argument you can offer. You have clearly read none of the more scientific and factual articles about Peak Oil. In an equivalent vein, many groups on the Left including anarchists make the correct linkage observation that many wars are caused and started by capitalism, although personnaly I would extend that to by any hierarchical power group, but you should realize that many people who are unaware of class theory and so forth find such a conjecture as a conspiracy theory. You are taking this role here without eqivalently reading the class arguments...

I think it is time for you to admit defeat and lets get on with the discussion of what all this means to Anarchism and what we should do about it rather than accepting the capitalists plans and solutions as usual.

author by Andrewpublication date Thu Jul 20, 2006 21:11Report this post to the editors

Terry your comments are getting increasingly hostile (eg 'poor argument' "admit defeat') which might end up getting in the way of the discussion. Also you actually get the wrong end of the stick in relation to 'conspiracy' (I'm actually rejecting it in the 'not convinced' post) so you may be skimming my posts rather than trying to understand what I'm saying. I'd have also thought it obvious I'm citing the Economist not as proof but as a probable example of what the energy traders believe which explains the level at which the 6 year price hovers.

Anyway I think you dismiss the market price issue a bit flippantly. The nature of speculation in futures markertis not 'following the herd' but rather believing you have access to information that the herd does not yet have. After all if the herd has the information then the future price will be correct and there is no profit to be made.

Speculation in commodities has inbuilt into it not that the market correctly predicts the price but the opposite - that the market may get it wrong and when it does that is where the speculator makes his fortune.

Soros is relevant in showing that neither considerations of morality or the interests of the capitaist class as a whole will restrict the action of such speculators. Of course short term speculation over currency rates is not identical to medium term speculation over the price of oil. But the motivation behind such speculation is.

Your energy futures trader is basically not employed to come to the same conculusions as everyone else but to try and spot where those conclusions are wrong. The best way of doing this is to consider information from outside the main stream sources as all the other investors will be sure to have access to this information.

In fact if you consider the futures market last Feb you'll see it was correctly predicting that oil was not going to drop back down from the 50USD level it reached but was going to continue rising (it was looking for 60USD/barrel at the time). Business Week have an interesting article on this at http://www.businessweek.com/magazine/content/06_06/b3970078.htm but this article is also interesting because it allows comments and at the bottom you'll find comments from traders and others discussing Peak oil theory.

In other words there really isn't any room left to think energy traders are unaware of this theory or that they have not researched it. Indeed in the last year it has gone mainstream with the publication of business orientated books with titles prediciting 200USD barrell oil (that is why I choose 200 USD).

That the price does not reflect such theories means the overwhelming majority of energy traders do not believe the more pessimistic versions of peak oil.

Of course they could be wrong - I'm not insisting that they are automatically right I'm just saying the vast profits impose a requirement on them for a fairly rigorous and (at least internally) honest analysis. In other words the future price would tell us if they were publically rubbishing peak oil but privately confident that it would happen.

In part I've turned to this measure because of the huge volume of contradictory opinion and theory I've been exposed to as I've reserched this. I'm at the point where I'm unwilling to simply accept as fact any of the 'facts' that are put forward. There are far too many vested interests concerned - the oil industry being the most obvious but the Nuclear industry is playing a significant role on the other side, most visibly in Britian.

author by Terrypublication date Thu Jul 20, 2006 22:11Report this post to the editors

Apologies if I come across as hostile as I don't intend to be, but I do find it frustrating the way you keep switching the argument over the course of this debate on the Peak Oil and Anarchism thread too as I found none of the cases you presented very convincing.

And yes, I may have glossed over and mis-read your 2nd comment.

At this stage I am now a little confused, because initially you were wondering why traders don't price the futures much higher and in your last comment you seem to accept $200 has a realistic chance of happening. Therefore it would be best if you could clarify your position with regards Peak Oil. For example maybe you could answer the following:

1) Do you accept we are reaching a global peak of cheap or easy oil

2) Do you accept or reject that production from other sources can meet the demand and basically create a plateau at current levels into the medium term future

3) Do you think that conservation, efficiency and renewables will kick in in time and basically make up for any falls in production without significant socially disruptive effects

4) Do you accept or reject that the current urban setup of lots of driving in private cars can continue by whatever means possible

5) Whats your view on the "fact" that there is only enough Uranium to supply for about 40 years with the current number of nuclear power stations, given that doubling them would probably half the lifetime to 20 years. Do you accept this argument?

And then hopefully we can continue the debate and know exactly what points we are arguing over.

BTW, my answers to the above are: 1) Yes, 2) No, 3) No, 4) No and 5) Yes

author by Andrewpublication date Thu Jul 20, 2006 22:19Report this post to the editors

1) Almost certainly within a decade
2) +3) Far too complex and controversal for me to give a yes or no answer. I don't expect the end of civilisation. I do expect high energy prices that will lead to significant behaviour changes. A global recession is quite possible but I expect that as usual it is the poor and the workers who will bear the costs
4) I think what I have written on this topic elsewhere means its already clear I'm not a fan of our car culture nor do I think it is sustainable.
5) I don't trust capitalism with nuclear power so I don't want them to use ten years worth of Uranium never mind 40 years.

author by Terrypublication date Fri Jul 21, 2006 00:14Report this post to the editors

Then it appears we agree on more than we realize. Our only differences would be on the timing of 1), which I think is now, and this feeds into 2) and 3) where there is much variability but I come down generally on the side of disruption largely because Peak is now and there has been little preparation.

On 4) and 5), again we more or less have consensus, although regarding 4) -the car culture as far as I see it attempts will be made to continue the car culture and therein will lie the cause for much trouble ahead.

Continuing the discussion, therefore it is surely the case that Anarchism needs to present it's analysis of current events -jockeying for position globally by the imperialists for access to energy and to explain likely future events as they unfold and disturbances to our lifestyle happening -the easy motoring lifestyle, then we should be explaining the underlying reasons which are the end of cheap oil and then whatever effects of capitalism might be overlaid on that and of course what would be more viable solutions.

As it stands and I think you will agree to some extent there is a lot of talk / articles about biofuels, potential new oil discoveries -most of which did not pan out in the quantities initially reported and other various distractions to confuse the public.

BTW, Cantarell -the biggest oil field in Mexico is in decline, but before the Mexican election there were various reports that they had found a deep sea 10 billion barrel oil field in the Gulf of Mexico. Much of this may have been electioneering, but since then the figures that have come in do not support this at all. This is important for Mexico because they have relied heavily on the revenue from Cantarell.

Related Link: http://www.theoildrum.com/
author by Andrewpublication date Wed Dec 13, 2006 21:42Report this post to the editors

I'm working on an article for RBR on this issue and I have to say the more work I do the less convinced I am by the doom and gloom arguments. It seems that a lot of the figures presented are simply wrong, in the last couple of hours while checking a claimed EROI for wind of 2 I've discovered that recent research suggests its actually around 18. I was familar with this problem in relation to claims around solar panels but I'm shocked to discover this also applies to wind.

Anyway the article I'm looking at is at

Related Link: http://www.theoildrum.com/story/2006/10/17/18478/085
author by Terrypublication date Thu Dec 14, 2006 00:44Report this post to the editors

Wind is as I more or less said above is by far and away the most advanced of the renewable energies and at least a decade ahead of solar energy in terms of power supplied etc. Indeed the EROEI is quite good for wind, but you will find in the article you cite that they show varying values which would be expected.

What I did point out though is that the utility factor for wind is around 26% which when I discovered it found was surprising and rather low. What that means though is to replace say 100 MW of capacity of plant with higher a utility factor, you therefore have to install more wind. Not too sure if that argument has been taken into account in the EROEI discussions or not.

The other form of rewewable energy touted alot is ethanol and all it's variations. The EROEI is not so good there.

I think another issue you ought to consider is how versatile oil is. Its a very portable and energy dense energy source. So erecting lots of wind turbines as a replacement does not give you the ease and flexibility you had when oil is cheap and plentiful.

It might be worth noting for Ireland for example, that around 40% of our electricity is generated from Natural Gas. It won't be easy to replace this from other energy sources in a relatively short span of time AND maintain growth of supply at the same time.

Are you optimistic then that wind power can fill in the gaps left by declining cheap oil and slightly later gas supplies. Will this avoid severe problems?

Can you qualify the statement: 'a lot of the figures presented are simply wrong' with some specifics?

author by Martin H.publication date Fri Dec 29, 2006 03:27Report this post to the editors

Just a quick comment on this one. I talked about this stuff a while back with a mate who works in the CIty. His view (and one that is likely to be shared by all sorts of traders, in oil futures or not) is that it will not be big bump, as rising prices will make other sources of oil economically viable, primarily in tar shales and sands in Alberta and other parts of the mid west.
While I don't think they are necessarily right in this, there is a certain assumption that this is what will happen among the financial elite. And clearly, as my friend also intimated (and we are being softened up for now with all the global warming media this year) there will be a bump,

Regards,

Martin

author by Andrewpublication date Mon Nov 05, 2007 01:28Report this post to the editors

Forgot to post this earlier but the article I mention above on Peak Oil is on Anarkismo at

Related Link: http://www.anarkismo.net/newswire.php?story_id=5296
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tnimilitaryspending01.png imageEU: No austerity for military spending 16:18 Sun 09 Jun by ROAR Collective 0 comments

High levels of military spending played a key role in the unfolding European sovereign debt crisis — and continue to undermine efforts to resolve it.
A new report by the Transnational Institute — ‘Guns, Debt and Corruption: Military Spending and the EU Crisis’ — looks at the ways in which excessive militarization directly fed into the unfolding European debt crisis, and continues to undermine efforts to resolve it. Below the downlink links and infographic you can find the executive summary of the report.

valueofradicaltheory.jpg imageAnnouncing "The Value of Radical Theory" 14:21 Mon 18 Mar by Wayne Price 0 comments

Annnouncemt of a new book by Wayne Price which is an introduction for anarchists and other libertarian socialists to Karl Marx's crtique of political economy. In what ways can Marx's economic critique be of assistance to anarchists? What are anarchists' critique of Marx's economic theories, goals, and method?

affeng.jpg imageWe won’t pay their debt - let's move away from capitalism! 16:52 Thu 23 Feb by EuroAnarkismo 0 comments

To move ahead and build international solidarity, all the movements must come together on a European scale. The capitalists know how to organise on that level and how to adopt the treaties they expect to seal peoples’ fates with. We, the working men and women of Europe, have not yet achieved this level of organisation, even though alternative forms of trade union organistion have found ways to converge. This effort must be pursued, and a response organised on an international level. [Français] [Ελληνικά] [Nederlands]

solidarity.jpg imageSolidarity with the European peoples in struggle! 17:50 Fri 10 Dec by Anarkismo European Coordination 0 comments

Faced with this situation, we must respond with struggle and solidarity between the workers in affected countries. Faced with attacks like these, internationalism is more necessary than ever: we need a Europe-wide social movement! [Français] [Ελληνικά] [Deutsch] [Dansk]

300_0___20_0_0_0_0_0_al_2.jpg imageSolidarity with the European peoples in struggle! 19:23 Wed 01 Dec by Alternative Libertaire 0 comments

In recent weeks, the signs of anger among the peoples of Europe have been increasing: a general strike in Portugal, demonstrations of historic proportions in Ireland, the student movement in England and, hopefully, the beginning of a lasting movement following the mobilizations over pension reforms in France. [Français] [Castellano] [Português] [Italiano] [Català]

textGas, gas, gas, tovarishch Gazprom! (English) 18:53 Sat 07 Jan by Federazione dei Comunisti Anarchici 0 comments

In the tragic and bloody framework of the wars (both geopolitical wars and wars for the sake of war) for the strategic control of raw materials, which from the Middle East to Central Asia sees a clash of imperialist interests for the control of energy resourses and of the various corridors needed to bring oil, gas and water out of the area, the stakes have been raised by Putin's (and Gazprom's) Russia on the very eve of Putin taking over the presidency of the G8 and Gazprom placing 49% of its juicy shares on the market.

textIs a moneyless economy possible? 21:58 Fri 25 Nov by Terry 17 comments

Anarchists want a non-market socialist economy, with free access to goods and services. Is this just a nice but impossible idea? Is an efficient economy possible without money, trade or barter? Terry reports from the discussion at an anarchist meeting in Dublin on this topic.

imageWorkers’ Self-Directed Enterprises: A Revolutionary Program Apr 26 by Wayne Price 0 comments

There is a lot of evidence that working people can manage workplaces, enterprises, and industries. What kind of self-managed economy would work best? How could it be achieved: by reform or revolution? How could self-management be integrated into the revolutionary program?

imageThe Crisis, Bailouts, Quantitative Easing, Tapering and Class War Mar 01 by Shawn Hattingh 2 comments

Since 2009 the US state has been undertaking Quantitative Easing (QE), which has involved the US state creating $ 85 billion a month, effectively electronically printing money out of thin air, and linking this to the “purchasing” of paper assets like US government bonds and also more importantly mortgaged backed securities from banks, hedge funds, private equity firms, and asset management companies, which lost their value when the capitalist crisis hit hard in 2008. Through this, these financial institutions and banks have been given up to $ 85 billion a month for the last five years. Much of this money has been used by these corporations to increase their speculative activity, including speculating on government bonds sold by the likes of the South African, Brazilian, Argentinean, and Turkish states. Now the US state has been looking to start tapering QE and speculators as a result are exiting these government bond markets. As this article explores it will probably not be the ruling class (capitalists and top state officials) that suffer the worst convulsions associated with tapering, although they may be affected, but the working class in countries such as South Africa, Brazil, Indonesia, India, Argentina and Turkey. This article examines why and how this could take place, how ruling classes from different countries are trying to protect themselves; and why and how the working class will in all likelihood be worst hit. In order to, however, understand how the class war around QE is unfolding it is important first to look at the role states have played during the crisis, along with the competition that exists between states.

textGerman elections to open new season of Eurocrisis show Sep 27 by Paul Bowman 0 comments

Like the fading sun of the Summer, there is now little time left to enjoy the last days of Eurostasis we have been enveloped in of late. The relative calm that descended on the Eurocrisis, with the brief exception of the Cyrpus panic in March, is coming to an end with the German elections this coming Sunday.

textCritique of "political economy" May 15 by Ilan Shalif 0 comments

I still have to encounter a serious critique of capitalist (and anti-capitalist) political economy that stresses the capitalist system's main nature as a huge gambling casino. As most capitalists cannot know in advance if and how much there will be of a market for the products and services they produce and provide and at what price, they are mostly gamblers...

imageNordic Front reawakens Eurogeddon Beast - Euro crisis returns Sep 28 by Paul Bowman 0 comments

The rain is pouring, Summer's over and the Eurozone crisis is back from his hols. Timed nicely to coincide with the brutal Spanish riot police attack on the indignados protest outside the Madrid parliament, yesterday's statement by the remaining triple-AAA rated "Nordic Front" of Germany, Finland and the Netherlands, has put the cat back amongst the pigeons.

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imageAnnouncing "The Value of Radical Theory" Mar 18 0 comments

Annnouncemt of a new book by Wayne Price which is an introduction for anarchists and other libertarian socialists to Karl Marx's crtique of political economy. In what ways can Marx's economic critique be of assistance to anarchists? What are anarchists' critique of Marx's economic theories, goals, and method?

imageWe won’t pay their debt - let's move away from capitalism! Feb 23 Anarkismo European Coordination 0 comments

To move ahead and build international solidarity, all the movements must come together on a European scale. The capitalists know how to organise on that level and how to adopt the treaties they expect to seal peoples’ fates with. We, the working men and women of Europe, have not yet achieved this level of organisation, even though alternative forms of trade union organistion have found ways to converge. This effort must be pursued, and a response organised on an international level. [Français] [Ελληνικά] [Nederlands]

imageSolidarity with the European peoples in struggle! Dec 10 Anarkismo 0 comments

Faced with this situation, we must respond with struggle and solidarity between the workers in affected countries. Faced with attacks like these, internationalism is more necessary than ever: we need a Europe-wide social movement! [Français] [Ελληνικά] [Deutsch] [Dansk]

imageSolidarity with the European peoples in struggle! Dec 01 AL 0 comments

In recent weeks, the signs of anger among the peoples of Europe have been increasing: a general strike in Portugal, demonstrations of historic proportions in Ireland, the student movement in England and, hopefully, the beginning of a lasting movement following the mobilizations over pension reforms in France. [Français] [Castellano] [Português] [Italiano] [Català]

textGas, gas, gas, tovarishch Gazprom! (English) Jan 07 FdCA 0 comments

In the tragic and bloody framework of the wars (both geopolitical wars and wars for the sake of war) for the strategic control of raw materials, which from the Middle East to Central Asia sees a clash of imperialist interests for the control of energy resourses and of the various corridors needed to bring oil, gas and water out of the area, the stakes have been raised by Putin's (and Gazprom's) Russia on the very eve of Putin taking over the presidency of the G8 and Gazprom placing 49% of its juicy shares on the market.

more >>
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