2011 December 16

The Master Resource Report  2011-12-16

Euro or Oil (page 1 )

Did ExxonMobil just admit Peak Oil (page 2 )

IEA – Coal isn’t going away anytime soon (page 3 )

Hi-tech sand? (page 4 )

Don’t count nuclear out just yet (page 5 )

Real Estate Developers Should Pay Attention to Peak Oil

Just as the outer suburbs may prove to be a real estate dead-end over the next couple of decades for those who don’t understand Peak Oil. So will some commercial and industrial property in the wrong location. 

For decades one of the highest priorities for industrial and commercial real estate was easy, high capacity access to the interstate highway system. The ability to move truckloads of goods across the nation by truck was the number one priority. Speed and the big rigs were king. But in a world facing Peak Oil the value proposition changes for many real estate locations.

Access to the nation’s rail network and seaborne (including inland waterways) transport will prove vital. If an industrial park or commercial center is isolated from rail its future will move inverse to the price of diesel. If global trade is part of the business an integrated rail and container network will determine whether that property has or will retain value.

Brazil-  land grab or seafloor grab?

The Brazilian government will be tempted to make a grab for the reserves held by Chevron and others if the opportunities present themselves.

It now is beginning to look like it may have been given a chance. “Chevron Corp. and Transocean Ltd. should halt operations in Brazil and pay 20 billion reais ($10.7 billion) in damages after an oil spill last month, prosecutors urged a federal court.”

It will remain very hard for the Brazilian government not to look at the huge pre-salt oil deposits off its coast as a huge piggy bank. Whether it is the domestic oil company Petrobras or IOC’s like Chevron the attraction will be very difficult to ignore.

The electric cars biggest competitor runs on oil.

Sometimes the future just doesn’t cooperate and unfold as expected. The rise of the electric and plug-in-electric hybrid car may prove to be one of those. The biggest competitor to the adoption of the electric vehicles may well prove to be the very vehicles they were as intended to replace as the internal combustion engine becomes more efficient.

A good example is in the Britain today. “The average new car sold in Britain now does 52.5 miles per gallon, up from 40.6mpg ten years ago. Even so, says Neville Jackson of Ricardo, there remains much scope for improvement: petrol and diesel cars still typically use less than a fifth of the energy stored in their fuel to turn the wheels.”

If the U.S. car fleet were to move over the next decade from an average mileage in the mid twenty miles per gallon range to the upper thirty mile per gallon range the savings in oil could move into the millions of barrels per day. Add in a slower national speed limit along with the gradual rearrangement of driving behavior and the savings in oil consumption helps the economy and carbon emissions.

The driver will be price, both for the fuel and the vehicles. This is where the electrics have their problem for now. But over time this too will improve. So the future may unfold as expected. The U.S. is going to use much less oil tomorrow than today and that is what matters.