Posts Tagged ‘oil price’
Oil Prices
Over at the Guardian there is a nice little graphic on oil prices I cannot embed here. But it is worth a look as it has explanatory spots on each of the peaks and troughs over the last ten years.
The real question is “How long can it last?” And, thanks to Andy in Germany we have a guide to that too.
There is no doubt that demand is down – and that includes places like China which have been one of the biggest resaons for increases in demand recently
Over the next two decades, some experts say, oil production will peak at around 95 million barrels a day.
Other experts say that it has peaked already
One big problem is that oil fields have a natural rate of decline as oil gets pumped out. The rate varies widely from field to field, but the global average is about 5 percent a year. So, just to maintain output, producers around the world must find and develop about six million barrels of oil a day. To increase global oil production by 1.5 million barrels a day, that figure rises to 7 million or 8 million barrels a day, or at least 2.5 billion barrels a year – a monumental task that gets tougher as production grows.
“The energy crisis is fundamentally a problem of supplies, not of energy demand,” said Frédéric Lasserre, the head of commodity research at Société Générale in Paris.
And the great chorus of “drill baby drill” to the south of us ignores the reality that the reserves in places currently thought to be untouchable due to environmental concerns are going to take a long time to be exploited even if the unthinkable happens and the Republicans manage to steal another election.
the cost of producing extra barrels of oil is rising. As prices fall, this might cause high-cost producers, like those working Canada’s vast oil sand deposits, to shut down production or curb their expenses.
Which is, I think, the first time I have seen that suggested. Of course, the tar sands have to be shut down – and quickly – if we are serious about stopping the current disastrous slide into global catastrophe, but no one in any Canadian government is going to even think about that. Indeed the opportunity for more drilling in the Arctic is about the only official reaction so far to the new predictions on the rate of change in global warming. But it might put a crimp in some of the pipeline schemes which threaten our coast with a lot more tankers.
“the biggest crisis facing the world”
The first two stories I read in this morning’s Obeserver leave me depressed.
Gordon Brown is in Jeddah trying to persuade OPEC to open the taps a bit more. And that is his quote I used for the headline. He thinks the oil price is the problem and that therefore more oil coming on to the market to meet rising demand will solve it. That is, lower the price.
The second story is that “the majority of the British public is still not convinced that climate change is caused by humans – and many others believe scientists are exaggerating the problem.”
So at least Gordon Brown is in step with his constituents. Although most of the analysis is what that means for his political future. Not, what does this mean if the world does not have leadership that is prepared to tackle global warming. Brown was trying – unlike Bush and Harper.
There is a deal of debate about why the Brits are not convinced but the phrase “many people said they did not want to restrict their lifestyles” sums it up neatly for me. And that feeling is not confined to the British either. And the thing they like to do is point to Al Gore and ask how big his carbon footprint is, and though that somehow excuses them from actually dealing with the future that faces us all and in a much shorter time frame than was expected.
It is not as if any of this experience is actually new or different. Throughout my life there have been “end of the world as we know it” scares. The bomb, the hole in the ozone layer, DDT, the series of oil shocks, the rise of terrorism and so on. Most of the world is poorer and sicker than us – and we have actually been cutting back on the aid we give them. The population explosion was always a problem but the religious convictions of a few US marginal seats mean we do not deal with that or AIDS/HIV in any way that might actually work. The tv screen fills with little naked black babies who are going to die on a regular basis – and floods and disasters seem to occur with monotonous regularity in all the poorest nations. Nothing is being done to help Haiti or the Sudan – or nothing effective anyway. It is no wonder that people in the rich countries turn their attention away after a while from huge problems that seem so intractable. And listen to pundits paid for by big business who will tell them comforting lies. And sell them a big screen tv to watch “reality”.
The biggest crisis facing the world is our own indifference to our fate – and the wickedness of a political leadership that will allow that to happen. The good thing about the credit crunch and the oil crisis is that both were long overdue and a correction to over consumption and wastefulness that had to occur if we are to have a planet we can continue to occupy. And I used to reflect on what I heard the elders say about how this will affect our grandchildren. But most of the people alive today will see the impact of changing weather patterns, rising sea levels, worsening shortages of basic necessities – food, fresh water, secure shelter – and sudden catastrophic events such as the floods currently devasting the American mid west. Becuase it is not only Bangladesh and all those islands in the Pacific that are at risk. We all are.
Predictions – not if I can avoid them
I was called early this morning by News 1130 who wanted me to talk about the carbon tax and how people would react. I pointed out that the recent oil price increase was much more dramatic than any impact of the new carbon tax, and would have a much more dramatic effect. The point really is that the carbon tax revenues go to government, which could use them to run energy efficiency programs or invest in transit. But the profits from high oil prices just go to the oil producers who are not doing very much to help cope with high energy costs.
So that got us into the rate at which oil prices will climb. And at that point I did my schtick about the crystal ball being taken back to Canadian Tire. Yes it will get to $200 a barrel, but no-one can forecast when. The expectation of higher energy costs has already started to affect people’s behavior – vehicle miles travelled have started dropping in the US, more people are riding their bikes or transit, and that holiday in Cabo San Lucas looks less doable when the budget is stretched. Will people move from the suburbs? Well some will, but condos in Kits are already unaffordable for many. And anyway, in a mulitiple earner, whose commute is the most imporatant?
Just talking off the cuff, with no resources to hand (I was putting up a rail in my son’s closet at the time) I managed to burble on quite a bit. But I am not sure I want to sit here listening to the constant yammering of news radio just to check that what i said made sense. Let me know if you listen.
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