Hypocracy

[Gawain of Orkeny]

Why should anyone celebrate a policy based on remaining behind the curve?

Because the are against the use of fossil fuels. They care more about the enviorment. They could care less what the price of oil is other than the higher the better.. Thats why I called this thread hypocracy.

[Steppe Merc]

Well yes, the environment is more important than oil prices.

[Red Harvest]

Because the are against the use of fossil fuels. They care more about the enviorment. They could care less what the price of oil is other than the higher the better.. Thats why I called this thread hypocracy.

I assumed you spelled it "hypocracy" as a play on words...as if it were a style of govt...theocracy, autocracy, democracy...and the current administration would be the "hyprocracy."

Your cutesy attempt to point the other way aside, the folks you gripe about wanting alternative energy development and conservation are being progressive, while the approach you embrace is regressive. Progress is trying to develop for the future need, rather than ignoring developing events. You want to invest more in early 20th century tech, while many of us see more potential in investing in later 20th century tech.

After all, it is amusing that you will say we need to be drilling like mad in one sentence, and then in another say this is a refining issue and there is no shortage of oil. Those are contradictory statements.

What is so awful about developing solar, wind, and other technology (including long range fusion work.) Seems a lot more intelligent to be investing in these than in a declining resource. What is so awful about improving energy efficiency? We trumpet productivity improvements as driving our economy, why can't other efficiencies also improve it?

[Gawain of Orkeny]

Your cutesy attempt to point the other way aside, the folks you gripe about wanting alternative energy development and conservation are being progressive

Well Im one of them.

while the approach you embrace is regressive

Oh so increasing supply is now considered regressive?

You want to invest more in early 20th century tech, while many of us see more potential in investing in later 20th century tech.

I want to use what works now and plan for the future.

After all, it is amusing that you will say we need to be drilling like mad in one sentence, and then in another say this is a refining issue and there is no shortage of oil. Those are contradictory statements.

Somday yhou will wake up and realise this is a balancing act. The reason they dont drill more is because they couldnt refine it anyway. We need to both drill and build new refineries,

What is so awful about developing solar, wind, and other technology (including long range fusion work.)

Nothing again Im all for it.

Seems a lot more intelligent to be investing in these than in a declining resource.

First off we have to live now. Secondly once more there is plenty of oil left. We havent even gotten half of it yet at best.

We trumpet productivity improvements as driving our economy, why can't other efficiencies also improve it?

They can but let the market drive it.

Do you think we suddenly started running out of oil around a year ago? Oil is a commodity and its pricwe is whatever they think they can get away wiith. Their predicting shortages in supply and thats why the prices are going up just like they did in the 70s when we were "running out of oil"

[Aenlic]

The current best estimate for total oil reserves world-wide, both discovered and as yet undiscovered, is about 1 trillion barrels.

Current consumption world-wide is about 25 billion barrels per year.

You do the math. That's 40 years of oil left at current consumption levels. But consumption is not steady. It's increasing. So, we have less than 40 years of oil left. But the shortages will start occurring much sooner than that as sources become harder to reach. That 1 trillion barrel estimate includes a rosy view of undiscovered sources. The last major oil reserve find was in the Caspian Sea off the coast of Kazakstan - 30 years ago. The idea that oil production will reach a peak in spite of still-existing reserves, because of a combination of increasing consumption and decreasing finds, is called the Hubbert Peak Oil Thesis.

What are we doing about it? What are we doing to prepare for something we've known about, in essence if not detail, for at least the last 20 years?

Not a damn thing. Not really.

Sources:

Petroleum Equities

Speech by Alan Greenspan to the FRB on this topic in 2004

[Gawain of Orkeny]

The current best estimate for total oil reserves world-wide, both discovered and as yet undiscovered, is about 1 trillion barrels.

You do the math. That's 40 years of oil left at current consumption levels. But consumption is not steady. It's increasing. So, we have less than 40 years of oil left.

Hey look the sky is falling


They have been saying that for how long now?


You dont even take into consideration shale oil. This is a their best quess it says. Well twenty years ago they were saying the samething. 20 years from now the same claims will still be being made. No matter what happens the market and free enterprise will handle it. There is no need for panic and extreme methods.

[Aenlic]

So, Alan Greenspan, the Wall Street Journal, British Petroleum, Shell, Exxon-Mobile, Chevron-Texaco, the UN, The American Petroleum Institute, the Energy Institute, The Colorado School of Mines (Hubbert Center for Petroleum Supply Studies), The Society of Petroleum Engineers and many, many more - all of whom accept the basics of the Hubbert Peak hypothesis - are all wrong and you, the revered and perfect and oh so highly acquianted with the subject Gawain are right. Got it. No thanks, I'll take my chances with the experts instead of someone who thinks a "the sky is falling" sneer is an appropriate response to a real problem.

[Xiahou]

So, Alan Greenspan, the Wall Street Journal, British Petroleum, Shell, Exxon-Mobile, Chevron-Texaco, the UN, The American Petroleum Institute, the Energy Institute, The Colorado School of Mines (Hubbert Center for Petroleum Supply Studies), The Society of Petroleum Engineers and many, many more - all of whom accept the basics of the Hubbert Peak hypothesis - are all wrong and you, the revered and perfect and oh so highly acquianted with the subject Gawain are right. Got it. No thanks, I'll take my chances with the experts instead of someone who thinks a "the sky is falling" sneer is an appropriate response to a real problem.

Did you actually read the article on the federal reserve site? Greenspan said nothing at all about the world running out of oil anytime soon. He actually makes a very level-headed assessment and supports what I've been saying. There are lots of reasons for high oil prices, none of which are that we're going to run out.

While there are concerns of seeming inadequate levels of investment to meet expected rising world demand for oil over coming decades, technology, given a more supportive environment, is likely to ensure the needed supplies, at least for a very long while.

I especially like the "given a more supportive environment" bit. He's so understated.

[Aenlic]

Did you actually read the article on the federal reserve site? Greenspan said nothing at all about the world running out of oil anytime soon. He actually makes a very level-headed assessment and supports what I've been saying. There are lots of reasons for high oil prices, none of which are that we're going to run out.

I especially like the "given a more supportive environment" bit. He's so understated.

Apparently, you didn't read it.

During the past decade, despite more than 250 billion barrels of oil extracted worldwide, net proved reserves rose in excess of 100 billion barrels. That is, gross additions to reserves have significantly exceeded the extraction of oil the reserves replaced. Indeed, in fields where, two decades ago, roughly one-third of the oil in place ultimately could be extracted, almost half appears to be recoverable today. I exclude from these calculations the reported vast reserves of so-called unconventional oils such as Canadian tar sands and Venezuelan heavy oil.

He notes, quite specifically, the exact figure used by the peak theorists. That we now have access to roughly 1/2 of the total amount of oil in the earth's crust. The total amount is estimated to be 2 trillion barrels, the accessible reserves at 1 trillion barrels. The other trillion which is considered inaccessible includes oil shale (a pipe dream, pardon the pun), heavy oil and the rest, such as the possibility of as yet untapped Siberian and East Siberian Sea reserves.

And, as Greenspan says, in a decade the proven net reserves increased by a whopping 100 billion barrels! Wow. Awestruck, I am. That's all of 4 years supply at current demand levels. Woohoo! Demand might as much as double in the next decade, if China's economy really gets cooking. You do the math.

Yep, given a more supportive environment, technology "may" be able to access the other trillion barrels that is currently inaccessible. What he fails to mention is that all that does is double the supply, increasing the run out date from 40 years to 80 years from now. And that's only if some unmentioned and as yet undiscovered technology suddenly appears.

At the absolute rosiest of rose-tinted glasses optimistic, 80 years is it. And that's only if technology in the next 40 years somehow comes up with an as yet undreamd of way of getting to much of the rest of the oil. For it to be any longer demand has to go down. And that isn't going to happen as long as people keep putting their wishful thinking in pipes and smoking it.

I really recommend doing a little research into the issue of the peak oil hypothesis. Maybe it'll loosen up a few calcified brain cells.

[Gawain of Orkeny]

He notes, quite specifically, the exact figure used by the peak theorists. That we now have access to roughly 1/2 of the total amount of oil in the earth's crust

This cant be.

You see this is the little fact you keep ignoring. From your own qoute.

Indeed, in fields where, two decades ago, roughly one-third of the oil in place ultimately could be extracted, almost half appears to be recoverable today

You see we cant even get at half of it now. If you had looked at it that way 20 years ago when we could only get a third we would be out of oil now. Its just a matter of it being profitable to go get. This is what were trying to tell you. Again we havent even tapped into the shale oil deposits yet. There is NO shortage of oil. By the time there truly is we will not need it. Have some faith in science other than those enviormentalist wacko ones.

[Aenlic]

And what I keep trying to tell you is that even if we tap into the oil shale and the other as yet inaccessible sources then all you've done is doubled the available reserves. So instead of 40 years, we're talking 80 years and that's if we can suck up every possible drop and the current consumption rate remains unchanged!

Now if you wish to argue that there is some source that the Society of Petroleum Engineers and a host of other respectable industry organizations haven't counted, then feel free to do so. And please understand when I scoff loudly at your estimates as opposed to the expert's estimates.

If you wish to claim that demand isn't going to increase, then you may do that as well. It's rather absurd; but the White Queen managed to believe six impossible things before breakfast so I suppose you can too.

So, I'm willing to listen to your proofs that the sky isn't falling. Enlighten me. Show me the opinions of the experts that there is no coming shortage of oil and that the peak hypothesis is untrue; and I promise I'll give them all due consideration.

[Red Harvest]

Hey look the sky is falling


They have been saying that for how long now?


You dont even take into consideration shale oil. This is a their best quess it says. Well twenty years ago they were saying the samething. 20 years from now the same claims will still be being made. No matter what happens the market and free enterprise will handle it. There is no need for panic and extreme methods.

And you and I are going to die. Is that the sky falling? No, it's reality. We just hope it won't be any time soon. You might not agree with Hubbert, many thought he was a fool in 1956 when he predicted US lower 48 production would peak in 1970, but he turned out to be right. The interesting notes of late have been the overestimates in the reserves (not underestimates that you are counting on), and the fact that production is falling (as expected) except for in what were artificially constrained regions...Persian Gulf swing producers, who are now out of swing.

There is reason to panic, although panicking is not what we really need. Why have a sense of panic? It's like watching a movie where you can see something bad developing, but the victim cannot. There is nothing you can do in the audience but watch in horror. It is your lackadaisical attitude towards the increasing energy problem that gives me concern. It is also the general public's complete ignorance of what is going on, and stupid obsession with gasoline prices, which illustrates that people like to remain blissfully ignorant.

Free enterprise will handle it? How, like it handled the S&L crisis, or the Great Depression, or the '73 oil crisis, or the Iran-Iraq war oil crisis, or U.S. airline security before 9/11, or the stock market bubble? Did free enterprise put enough lifeboats on the Titanic...or properly train her crews into how to organize abandoning ship? Free enterprise is largely reactive in matters of public crisis. There is not a market for free enterprise to respond to until AFTER the event has hit.

This isn't something free enterprise is going to effectively prepare us for without govt encouragement to prepare. It sure as hell won't be on time, it will LAG badly, because U.S. enterprise is in crisis reactive mode anymore. The president claiming "conservation is not the answer" sure doesn't help and hasn't helped. It's like facing a bear with a double barrel shotgun, only to pluck one round out and throw it on the ground saying, "one barrel is all I'll need!"

More importantly, free enterprise might react properly somewhere...but the odds are that it will not be in the United States. Why? Because we are letting others take the lead while we sit in denial. Almost all other developed nations have been more progressive on energy issues. If two folks have to outrun a bear (since they failed to drop it with that single barrel) who do would you put your money on? The couch potato who routinely put off exercise and never left a buffet line until stuffed? Or the lean one who runs a few miles each day to stay fit?

Oil running out completely in short order isn't the problem. Peak oil is, where production can not keep up with demand...and especially growing demand. The assinine view is that we should put most of our efforts into pumping more, while continuing to use more. The result of this assinine policy is rapidly rising oil prices. The solution proposed: accelerate the assinine policy by trying to pump out faster still. Brilliant, brought to us by the same folks that made the $2 trillion dollar shortfall in budgeting...the very problem that many of us indeed predicted...those same ones you want to discredit.

And this of course completely ignores the massive technical hurdles and environmental aspects of the other fossil fuels you mention. Like it or not, carbon dioxide presents problems, and shale will make those problems accelerate in a way that will likely be beyond our control.

[Red Harvest]

Current consumption world-wide is about 25 billion barrels per year.

This number is likely a bit low, because there are various things being put on an oil equivalent basis (including the reserves.) There are so many factors I won't claim to understand a number of them, but I can see the forest for the trees. It depends also on what you couple it with.

Current production and use is at ~84 million bbl/day for a total of 30.7 billion bbl/yr. Growth over the past 20 years has been about 2% (this is used in various estimates...although it is often more like 1.6% actual.) Demand picks up when the world economy is strong, and flattens out when the economy is weak.

That is how I predicted the extended rise in prices by the way...it was elementary economic principles. We were emerging from a downturn so the industry numbers based on recent downturn influenced past were obviously bogus. Any one with the ability to read cyclic charts should have been able to see it. It was hilarious, I wish I still had all those reports now. They were all wishful thinking crap or worse yet, telling the gullible customers exactly what they wanted to hear. Doesn't mean I could get managers to listen...they think more like your average conservative in this forum, no I'm not kidding.

The true independent experts who study this have pointed out that the appropriate limitation estimates are *geological* and that tech reaches its limits.

[Red Harvest]

I want to use what works now and plan for the future.

No, you want to look at the past and continue to do what worked then. You are a mirror of corporate America at the present. Planning for the future is exactly what you try to discount. You dismiss it as a bunch of lefties and environmentalists. (Tempting to start an ozone/CFC discussion here.) That's why we haven't had a working energy policy. The energy bill that finally made it through was a mere drop in the bucket.

Somday yhou will wake up and realise this is a balancing act. The reason they dont drill more is because they couldnt refine it anyway. We need to both drill and build new refineries,

I'm wide awake. We haven't been doing a balancing act. The alternative energy investment fell to a trickle after the supply based crises of the 70's ended. Energy conservation has been nearly absent in industry since then--didn't seem to matter how good the rate of return was on my energy savings based projects, the managers were not interested. We have tech now that can start shifting our consumption, but it takes time, and we aren't making use of it. Our President openly ignores at least 2/3rds of the tools at his disposal.

Refineries? We've been over that popular piece of nonsense ad nauseum. It fails to explain today's market. In fact, there are efforts in the industry to shut down older refineries still--and I can think of one closure that is being opposed by the very "greenie" populations you complain about. Refinery capacity is added as needed...I should know, I've worked on several recent projects.

Your circular logic does not match the data.

First off we have to live now. Secondly once more there is plenty of oil left. We havent even gotten half of it yet at best.

Stick your head in the sand, poke your fingers in your ears. You want to go on PRETENDING that there is no problem. You have no solution other than to keep doing what we've been doing, despite real changes to the nature of the market and supply. We can live just fine now, but we can also invest in the future, rather than working on the wrong end of the beast.

Do you think we suddenly started running out of oil around a year ago? Oil is a commodity and its pricwe is whatever they think they can get away wiith. Their predicting shortages in supply and thats why the prices are going up just like they did in the 70s when we were "running out of oil"

You still can't get it...how many times do I have to explain the difference? That was an artificial supply reduction, this one is about demand outstripping supply, and not in an artificial way. It would not have mattered so much...but the U.S. no longer had excess supply, it hit its limit in 1970...as Hubbert predicted. But hey, you don't believe that approach. If you did, then you might understand what is wrong with your theories.

We've been running out of the lighter varieties of oil for decades (despite efforts to bolster production and "drill our way out") and now we're starting to fill the crunch. However, yes, we did start running out of production capacity about two years ago. If you go back and look at the "excess" supply capacity numbers I posted in the other thread the change is obvious (unless you are Helen Keller.) With excess supply capacity at less than 1% of total usage, there is no swing buffer, and growing production is critical just to prevent a major shortage. The Saudi's admit they are trying to keep up by putting in new production capacity. Everyone else is already tapped out.

[Xiahou]

Apparently, you didn't read it.

Apparently you didn't even read the part you quoted.

During the past decade, despite more than 250 billion barrels of oil extracted worldwide, net proved reserves rose in excess of 100 billion barrels. That is, gross additions to reserves have significantly exceeded the extraction of oil the reserves replaced. Indeed, in fields where, two decades ago, roughly one-third of the oil in place ultimately could be extracted, almost half appears to be recoverable today. I exclude from these calculations the reported vast reserves of so-called unconventional oils such as Canadian tar sands and Venezuelan heavy oil.

Do you know the difference between net and gross?

Demand vs current production is fairly tight and no doubt it's playing a role in our oil prices- things such as the war in Iraq and the mess that is Venezuela have cut into supply. But, speculation is also responsible for a large part of the current price. The question is, how much? Here's a recent article from Yahoo Financial that talks some about it.

Also, for our reader's perusal is an informative article from wikipedia on the current oil situation. Here are a few excerpts, but I recommend reading it in its entirity.

Compared to two years ago demand is not significantly higher nor is supply significantly lower.

While total consumption has increased [6], the western economies are less reliant on oil than they were twenty-five years ago, due to substantial growths in productivity. In the United States, for instance, each $1000 dollars in GDP required 2.4 barrels of oil in 1973 when adjusted for inflation this number had fallen to 1.15 by 2001

Economists say that the substitution effect will spur demand for alternate energy sources, such as coal or liquified natural gas. The increased price of oil also make previously impractical sources of oil attractive to businesses. The most prominent example of this are the massive reserves of the Canadian tar sands. They are a far less cost efficient source of oil than crude, but at 60 dollars a barrel have recently become very attractive to businesses. Recent months have seen billions of dollars invested in the oil sands.

The increased price of oil might also encourage greater fuel efficiency. Recent years have seen a move towards more fuel hungry sport utility vehicles in the United States and Canada, and this may be stopped by the high price of gas. There is an increasing market for hybrid vehicles since they are more fuel efficient; since the 1973 energy crisis, the front-wheel drive passenger car has replaced rear-wheel drive as the preferred layout for energy efficient cars. There is an increasing demand of crossover sport utilities which are more fuel efficient - especially for those based on passenger car platforms.

[Aenlic]

This number is likely a bit low, because there are various things being put on an oil equivalent basis (including the reserves.) There are so many factors I won't claim to understand a number of them, but I can see the forest for the trees. It depends also on what you couple it with.

Yes, I know it's low. I've been trying to be extra conservative on the number, using the most optimistic of the groups in my initial post, Greenspan and a corporation whose sole interest is in advising petroleum traders. And yet, the ostriches continue to plant their noggins in sandy holes and play silly word games so they don't have to consider the truth.

I have deliberately avoiding using site like this, http://www.hubbertpeak.com/, even though the experts listed on that site are some of the top experts in the field, including the guy who heads the Hubbert Center at the Colorado School of Mines.

So, who are we going to believe on the matter? Those who toe the corporate conservative party line and get their news from dubious sources at best so they won't have to hear anything which makes them uncomfortable, or those whose job it is to know these very subjects? I'm not willing to put my trust for the future of the oil supply solely in the hands of corporations who make their entire profit from the negative side of the supply/demand equation, and would lose money from sensible planning and greatly decreased consumption to delay the inevitable.

[Gawain of Orkeny]

And what I keep trying to tell you is that even if we tap into the oil shale and the other as yet inaccessible sources then all you've done is doubled the available reserves. So instead of 40 years, we're talking 80 years and that's if we can suck up every possible drop and the current consumption rate remains unchanged!

And Im telling you your wrong. Again they said this years ago and we keep finding more. Again its just a matter of making it profitable to extract and find. Besides that in 80 years Im sure we will be consuming far less. If we were really running out of oil we would be doing a lot more about it. You want to believe the oil companies who are making this extra profit that their telling you their running out of product LOL. Heck thats one of my favorite sales pitches. Hey I only have two left you better grap one.

Stick your head in the sand, poke your fingers in your ears. You want to go on PRETENDING that there is no problem

I never said that. I know theres only so much oil and I said we need to develope alternative enrgy. My point is leave it to the market and science and not to the government. Have a little faith in humanity.

[Ser Clegane]

You want to believe the oil companies who are making this extra profit that their telling you their running out of product LOL.

Actually IIRC oil companies even tend to overstate their reserves.

Royal Dutch/Shell had to correct the value of their reserves downwards and received the appropriate reactions on the stock market.

So to say that oil companies play dramatize the situation it oversimplifying the situation a little bit.

[Red Harvest]

I never said that. I know theres only so much oil and I said we need to develope alternative enrgy. My point is leave it to the market and science and not to the government. Have a little faith in humanity.

Rather than actively do something to address the problem, you want me to pray? Wish for the best? Hope folks realize what is happening before it actually occurs...like the most recent run up? I can't find any basis for having such faith in humanity at the moment.

This is the sort of problem where the role of government can be very positive in priming the market and development. Government is there to deal with the bigger issues that we can't prepare for with out it (defense, infrastructure, etc.) Govt has been the key component behind the build out of infrastructure. What we are talking about is not a welfare system for energy, but instead a strategic shift in investment and research. It depends on market and business, but the govt needs to help along the process so that we have things as they are needed, rather than later. With energy, the economic cost of responding late is huge because of the relative inelasticity. Especially when you already run a massive trade deficit...

The result of what you suggest is that we suffer the consequences of being behind, and that would work as your market driver. As I've pointed out, business will *respond*...later, not by being there waiting for us to catch up to them. They want the market clearly established and there before they invest. Government doesn't have to act that way. Even if we start to behave pro-actively, it won't help shift fleet fuel efficiency all that much for about 5 years. Ditto for major industry fuel efficiency--efficiency improvement in the short term usually comes from folks actually shutting down, becasue they can't afford to operate anymore. My approach differs in that I would prefer that we try to keep up or get in front of the problem, rather than chasing it.

The inelasticity of energy demand is largely absent from the "oil supply is not a problem" articles. Instead the articles say: demand will decline if prices rise, therefore producing self correction. They simply ignore the well known inelasticty of energy demand. I can't take such articles seriously.

What really happens when oil prices rise dramatically? From what I've seen looking at global growth and contraction is that *growth* in demand halts, but not so much the base usage. The base usage doesn't tend to shrink, at least not on the short scale of a year or two...despite doubling or tripling or more of prices.

[Gawain of Orkeny]

So to say that oil companies play dramatize the situation it oversimplifying the situation a little bit.

Well Im trying to get through to these guys

Yes, there is an inflation risk. Yes, both Britain and the US are in rate-raising mode. And yes, there are anxieties over terrorist attacks on oil installations. But the world is not running out of oil.
There may be many fears spooking the world's oil markets. But there is no oil "shortage", just as there was no oil "shortage" in the early 1970s or the early 1990s. There are our own apprehensions. And then there are the facts of the matter.

According to a paper in the latest edition of Science magazine, proven world oil reserves exceed 1 tn barrels. Overall, the paper reckons that the world retains more than three trillion barrels of recoverable oil resources. Far from oil "running out" as some might have it, the big story of the oil industry over the past 50 years has been the way in which technological change has continuously worked, not only to yield up new discoveries but also to upgrade the size and extent of existing fields.
The paper, Never Cry Wolf -- Why the Petroleum Age is Far from Over, cites the example of the Kern River field in California, first discovered in 1899. Calculations in 1942 suggested that 54 mm barrels remained. In fact, over the next 44 years the field produced 736 mm barrels and in 1986 was reckoned to have another 970 mm barrels remaining.

From 1981 to 1996, the estimated volume of oil in 186 well-known giant fields across the world discovered before 1981 rose from 617 to 777 bn barrels -- and this without new discoveries. This trend, the paper argues, is likely to continue. For example, the Kashagan field in Kazakhstan was deemedin the second half of the 1990s to hold between two and 4 bn barrels.
In 2002, after completion of only two exploration and two appraisal wells, estimates were officially raised to between seven and 9 bn barrels. In February this year, after four more exploration wells in the area, they were raised again to 13 bn barrels. Recovery rates from fields worldwide have also increased, from about 22 % in 1980 to 35 % today.

Doomsters are wrong -- there's plenty of oil

And again this isnt touching on shale oil. As I said its the enviormentalists who are behend this. They want alternative enrgy sources developed not because their cheaper but because their cleaner. Theres absolutley nothing wrong with that. In fact as a also stated Im all for it. But dont try telling us were running out of oil. They cant wait for that day. Again this is the hypocricy Im speaking about. Just come out and tell the truth.

More

From that snapshot the oil situation doesn't look good. But there's little reason to assume that the next five years will simply see a continuation of current trends. Thanks to a combination of higher prices, increased exploration and production spending, and improved technology (page 32), oil supplies are poised to grow much faster than they have in recent years. Cambridge Energy Research Associates (CERA), a respected energy consultant, sees 20 or more major new fields coming on line each year through 2010. Altogether those fields could boost worldwide production capacity 15%, from 87.9 million barrels per day to 101.5 million by the end of the decade, CERA estimates. As a result, supply should exceed demand by 7 million bbl. per day, a huge leap from the current cushion of 1 million bbl. That should take pressure off prices. "OPEC countries have the potential, and [most] are increasing production," says Peter Jackson, a CERA researcher. "Non-OPEC production has increased at quite a lick compared to the 1990s."

Where is the new supply coming from? Pretty much across the globe. After hiking its exploration-and-production expenditures by 50% since 2000, to $12 billion a year, Exxon Mobil Corp. (XOM ) expects to add more than 1.2 million bbl. per day of new supply by 2007 from 27 projects, including ones off the coast of Angola and Russia's Sakhalin Island. Chevron Corp. expects its Big Five fields in West Africa, Australia, the Gulf of Mexico, and Kazakhstan to generate 800,000 more bbl. per day by 2009 -- a third of its current production. "We've got that pretty well mapped out," says Chevron Vice-Chairman Peter J. Robertson. "Projects are more complex now. They take a little longer. There's still plenty of oil in the world."

Is There Plenty Of Oil?

[Red Harvest]

Actually IIRC oil companies even tend to overstate their reserves.

Royal Dutch/Shell had to correct the value of their reserves downwards and received the appropriate reactions on the stock market.

So to say that oil companies play dramatize the situation it oversimplifying the situation a little bit.

Yep, it was about a 20% adjustment initially (3.9 billion bbls), but it has been restated several times since then and it looks like it is 23% now. There have been a number of questionable reserve increases over the years by various components of the industry. There is considerable potential for this to burst upon us like the accounting scandals in the U.S. stock market. It is the same sort of thing, being "aggressive" with the numbers and pushing the envelop--the motivators are identical. There is plenty of wiggle room and the rules (weak as they are) vary greatly from country to country. The Saudi Aramco reserves are questioned as well...but there is no good way to confirm them.

The following has some very good comments in it.
Discussion of the World Oil Market

From the article:

The notion that finding and development (F&D) costs would steadily fall also now seems illusionary. While F&D costs stayed in a $5 to $7 per bbl range throughout the past decade, the total exploration and production capital expenditures rose from a steady $55 billion to $60 billion in the first half of the 1990s to over $124 billion in 2000. The sole reason that F&D costs per bbl stayed low was the rise in reported proven reserves.

New big discoveries are not happening we are now in the phase of doing a better job of extracting what we have.

Also from the article:

In 2004, oil markets finally began to shatter conventional beliefs. The widely held belief that $30 oil would cause a recession failed to pan out. The idea that high prices would soon induce a surge in new oil supplies never materialized. The theory that sustained growth in global oil demand was unlikely suddenly shifted to a more ominous question: Is oil demand growth now becoming a runaway train?

The bolded part is something I picked up on earlier...many articles talk of recoverable reserves at X dollars per barrel. By their logic, production should rise rapidly as price rises. Yet price hit levels far beyond what they predicted, and production is nowhere near keeping up (driving prices back down to predicted levels.) As some of the independent researches have noted, there are geological limits that are far more important than the current assumptions about recovery and tech improvement with regards to prooduction.

The article points to a system that is bottlenecked throughout. Distribution, production, exploration, and refining (on TYPE because 90% of discoveries are heavy crude.) It clearly shows this is a demand based problem, rather than some easily broken bottleneck. (Not mentioned with regards to refining is that its excess capacity in the U.S. exceeds the excess production capacity by several fold--note that is the excesses, not the totals.)

[Red Harvest]

Gawain,

The funny part about the links is all the boundless enthusiasm based on speculation, rather than science. The second article is counting on production from fields that have not been established. (It also appears to be about 3 million bbl/day in excess of current actual production levels...but never mind that.) The article also fails to mention the decline of many fields, such as the mature ones mentioned in the prior article. The mature ones continue to produce less each year. Contrary to what the article says, oil production has been declining outside of the Persian Gulf and Former Soviet Union.

At the rate things are going, we should have a pretty good indication in about a year (barring global recession whacking demand.) Afterall, we've used nearly a trillion barrels already, and are on course to use another trillion over the next 25 years. So even 3 trillion additional would run out in 60 years or so. Not to mention the CO2 impact on our lives.

Of course, it's not all about running out...it is more about how fast can you reasonably produce it and what happens to a resource when the end of it can be seen.

[Xiahou]

I see now that the 'sky is falling' crowd is now ignoring Greenspan once it was shown that he wasn't supporting your position- how convenient. He was an expert who we were fools not to believe when you thought he supported your view- now, well... look over here these experts still say what I believe. For every 'expert' you find, I can find another who takes a more level-headed view.

Look, obviously, there is a finite amount of oil out there- but the idea that we're going to wake up one morning and there will be no more gasoline is ridiculous. Every rational economist I know of expects oil prices to slide in the coming months due to the amount of the price that's due to speculation. Of course, prices aren't going to recede down to previous levels, but the fact is, even at today's prices, oil isn't expensive enough to justify transitioning many of the alternative forms of fuel that are currently available. The notion that we should further artificially inflate prices through additional taxation is counterproductive.

[Aenlic]

His facts haven't changed, his facts are the same facts used by all of the others, except the pie-in-the-sky everything's rosy crowd. His interpretation of the facts only speaks to the immediate future of oil prices, that's where he wanders off into speculation about possible technological advances that haven't happened yet. Economists don't have a very good record when it comes to technology and its effects on the economy. He doesn't address what will happen when the supply reaches the peak. I included his comments because they used the same figures of an increase from 1/3 of the oil to 1/2 of the oil - to 1 trillion available barrels in reserves. It seemed reasonable to expect that using any of the primary sources would just bring out the old "that's not a reputable source" excuse. My mistake in not foreseeing that you would instead focus on Greenspan's reliance on some as yet uninvented technology to save his economist bacon. But the numbers still stand as he used them to set up the speech.

Please feel free to argue instead with the Petroleum Equities site, or the Society for Petroleum Engineers or the Colorado School of Mines, all of whom have a very real interest in trying to be as accurate as possible - it's their job. I noticed you've been ignoring the other sources. You've focused solely on the predictions of Greenspan rather than the facts as I used them. That's fine. Here's something you might find enlightening, from WorldOil.com, the online version of the industry/trade magazine:

TABLE 1. Projections of the peaking of world oil production.
Projected Date Source of Projection Background & Reference

--------------------------------------------------------------------------------

2006-2007 Bakhitari, A.M.S. Iranian oil executive a
2007-2009 Simmons, M.R. Investment banker b
After 2007 Skrebowski, C. Petroleum journal editor c
Before 2009 Deffeyes, K.S. Oil company geologist (ret.) d
Before 2010 Goodstein, D. Vice provost, Cal. Tech e
Around 2010 Campbell, C.J. Oil company geologist (ret.) f

--------------------------------------------------------------------------------

After 2010 World Energy Council World non-government org. g
2010-2020 Laherrere, J. Oil company geologist (ret.) h
2016 EIA nominal case DOE analysis/ information i

--------------------------------------------------------------------------------

After 2020 CERA Energy consultants j
2025 or later Shell Major oil company k
No visible peak Lynch, M.C. Energy economist l

a Bakhtiari, A.M.S. "World Oil Production Capacity Model Suggests Output Peak by 2006-07," Oil and Gas Journal, April 26, 2004.
b Simmons, M. R., ASPO Workshop. May 26, 2003.
c Skrebowski, C., "Oil Field Mega Projects - 2004," Petroleum Review, January 2004.
d Deffeyes, K. S., "Hubbert's Peak-The Impending World Oil Shortage," Princeton University Press. 2003.
e Goodstein, D., "Out of gas - the end of the age of oil," W.W. Norton, 2004.
f Campbell, C. J. , "Industry urged to watch for regular oil production peaks, depletion signals," Oil and Gas Journal, July 14, 2003;
g "Drivers of the energy scene," World Energy Council. 2003.
h Laherrere, J. Seminar Center of Energy Conversion. Zurich. May 7, 2003
i DOE EIA. "Long- term world oil supply." April 18, 2000. See Appendix I for discussion.
j Jackson, P. et al. "Triple witching hour for oil arrives early in 2004 - but, as yet, no real witches." CERA Alert. April 7, 2004.
k Davis, G. "Meeting future energy needs," The Bridge. National Academies Press, Summer 2003.
l Lynch, M. C., "Petroleum resources pessimism debunked in Hubbert model and Hubbert modelers' assessment." Oil and Gas Journal, July 14, 2003.

(from http://www.worldoil.com/magazine/mag...ting-Hirsh.htm)

Note that in the general survey, only one source cited no date for a peak, an economist. Gee, go figure. All of those experts are "sky is falling crowd" and the one economist is the only true expert who knows what he's talking about, eh? Riiiight.

And, Gawain, you might want to read that article as well. It specifically states that the western oil shale resource in the U.S. amounts to a grand total of a possible 130 billion barrels. That's just 5 years worth of oil, without any increase in consumption. The article also says that current estimates for increased demand have it at 50% more than now by 2025, making your oil shale good for only 3.5 years.

[Strike For The South]

The oil cant be gone it needs to hold out for a couple of months just till I get my lisnce and my truck

[Red Harvest]

I've been ignoring Greenspan since he ignored the fiscal realities of budget projections to support a hairbrained scheme and supply side econ back in 2000/2001.

Since when was Greenspan an expert on oil? The "experts" you speak of are not independent ones. And those "experts" have been largely wrong for the past two years.

This looks like a rather common example of herd mentality, something the experts are just as prone to. Most "experts" try to follow the herd even when there are disconcerting signs ahead. It is predicting the path largely from looking in the rear view mirror, rather than developing a deeper understanding based on contradictory indications. This price run up has not been like the others. And we've burned about 500+ billion bbl's of oil since the last major spike in '79.

You might not like the other theories, but they certainly have done well in explaining U.S. production and the peak that occurred in 1970/1971. Despite vehement denials that this would be the case, efforts to "drill our way out" have failed and U.S. production keeps falling.

[BDC]

I doubt oil is about to run out, certainly hope not anyway.

I expect prices to rise though as India and China desperately try to get hold of as much as possible. And even more supply issues.

Hopefully someone will create a viable alternative pretty swiftly before things get really hot. Especially as the dollar is linked to the barrel of oil so strongly. America in recession doesnt sound too fun either.

[Red Harvest]

The notion that we should further artificially inflate prices through additional taxation is counterproductive.

Counterproductive to what? It will end up decreasing future demand, which makes us less dependent on oil imports, it also means lower U.S. prices longterm (see the inelasticity part again.) It should move us closer to where we need to be long term--with investment in long term solutions rather than short term. It will bolster U.S. research, education, and leadership...it is investment in ourselves. If you see that as counterproductive then you live in a mighty strange place.

The idea of additional taxation is to reduce the economic burden later through investment today. It isn't general funds or social programs and such a tax should not be used for those. Sheesh... Of course, too many Americans like you have the compulsive consumption disorder, max out the credit cards, max out the national debt, all for "ME, ME, ME TODAY, TODAY, TODAY" with zero sense of the future.

The trends and theory indicate the oil prices on average will inflate faster than the rest of inflation and we are putting ourselves in a position where our economy and security are at risk. Seems worthy of investment.

[Xiahou]

Despite vehement denials that this would be the case, efforts to "drill our way out" have failed and U.S. production keeps falling.

Do you think that could have anything to do with bans on drilling? There are reserves off the west coast that are totally untouched due to drilling bans. Would they make the US energy independant? Of course not- but the fact that we can't even consider them is silly. And as Greenspan said- our global reserves are still growing faster than we are depleting them.

The "experts" you speak of are not independent ones. And those "experts" have been largely wrong for the past two years.

And your experts are totally independant and unbiased right? And for how many years have the "experts" in your crowd been wrong? How many times have they claimed with "incontravertable" evidence that we should have run completely out of oil by now?

It specifically states that the western oil shale resource in the U.S. amounts to a grand total of a possible 130 billion barrels.

Really? According to the DOE shale oil reserves are in excess to 2 trillions barrels. Quite a disparity don't you think?

[Red Harvest]

And your experts are totally independant and unbiased right? And for how many years have the "experts" in your crowd been wrong? How many times have they claimed with "incontravertable" evidence that we should have run completely out of oil by now?

I'm not aware of them actually predicting we would be out by now, nor are they saying we will run out in the near future. The case is really an economic one. However this clearly shows the fallacy in your thinking. Unlike you and some other "experts," they have an understanding of the impact oil demand's inelasticity to pricing. You believe we have to run out before we are in serious trouble. That's not what they are saying, nor is it what I am saying.

One of these days perhaps you will start to put the economic concepts together.

Right now, you are still stuck thinking about the artificial spikes of the 70's...trying to use that to discredit those predicting production peaks. I'm split as to whether you are being dishonest by trying that tactic, or if you are being dense. There is a lesson to be learned from those spikes, however. The lesson was that the 1970 peak in U.S. oil production (which was predicted--and scoffed at by people thinking much like you) made the spikes painful and possible. It illustrated how increasing U.S. demand had made it very vulnerable when its own supply could not meet internal demand.