The Master Resource Report 2011-10-21
Will 2011 set a new record high for oil. (page 1 )
Guest Report from Ireland. (page 1 )
There is more to the Bakken then just oil. (page 2 )
Bad news for winter heating cost. (page 3 )
Thermal and PV solar. (page 3&4 )
It is all about price
If a consumer can no longer pay the price being asked for oil they have hit Peak Oil. Whether it is a supply constraint or a price constraint their ability to acquire and use oil has ended. This is the point Jeff Rubin made this week in his Globe and Mail article.
For those who don’t understand that Peak Oil is manifested in price the concept of Peak Oil will never be understandable. They will continue to focus on resources, reserves and new little discoveries that don’t even balance depletion. Price determines when each consumer or business experiences Peak Oil so until that point is reached it is easy to ignore.
Maybe the term should be Peak Economic Oil to get the price component into the discussion.
Speaking of price
It is great to find someone willing to predict price. “The downside to oil prices is unlikely to be anything as severe as during the 2008-2009 cycle,” wrote Amrita Sen and Roxana Molina of Barclays Capital in London. — “We maintain our price forecast of $115 per barrel in 2012 and expect $90 per barrel to hold as a sustainable floor even under gloomy macroeconomic conditions,”
That net export problem again.
Net oil importers like the U.S., China and Europe depend on the exports from the net exporting countries like Saudi Arabia, Kuwait and Iraq which is a potential source of increased exports. However, the trend is in the other direction and this news on new additions to refining capacity support that trend’s continuation.
“The Organization of Arab Petroleum Exporting Countries reported in June that Arab countries’ refining capacity is expected to increase by 5 million bpd to 12.4 million in the next three years.” While some of this refined product will make it onto the global products market most likely a large portion will be retained for domestic consumption. If only 20% is retained it would reduce exports by 1 million barrels per day which is roughly equal to Saudi Arabia’s exports to the U.S. Put another way is it about what Charlie Maxwell indicated Opec’s spare capacity was back in September (page 2).
Don’t Worry Be Happy – Technology Will Saves US!
Wow, “a whole new Earth”. Now that is technology and magic all rolled into one!!!
The author’s article in Forbes conveniently ignores a few realities about that new planet.
- The need to compensate first for depletion of approximately 4 million barrels per day per year from existing production first before any net new production comes to the global market.
- The flow rate from these resources is not the same as conventional sources.
- The net energy yield is lower. This one would really confuse him.
- The cost of extraction puts an economic limit on the consumers that can afford it.
- The belief that all shale or geology will support the manufacturing model.
- Assumes there will be no other limiting factors in its extraction, water being the best example.
- The scale: Check out the Cubic Mile of Oil for a sample.
These new resources will be exploited and will in many cases add to the energy flows. But to assume they will be “hot swappable” and scalable substitutes for conventional fuels may prove false and carry a cost that is not at all understood by proponents today.
Saying that technology has allowed humans to create a “whole new Earth” may just be the ultimate act of hubris.