Wikinvest Wire

Oil, peak oil, that is

Thursday, May 22, 2008

Today's front page story (it's free!) in the Wall Street Journal describes how the International Energy Agency has taken one step closer to embracing peak oil:

The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.

The Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but the bottom line is already clear: Future crude supplies could be far tighter than previously thought.
But the direction of the IEA's work echoes the gathering supply-side gloom articulated by some Big Oil executives in recent months. A growing number of people in the industry are endorsing a version of the "peak-oil" theory: that oil production will plateau in coming years, as suppliers fail to replace depleted fields with enough fresh ones to boost overall output. All of that has prompted numerous upward revisions to long-term oil-price forecasts on Wall Street.
Not coincidentally, for those of you new to the subject, the folks at The Oil Drum are re-running their series Peak Oil - Whom to Believe?
If you're like me, you might have spent a moment or two in recent months pondering how billionaire oilman T. Boone Pickens, oil banker Matthew Simmons, and many others are suggesting that the world is reaching Peak Oil now, and at the same time, Cambridge Energy Research Associates (CERA) headed by Pulitzer Prize writer Daniel Yergin, and others such as Exxon Mobil, are not predicting a Peak in global oil production until circa 2040 followed by a slow gradual decline. How can such smart and successful people disagree by decades on a topic so vital?
Is it possible they use different data sources? Do they mean different things when they say "Peak Oil"? Do they get different secret handshakes from Saudi princes? Do they have different agendas? Are they using different boundaries of analysis? Is one of them kidding? This 3 part post will address how people can differ so much on something so important as a peak and subsequent decline in world oil availability, addressing both factual and psychological reasons. Does the world have plenty of oil? Maybe, but as I will discuss below the fold, this is not among the questions we should be asking.
Both are worth taking the time to read - much of the explanation for the $130-$135 now required to buy a barrel of oil is contained therein.

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Anonymous said...

The Oil Drum is without peers in online peak oil coverage. I go there every day.

- JS

Anonymous said...

" of crude and other liquid fuels will arc gently upward..."

That's the cutest euphemism for exponential growth I've ever seen!

Anonymous said...

My only concern for peak oil regards its entertainment value.

ExxonMobil was laughing off peak oil a year ago, now they are in its corner. I doubt they got gobs more data to make them change their minds. What they got was threats of increased taxation. Peak Oil is now their defense.

Anonymous said...

Oil is a non-renewable resource and should probably will reach $200 as structurally weak US dollar will continue its gradual slide for a decade of more.

Also the amount of oil waisted by current cars is tremendous: existing generation of "vanity cars" (SUVs are a typical example but any car with 3-4.5 liter engine transporting a single person 20 miles each way belongs to the category) can exist only due to tremendous negligence of officials.

We are stealing oil from future generations. Probably we need new Manhattan project to deal with the problem. Good thing is that oil now became a new global currency. That might accelerate attempts to cut consumption and switch to electrical cars.

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