Tag Archive for 'oil'

Peak oil is here - now what are you going to do about it?

Published
by
Tom Raftery
on July 2, 2008
in oil
. 0 Comments

Congressman Roscoe Bartlett [R] in the video above addresses the US congress on the liklihood that we have hit peak oil.

Congressman Bartlett has been banging this drum since 2005 but he received an unlikely ally in the International Energy Agency yesterday! The IEA is not known for being alarmist and is typically extremely conservative in these matters however yesterday’s Medium-Term Oil Market Report from the IEA contained some interesting nuggets which suggest that they are coming around to the “Peak Oil is here now”, way of thinking.

Nobuo Tanaka, Executive Director of the International Energy Agency speaking at a press conference at the World Petroleum Congress, emphasized that market fundamentals were the main underlying factor behind high oil prices. “OPEC production is at record highs and non-OPEC producers are working at full throttle, but stocks show no unusual build. These factors demonstrate that it is mainly fundamentals pushing up the price,” he added.

In other words, no build up of stocks means it is a simple case of supply and demand, not speculators, which is causing the current price increase.

This is not good news.

The report goes on:

Over 3.5 mb/d of new production will be needed each year just to hold global production steady. “Our findings highlight again the need for sustained, and indeed, increased investment both upstream and downstream — to assure that the market is adequately supplied,” stated Mr. Tanaka.

But figures for new production have been falling year-on-year, never mind increasing 3.5mb/d.

Ok, so if we say peak oil has arrived and we are never again going to see a barrel of oil go below $120 per barrel (in fact it will trend ever upwards over time), just what are you going to do now that you have that information?

Will you start an efficiency drive in your company? Remember your financial accounting - saved overhead goes straight to the bottom line!

Will you buy a hybrid car? Will you install solar/wind generation capacity at your place of work/home? Will you go vegetarian?

We are headed into challenging times but for people and companies who make the right choices, there is, as ever, money to be made!

by-sa

Bring On The Renewables Bubble

Published
by
monkchips
on June 4, 2008
in renewables
. 0 Comments

Power Lines
Photo Credit chefranden

I was talking to Tom last night, and it struck me that a bubble won’t be all bad. There are a couple of reasons why. First off, unlike the last time a green bubble popped when oil prices collapsed in the 1980s, this time around we have China and India to sustain demand, and oil prices.

So why would a bubble be good? For one, we need the inward investment to create an infrastructure capable of serious lobbying, to be able to create favourable Green Tape (the rules, regulations and tax regimes surrounding renewable investments). At the moment energy lobbying is clearly in the hands of the oil and gas companies. This balance needs some redress, and massive capital injections are going to help.

Finally lets not also forget that bubbles can and do change the world. The first internet “bubble” popped, but you’re not about to tell me the transformation is over, and or has even started, yet…Innovation is discontinuous, and that’s why I am not afraid of some bubble tendencies. We just need to make sure some of the gum sticks when it bursts…

 

picture courtesy of chefranden on Flickr under creative commons Attribution 2.0 license.

 

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High oil prices are a good thing!

Published
by
Tom Raftery
on May 29, 2008
in oil
. 8 Comments

Houston Smartypants Car
Creative Commons License photo credit: Lori Greig

I wrote a post a couple of weeks back saying that the sooner oil reaches $200 per barrel, the better. Unsurprisingly, it generated a bit of comment!

So I was mighty chuffed to read Thomas Friedman’s superb Op-Ed in the New York Times yesterday where he made a very similar argument.

Thomas said:

there is no short-term fix for gasoline prices. Prices are what they are as a result of rising global oil demand from India, China and a rapidly growing Middle East on top of our own increasing consumption, a shortage of “sweet” crude that is used for the diesel fuel that Europe is highly dependent upon and our own neglect of effective energy policy for 30 years.

Cynical ideas, like the McCain-Clinton summertime gas-tax holiday, would only make the problem worse, and reckless initiatives like the Chrysler-Dodge-Jeep offer to subsidize gasoline for three years for people who buy its gas guzzlers are the moral equivalent of tobacco companies offering discounted cigarettes to teenagers.

I like the discounted cigarettes to teenagers analogy but it doesn’t go far enough. You give discounted cigarettes to teenagers, you kill them. You give discounted petrol/gas and you kill the planet. In effect, with its massive subsidies for oil companies (subsidies for oil companies? who thought that was a good idea?), this is what the United States administration has been doing for decades. But we digress.

He goes on to quote the arguments of energy economist Philip Verleger Jr. who wants a “price floor” - a guaranteed minimum price below which gas will not go:

$4 a gallon for regular unleaded, which is still half the going rate in Europe today. Washington would declare that it would never let the price fall below that level. If it does, it would increase the federal gasoline tax on a monthly basis to make up the difference between the pump price and the market price.

To ease the burden on the less well-off, “anyone earning under $80,000 a year would be compensated with a reduction in the payroll taxes,” said Verleger. Or, he suggested, the government could use the gasoline tax to buy back gas guzzlers from the public and “crush them.”

But the message going forward to every car buyer and carmaker would be this: The price of gasoline is never going back down. Therefore, if you buy a big gas guzzler today, you are locking yourself into perpetually high gasoline bills. You are buying a pig that will eat you out of house and home. At the same time, if you, a manufacturer, continue building fleets of nonhybrid gas guzzlers, you are condemning yourself, your employees and shareholders to oblivion.

With the current high prices for gas/petrol in Europe and the US, the message is starting to get through. Te demand for hybrid cars is growing daily as Thomas noted when he went to buy a new one:

I was visiting my local Toyota dealer in Bethesda, Md., last week to trade in one hybrid car for another. There is now a two-month wait to buy a Prius, which gets close to 50 miles per gallon. The dealer told me I was lucky. My hybrid was going up in value every day, so I didn’t have to worry about waiting a while for my new car. But if it were not a hybrid, he said, he would deduct each day $200 from the trade-in price for every $1-a-barrel increase in the OPEC price of crude oil. When I saw the rows and rows of unsold S.U.V.’s parked in his lot, I understood why.

The absolute worst thing which could happen now would be for oil prices to drop again. Companies who had invested heavily in renewables would potentially go out of business and fuel efficiency would no longer be a primary concern for car buyers.

No, high oil prices are a good thing. Nothing will move us off the carbon economy as effectively as a strong financial incentive.

by-sa