Tuesday, January 16, 2007

What peak oil? Did we invade Iraq to keep its oil in the ground? Is it deja vu all over again with Iran?

WTF? That was one startling headline in the Washington Post this morning -- Saudi says no need to panic over oil price drop. Yeah, that really would be distressing, wouldn't it -- oil prices going down? The article explains:
Saudi Oil Minister Ali Al-Naimi said on Tuesday output cuts already agreed by OPEC had removed much of the world's excess supply and there was no need to panic over a steep fall in prices.

[...]

The Organization of the Petroleum Exporting countries decided in October to cut supply by 1.2 million barrels per day (bpd) from November and last month agreed a further reduction of 500,000 bpd to take effect from February 1.

[...]

A 15 percent price plunge since the start of 2007 has many OPEC producers deeply concerned and Venezuela calling for an emergency meeting to take a further 500,000 bpd off the market.
In short, all those stories about "peak oil" to the contrary, the world seems to be awash in oil -- so much so that producers are apparently having a hard time keeping production low enough to produce the prices they want. It's enough to make you wonder whether Greg Palast wasn't right after all, when he argued last summer that, yes, the Iraq war was about oil, but no, it was not about controlling it in order to sell it. It was about controlling it in order to keep it in the ground.
Did Dick Cheney send us in to seize the last dwindling supplies? Unlikely. Our world's petroleum reserves have doubled in just twenty-five years -- and it is in Shell's and the rest of the industry's interest that this doubling doesn't happen again. The neo-cons were hell-bent on raising Iraq's oil production. Big Oil's interest was in suppressing production, that is, keeping Iraq to its OPEC quota or less. This raises the question, did the petroleum industry, which had a direct, if hidden, hand, in promoting invasion, cheerlead for a takeover of Iraq to prevent overproduction?

It wouldn't be the first time. If oil is what we're looking for, there are, indeed, extra helpings in Iraq. On paper, Iraq, at 112 billion proven barrels, has the second largest reserves in OPEC after Saudi Arabia. That does not make Saudi Arabia happy. Even more important is that Iraq has fewer than three thousand operating wells... compared to one million in Texas.

That makes the Saudis even unhappier. It would take a decade or more, but start drilling in Iraq and its reserves will about double, bringing it within gallons of Saudi Arabia's own gargantuan pool. Should Iraq drill on that scale, the total, when combined with the Saudis', will drown the oil market. That wouldn't make the Texans too happy either. So Fadhil Chalabi's plan for Iraq to pump 12 million barrels a day, a million more than Saudi Arabia, is not, to use Bob Ebel's (Center fro Strategic and International Studies) terminology, "ridiculous" from a raw resource view, it is ridiculous politically. It would never be permitted. An international industry policy of suppressing Iraqi oil production has been in place since 1927. We need again to visit that imp called "history."
Read the rest at the link. You might never look at supply and demand in the oil industry in quite the same way.

The troubling question now is, what next? With Iraq in total chaos and much of its oil off the market, there still seems to be way too much oil slopping around in world oil markets. The trouble with OPEC is, everyone cheats. To get supply and demand back in a nice proper balance that keeps oil prices high, it would be nice if you could find another country whose entire oil supply you could just remove from the market.

Hey, what about finding a pretext to attack Iran? Yeah, that should do it.

4 comments:

Jay Draiman said...

MANDATORY RENEWABLE ENERGY – THE ENERGY EVOLUTION –R9

In order to insure energy and economic independence as well as better economic growth without being blackmailed by foreign countries, our country, the United States of America’s Utilization of Energy sources must change.
"Energy drives our entire economy." We must protect it. "Let's face it, without energy the whole economy and economic society we have set up would come to a halt. So you want to have control over such an important resource that you need for your society and your economy." The American way of life is not negotiable.
Our continued dependence on fossil fuels could and will lead to catastrophic consequences.

The federal, state and local government should implement a mandatory renewable energy installation program for residential and commercial property on new construction and remodeling projects with the use of energy efficient material, mechanical systems, appliances, lighting, etc. The source of energy must by renewable energy such as Solar-Photovoltaic, Geothermal, Wind, Biofuels, etc. including utilizing water from lakes, rivers and oceans to circulate in cooling towers to produce air conditioning and the utilization of proper landscaping to reduce energy consumption.

The implementation of mandatory renewable energy could be done on a gradual scale over the next 10 years. At the end of the 10 year period all construction and energy use in the structures throughout the United States must be 100% powered by renewable energy. (This can be done by amending building code)

In addition, the governments must impose laws, rules and regulations whereby the utility companies must comply with a fair “NET METERING” (the buying of excess generation from the consumer), including the promotion of research and production of “renewable energy technology” with various long term incentives and grants. The various foundations in existence should be used to contribute to this cause.

A mandatory time table should also be established for the automobile industry to gradually produce an automobile powered by renewable energy. The American automobile industry is surely capable of accomplishing this task.

This is a way to expedite our energy independence and economic growth. (This will also create a substantial amount of new jobs). It will take maximum effort and a relentless pursuit of the private, commercial and industrial government sectors commitment to renewable energy – energy generation (wind, solar, hydro, biofuels, geothermal, energy storage (fuel cells, advance batteries), energy infrastructure (management, transmission) and energy efficiency (lighting, sensors, automation, conservation) in order to achieve our energy independence.
"To succeed, you have to believe in something with such a passion that it becomes a reality."

Jay Draiman, Energy Consultant
Northridge, CA. 91325
1-16-2007

P.S. I have a very deep belief in America's capabilities. Within the next 10 years we can accomplish our energy independence, if we as a nation truly set our goals to accomplish this.
I happen to believe that we can do it. In another crisis--the one in 1942--President Franklin D. Roosevelt said this country would build 60,000 [50,000] military aircraft. By 1943, production in that program had reached 125,000 aircraft annually. They did it then. We can do it now.
The American people resilience and determination to retain the way of life is unconquerable and we as a nation will succeed in this endeavor of Energy Independence.

Solar energy is the source of all energy on the earth (excepting volcanic geothermal). Wind, wave and fossil fuels all get their energy from the sun. Fossil fuels are only a battery which will eventually run out. The sooner we can exploit all forms of Solar energy (cost effectively or not against dubiously cheap FFs) the better off we will all be. If the battery runs out first, the survivors will all be living like in the 18th century again.

Every new home built should come with a solar package. A 1.5 kW per bedroom is a good rule of thumb. The formula 1.5 X's 5 hrs per day X's 30 days will produce about 225 kWh per bedroom monthly. This peak production period will offset 17 to 24 cents per kWh with a potential of $160 per month or about $60,000 over the 30-year mortgage period for a three-bedroom home. It is economically feasible at the current energy price and the interest portion of the loan is deductible. Why not?

Title 24 has been mandated forcing developers to build energy efficient homes. Their bull-headedness put them in that position and now they see that Title 24 works with little added cost. Solar should also be mandated and if the developer designs a home that solar is impossible to do then they should pay an equivalent mitigation fee allowing others to put solar on in place of their negligence.

Installing renewable energy system on your home or business increases the value of the property and provides a marketing advantage.

Nations of the world should unite and join together in a cohesive effort to develop and implement MANDATORY RENEWABLE ENERGY for the sake of humankind and future generations.

Owl said...

Peak oil and market gluts are not mutually exclusive. Oil price volatility is at an all-time high, meaning that there is still a down side on prices. This is expected in a peak oil scenario. Sure, the world is ``awash''. It's near the peak! Meanwhile, swing production has re-appeared. That nearly disappeared for some months in 05 & 06, encouraging the price run-ups. OPEC is trying to corral the excess capacity. World peak oil may be past (daily production of late 2005 has not been exceeded since). World demand has fallen off, maybe as much as 2 mbpd, due to slowdown in oil-consuming sectors, warmer weather in eastern North America, and just the bloody high prices.

Palast may well be correct about most of what he says. Having direct control of a potential swing producer that may one day be able to pump 10-12 mbpd must have looked awfully attractive to Cheney and ilk. But I think Palast dismissal of peak oil is a shallow analysis.

almostinfamous said...

why would you attack iran (and thus anger russia and/or china) when you have venezuela who's getting a little uppity(and is in your own backyard?

Anonymous said...

Some things to consider:
1. Dick Cheney visited Saudi Arabia in November, then oil prices began to fall.
2. Iran and Venezuela don't make money on their oil when prices are this low.
3. Lowering the price of oil was used to collapse the cold war Soviet Union.

Maybe, its in the interest of the Saudis to lower the price of oil to bring about the collapse of the Iranian government which is having economic problems of inflation and unemployment. Removing the head from the snake (Iran) afterall has always been the reason for invading Iraq.