Wave power and Oil Peak Recession

A mixed bag of borrowed posts today:

Electricity is no 1:1 replacement for liquid fuels, but electricity is what we need in addition to liquid fuels. And with the climate change related carbon emissions cuts rolling towards us in an unrelenting way, alternatives are needed.

Big Gav at Peak Energy has a good summary post about recent developments in wave power. Go check it out.

On David Strahan's site, there's an interesting and very short interview with Robin West (PFC Energy) on current oil crunch, peak, future oil prices and the chance of big recession ahead, due to lack of oil. Very good stuff and 5 minutes well spent.

Green Wash & Peak Deniel - The Big Oil strikes back

Now ask yourself:

How can you trust the oil data coming from these companies, when they've been caught repeatedly of lying systemically to us about their environmental practices, the climate change and involvement in corruption in oil producing countries?

The answer: you can't.

So, if they say Oil is not peaking, you probably cannot trust them. They will say oil is peaking only when the evidence has become so undeniable and overwhelming that they'd lose more by trying still to deny the facts.

That moment is approaching fast.

Oil problems over - Saturn moon to the rescue!

So what if the oil reserves on earth are getting half depleted and producing less and less oil.

We can always go to Titan!

"Saturn moon Titan has hundreds of times more liquid hydrocarbons than all the known oil and natural gas reserves on Earth, scientists report." - AFP

So, let's just fly to the moon and drill there - problem solved!

Meta: when one has to start thinking about hydrocarbon resources 1.2 billion kilometers away, one should know how dire the situation is.

Oil crisis is (almost) here

It wasn't more than a year ago when the Energy Crunch or Oil Crisis discussion could have been divided into two camps: the market fundamentalists saying 'Don't worry - everything will be alright' and the energy analysts (and peak oilers) saying 'Brace for impact - too late to act now'.

Well, what is the situation now?

Peak Oil Camp
TOD: "World total liquids production remains on a peak plateau since 2006 and is forecast to fall off this peak plateau in 2009."
ASPO: "The Second Half now dawns, and being characterised by falling supply, effectively removes the collateral for debt."

Market Fundamentalists
CERA: "Action needed to avoid oil crisis"
IEA: "Global energy system is on an increasingly unsustainable path. There will be growing tightness in oil and gas markets."

The common theme is obvious: we are heading for an oil crunch soon. Only the explanations differ. For peak oilers this is a beginning of an end of the oil age. For the fundamentalist, this is a temporal hiccup, due to bad capacity planning.

Whatever the reasons, the oil crisis is (almost) here. It may be due to peak oil of the below ground variety or perhaps not yet. Time will tell. However, that will probably not comfort the average oil/gasoline consumer in the short run.

You can't say you weren't warned...

CERA vs Reality

Demand Destruction

When there is not enough oil to go around, what do you do?

You try to destroy demand, especially that of others, after which you have more oil to go around - relatively speaking.

Why? Oil is the lifeblood of the economy. Hike up the price too much or limit the availability and economy is constrained. And nobody wants a constrained economy. It's against the market fundamentalist ideology of our times.

Let's take another quick news round up from the recent past:

• OPEC refuses to take consumers' call
  OPEC did not yet cut oil output, but is planning to do so later "in response to slowing down of the US economy." Newsflash: oil consumption is not markedly affected by the slowdown of US economy (see the 2001-2003 mild slowdown in US for a recent example). So, why is OPEC planning on cuts? Either they can't sustain the current production levels or they want a better price. Either way, if price continues to rise, it will results in some demand destruction, esp. in poorer countries.
  
  
• G7 calls for an end to oil subsidies in India, China
  So, the richest G7 countries want the developing countries citizens to pay the same for their gasoline as the rest of the world. Reason: if every Indian and Chinaman had to pay the same as the average US consumer, there'd be much less oil demand in China and India. And hence, more available for the G7 countries.
  
  
• IEA increases 2008global oil demand forecast
  So, IEA is in the same breath stating that in 2008 oil demand will rise while high price will also destroy demand (or more accurately that there will be a price related temporal demand response). Destruction or Response, it doesn't seem that even IEA believes that the current level of 'high price' (oil is actually relatively cheap!) will significantly reduce oil demand.
  
  
• What about the poor?
  Poorer countries have already been forced to cut down on their demand of oil. However, this has not been enough to guarantee cheap prices and good availability for other customers. In a recent BIEE seminar demand destruction was discussed with the following notion: demand is not destroyed unless the destruction is permanent. Presumably this means dismantling of the oil based power infrastructure, that still prevails in many poorer countries.
  

But does demand destruction work beyond the poorest of countries? In 2006 and 2007, the constant rise of oil prices mattered very little. Oil demand rose regardless of price and was not destroyed.

So, it is possible that in order to destroy demand, more drastic measures are needed.

This begs the question: what are these drastic measures?

Peak Oil - Where are we now?

Peak oil is passe. Oil is down to 90 USD or so. US and the rest of the world is going slowly into recession, thus driving oil need down even further.

So, plenty of oil in the horizon and with cheap prices!

Maybe not. Let us take a quick news round up.

• Pakistan: Many industrial units on the verge of closure due to severe energy crisis
• Nepal: Power cuts, diesel crunch clobber economy
• Latin American energy crisis
• South Africa set for month of blackouts

Shortages are here and spreading. And they are not anymore the problem of poor or war beaten African countries (Kenya, Uganda, etc.)

• A worldwide slowdown won't end the oil price boom anytime soon
• Coal prices may triple as supply crisis deepens
• IEA criticises OPEC decision not to hike output
• Saudi Arabia boosted production, but cut exports in 2007

Looks like that oil price won't come down. Official story is that OPEC refuses to boost production. The real story behind the official one? They are boosting production, but they are just using it themselves. Export Land Model in action.

• Charles T. Maxwell: Oil Shortages Start in 2010; Peak Oil Hits 2012-2015
• CEO of Talisman Energy: Peak oil is 'here'
  
• Mexico's Oil Output Has Peaked, Under Current Limitations
• Big Oil has trouble finding new fields
• Shell Profit Misses Estimates on Falling Production

More companies are facing the reality of peak oil. When there is less oil left, you will find less, regardless how hard you look. And boy, did they look hard. Not surprisingly more and more oil CEOs and heavy weight analysts are starting to say the same thing: we are at peak or near peak.

• IEA refutes 'peak oil', points to lack of investment
• Kuwait keeps 2020 oil capacity aim despite problems

While the official story remains: no worries, keep on consuming, plenty of oil left - we just need to invest more. Nope. The investment curves for exploration and drilling have gone through the roof in the past years and helped very little. The only areas where potential huge investments could alleviate is refining capacity match. The world is getting more of that heavy sour oil, while the refining capacity and need is for light and sweet. And this situation is not going to get better, it is going to get worse.

• France to review biofuel use on environment worries
• Banning 'bad' biofuels and becoming better consumers

Wow. Biofuel hysteria is finally getting the official critical view. But fear not, it is but a mere smoke screen. Palm oil will be used, so will be soy oil and corn ethanol. Never mind that they are idiotic in energy and climate terms. But the world needs to keep running. And it runs on liquid fuels. Not just solar panels and wind turbines. Prepare to hear lots more grief on biofuels and plenty of failed starts and scrapped super projects on new ground-breaking technologies that were supposed to miraculously fix the our oil predicament.

• Iran oil bourse scheduled
• The Cold War Never ended - it's just coming back
• Four Deep Sea Internet links out of use - Middle East without Internet access

Ah, the Great Game. You read the newspapers and you think the world is about solving the greenhouse gas dilemma or combating the coming recession. At the same time the pawns are being moved towards their position in the great energy game: the noose is tightening around Iran and on former Soviet Union countries - not to mention the Stans and African oil rich countries now being torn to pieces by "ethnic issues" and "civil war" (funnily enough funded and equipped by the Chinese, the French and the Americans).

So, most that was written in this blog in 2007 has pretty much come to pass and continues to do so. The world - it seems - really is a fairly simple place after all. At least on the short time span.

What's in store for 2008 and beginning for 2009?

While the lack of a working crystal ball makes it hard to know, some educated guesses can be made.

More on those in future posts.