Thinking more and more about soil, farming & gardens.
Permaculture & Peak Oil
Learning from Cuba's Response to Peak Oil
"If one does not understand soil, one does not understand life."
“To date, there is little empirical evidence that pure speculation has driven oil prices higher than the underlying fundamental and financial factors would suggest.” - Norge's BankWhat are these underlying financial factors? Well, Look at the correlation between crude oil prices and USD trade exchange value:
“Speculation seems to have played a normal role along the futures curve. It remains quite difficult to explain the large rise in the oil price as due to the presence of speculators.” - Bank of EnglandFurther, this is what several other economists had to say on the issue:
“The mismatch between unabated global desired savings and lower realized investment, between the amounts available for finance and the flow of hard assets to absorb it, has led to a liquidity glut which has pushed long term real interest rates the world over lower. This has spilled over into markets for existing real and financial assets - real estate, high-risk credit, private equity, art, commodities, etc - pushing prices higher.” - Raguram Rajan, 2006In plain English: when the reserve currency of the world (USD) goes down in value, oil goes up (not necessarily in that order). Of course, we all knew that already. More importantly, correlation is of course not causation. Regardless, if somebody wants to look for guilty parties for the rise in the price of oil (in nominal USD) based on correlation alone, then they should be looking at the Bush Jr government and particularly the Federal Reserve plus some of the other loose-money-policy central banks. If there has been financial reason for the price of oil in the past year, then it's coming from these sources.
Another noted economist Jeff Frankel has cited low interest rates as one of the most important factors for increase in commodity prices. The Central Banks have been blamed for the recent rise in commodity prices as they kept the monetary policy too loose for a long period of time. Guillermo Calvo, another renowned economist echoed similar thoughts.
“By 2010, the production of the fuel that has driven the world’s economy will start to rapidly decline. This will conflict with the steadily increasing demand for oil. The collision of these two trends will lead to shortages and increased prices, providing a strong incentive to shift to alternative fuel resources…Due to unequal distribution through the world of oil and gas supply and consumption, [the upcoming] transition will result in significant shifts in global power and wealth.” – Ray Leonard, VP of Kuwait Energy in a private meeting in June 2008, as reported by ASPO-USASo, brace yourself. This could be a only the beginning of a big ride.
"Limiting GHG concentrations to 450 ppm CO2-equivalent is expected to limit temperature rises to no more than 2°C above pre-industrial levels. This would be extremely challenging to achieve, requiring an explosive pace of industrial transformation going beyond even the aggressive developments outlined in the Blueprints scenario. It would require global GHG emissions to peak before 2015, a zero-emission power sector by 2050 and a near zero-emission transport sector in the same time period"That assessment is indeed a challenge, considering their view of the global energy mix to 2050:
“It’s not the size of the tank but the size of the tap.”So, there's the optimistic assessment. Peak in 1,5 years, with a plateau at best, most likely a sharp reduction.
"Russia has simply decided that they will control production growth at 10 million b/day; they may well both be able to and decide to produce close to that level for a decade."
"The limitation on production from the Arabian Gulf is mostly due to politics, lack of motivation, investment level, and type of crude, not shortages of reserves. A rapid increase in production is not physically possible at this time. "
"Likely results during the next decade from unconventional sources: combined production is only likely to grow from today’s 2.3 million b/day to 4 or 4.5 million b/day; 6 million b/day is the most optimistic. Oil prices will need to consistently stay above $80/barrel for the investment needed. The environmental impact will be negative."
"Rise in OPEC production will be partially offset by decreasing production in the Rest of World, with FSU production steady. A production peak of ultradeep water fields will allow the “peak” to be a “plateau during the coming decade, followed by a sharp fall."
“By 2010, the production of the fuel that has driven the world’s economy will start to rapidly decline. This will conflict with the steadily increasing demand for oil. The collision of these two trends will lead to shortages and increased prices, providing a strong incentive to shift to alternative fuel resources…Due to unequal distribution through the world of oil and gas supply and consumption, [the upcoming] transition will result in significant shifts in global power and wealth.”
“We are nearing World Peak Oil, with resulting high prices and associated political and economic disruptions."
"Preparation should be carried out on individual, familial, societal and national levels as soon as possible. Every preparative step taken today will prove far cheaper than any step taken tomorrow." - Samsam Bakhtiari
"I was a producer of materiality and I am ashamed of this fact.
I will definitely give up in two years' time. I want to do something else, but I don't know what yet. I want to find a new way of expressing myself ...design is a dreadful form of expression."Points for admittance of guilt, but no points for the cop out.
Suomalainen media on pahasti jäljessä öljymarkkinoiden muutosten ymmärtämisessä. Öljyn tuotantohuippu, öljylaadun heikentyminen ja tuotantokustannusten kasvu loistavat kaikki poissaolollaan suomalaisen median öljyanalyyseissä. Tilalla ovat spekulaatio, pelkopreemiot ja muut koomisuutta hipovat selitykset väitetystä öljyn hintakuplasta.
Tälläkin alueella suomalainen media on auttamattomasti naapurimaiden uutisointia jäljessä. Eikä nyt tarvitse mennä Britteihin, jossa öljyhuippua on raportoitu aktiivisesti kuukausittain jo yli kahden vuoden ajan. Tai Saksaan. Tai Yhdysvaltoihin. Tai Australiaan. Parempaa uutisointia löytyy nimittän lähempää, Ruotsista ja Norjasta.
Ruotsin johtava talouslehti, Dagens Industri, kirjoitti kesäkuun lopulla Jeffrey Brownin kehittämästä Export Land -mallista ja varmisti sen paikkansapitävyyden energiajärjestöjen tilastoista. Lopulta tulos on hyvin yksinkertainen:
"Resultatet blir att den inhemska konsumtionen av olja ökar medan nettoexporten minskar." - Dagens IndustriÖljynviejämaiden sisäinen kulutuksen kasvu syö siis maiden vientipotentiaalia. Vaikka ELM ei olisikaan täydellinen selitys koko Lähi-Idän OPEC -maiden nettoviennin laskulle viime vuosina, on sen osuus lähivuosina vääjäämätön: Lähi-idän öljymaissa on nuorin ja nopeiden kasvava väestö, jonka öljynkulutus nousee elintason kasvaessa kohisten. Optimistisinkaan öljyntuotannon kasvuennuste ei riitä näissä maissa kattamaan kotimaan kysynnän kasvua. Ja kun päälle laskee vielä esim. Saudi Arabian ja Kuwaitin kohdalla maiden johdon toteamukset, että öljyä jätetään kotimaahan tulevia sukupolvia varten, niin yhtälö on valmis.
"Flere land som tidligere var nettoeksportører av olje, har gradvis utviklet seg til å bli nettoimportører, noe som er med på å bevise at ELM-teorien kan ha noe for seg." - Hegnar
Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian.
The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.
Figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3% to food-price rises.
"It is clear that some biofuels have huge impacts on food prices," said Dr David King, the government's former chief scientific adviser, last night. "All we are doing by supporting these is subsidising higher food prices, while doing nothing to tackle climate change."
Posted by The Energy Standard team at 15:21
Posted by The Energy Standard team at 14:29
Posted by The Energy Standard team at 10:19
Net [non-OPEC] increase of 1.2 mb/d expected for 2008-2013
…and the fact that gas liquids, non-conventionals and
biofuels are drivers of growth, not crude
Incremental supply additions from 2008 to 2013:
Non-OPEC crude capacity +1.2 Mb/d
OPEC crude capacity +2.5 Mb/d
OPEC gas liquids output +2.1 Mb/d - output
World biofuels output +0.6 Mb/d (capacity 2.0 Mb/d)
Total supply additions: +6.4 Mb/d (w/ biofuel cap. 7.8 Mb/d)
Total demand subtracted: -7.x Mb/d (+1.4% p.a.)
Spare capacity: -0.6 - -1.x (w/ biofuel max +0.8)
Posted by The Energy Standard team at 23:24
Posted by The Energy Standard team at 10:17
The New Scientist has an article in its June 28 issue with much of the same analysis and warnings that were considered crackpot lunatic thinking just three years ago. My, how times have changed!
Here are some key clippings with comments.
Spare capacity has now all but vanished, oil producers cash in on soaring prices by extracting as much of the stuff as they can.
"There is absolutely no slack in the system any more," says Gal Luft, executive director of the institute for the Analysis of Global Security, a Washington-DC based think tank.
This has left the oil market so fragile that a few well-placed explosives, an energy-sapping cold winter or an unusually intense hurricane season could send shock waves across the globe.
Situation most experts fear is what they call a "psychological avalanche."
[Describes what happens when people find out there's no more oil: hoarding and fighting]
It's not just about fuels. A giant chemical industry relies on oil as its fedstock, and without it many of the products we now take for granted would vanish.So, we are all vulnerable, regardless of whether we drive a car or not.
Much of the economic expansion and growth of the human population in the 20th century is directly tied to the availability of large amounts of cheap oil," says Cutler Cleveland.
There isn't a single good service consumed on the planet, except in rural economies, that doesn't have oil embedded in it. Oil is the lifeblood of the global economy.
Ras Tanure on the Persian Gulf handles 1/10th of world's oil. This makes it a prime target for attack.As discussed here and elsewhere, the supply is so tight and choke points so obvious that it doesn't even require a Shadow Opec to bring down several percentage points of world oil production capacity.
"If you have a facility like this and a plane crashed into it, or terrorists get int and somehow succeed in blowing it up, then you have a very, very significant disruption on your hands. That is what analysts see as a doomsday scenario.
Most industry experts, including geoscientists and economists, who were poolledy by Samid in 2007 said that peak production will occur by 2010. "Now a real concensus is emerging"The article is a good read.
Posted by The Energy Standard team at 18:29