The Oil Drum: Europe

19th century whaling is today one of the best examples we have of a complete cycle of exploitation of a natural resource.

The production curves of whale oil and whale bone in the United States in 19th century (from "History of the American whale fishery" by A. Starbuck, 1878). Both show a clear bell shaped Hubbert's curve. Click to enlarge.

This is the talk I was honored to deliver to ASPO Italy on 3rd May 2008 at their annual conference in Turin. 24 slides below the fold plus narrative of what I said on the day. The narrative boxes are below the slides.

An Italian translation of this post is available here. Thanks to Maurizio Moretto for the translation. Thanks are also due to Jean Laherrere of ASPO France for providing his interpretations of Russian and North African gas supplies.

Questa è la relazione che ho avuto l'onore di presentare ad ASPO Italia, il 3 maggio 2008, in occasione della conferenza annuale tenutasi a Torino. Sono 24 slides integrate dai commenti (i riquadri sottostanti) che ho potuto esporre a voce durante la presentazione.

La versione inglese di questo post è disponibile qui. Un ringraziamento a Maurizio Moretto per la traduzione italiana. Un ringraziamento a Maurizio Moretto per la traduzione italiana. Ringraziamenti sono dovuti anche a Jean Laherrere di ASPO France per aver fornito il suo punto di vista sulle forniture di gas dalla Russia e dal Nordafrica.

The pdf is a short report written by Robert F. Wescott and published in April 2006 by Securing America’s Future Energy. It was written when oil was ~$60 a barrel and addressed a scenario where the price of oil surged to $120 due to coordinated terrorist attacks on global oil transport infrastructure. Well, here we are, two years on at $120 oil (without the attacks) so it’s worth revisiting the analysis in light of the conclusion: The main conclusion of this note is that $120 oil would have profound negative effects on the world economy and global financial markets. ... Such oil prices would almost certainly precipitate a global recession.

Click to download pdf

The logo of the ASPOItaly-2 conference. It shows, superimposed to the classic ASPO peak, the mythical "post peak car", the battery powered, retrofitted Fiat 500

Conference report, many links and some pictures below the fold.

This story is part of my new Countdown to $200 oil series, which is the successor of my earlier, and now terminated by reality, Countdown to $100 Oil series.

As in previous years, I got my ass whipped in my latest attempt to suggest on Daily Kos that gas taxes should be increased, despite the fact that the place is completly dominated by Obama fans and Obama's solid stance against the gas-tax holiday.. Some commenters kindly called me a "rich elitist f*ck from Europe" (guilty on all counts, of course) for wanting to bankrupt poor Americans who cannot do without gasoline, preferably cheap, and are already struggling mightily.....

40 professors of ETH Zurich, one of the most highly reputed and visible technical universities on this planet, belong to the Energy Science Center, a collaborative effort created in order to study the challenges that lie ahead in terms of resource depletion and the effects exerted by our presence on the global dynamics of our planet. Currently, the potential ramifications of peak oil and global warming are the Center's main focus.

A year and a half ago, six of the professors decided to define a new Energy Strategy for ETH Zurich, to determine how ETH, through research and educational activities, could contribute to finding solutions to these rapidly emerging and ever more pressing issues.

In February 2008, they published the results of their collective efforts in a brochure that can be downloaded from the web in either German or English. Last week, they finally presented the results of their studies to the broader public in a special energy science colloquium entitled 1 t CO₂ and/or 2 kW per Capita? Strategic Goals and Transformation Paths for the Energy System of the Future. The presentation (in German) can be downloaded from their website in streaming video format.

This paper provides a critical review of the seminar talk presented by Prof. Boulouchos, who spearheaded the research effort, as well as of the recommendations made by the committee.

In recent days a series of media articles surfaced pointing to a concerning situation in China. The New Scientist reported:

At the end of a cold and stormy winter, the country has just 12 days of coal reserves at most power stations. Some provinces, including Hebei, bordering Beijing, have less than a week's coal left. This is a record low, the state electricity regulatory commission revealed on Tuesday.

The sequence of events (covered here on The Oil Drum previously) that led to the Forties Pipeline closure on 27 April 2008 began in 2005 when BP, currently the UK's largest company, sold Innovene, their Grangemouth refinery subsidiary to Ineos. Ineos is privately owned petrochemicals company that has grown from nothing since its formation in 1998, fueled by debt reported to be €9 billion.

BP, once 50% owned by the UK government, used to own and operate the Forties Field, the Forties Pipeline system and the Grangemouth oil refinery. This is a tightly coupled complex system where oil from the North Sea flows by pipeline to Kinneil terminal where it is either diverted to Grangemouth to be refined and then combusted by energy hungry consumers or it is diverted to Hound Point for export by tanker (see map below the fold). The failure of any vital part of this complex system may close the whole system down. This system is now fragmented and its failure has just happened.

Failure by BP to recognise the dependency of the Forties Pipeline upon vital services provided by Grangemouth, and to provide contingency back up for their loss, is the principal cause for over 40% of UK North Sea oil and gas production now being shutdown.

Incident prone BP are of course not the only stake holder to shoulder responsibility and below the fold I explore the responsibilities of the Grangemouth Workers, Ineos, The Banks, Government and The Media in contributing to this debacle.

Extended from the European Tribune version, which was itself inspired by earlier coverage here on TOD. More relevant background can be found in these two articles from a few months ago: UK Energy security and The European Gas Market, both by Euan Mearns.

Now that the news that the Forties pipeline has to close down is known, the blame game has started:

UK resists fuel curbs despite strike The UK is “nowhere near” having to impose emergency powers to restrict fuel supplies to essential users, the government insisted on Sunday, despite a strike forcing the closure of a pipeline that carries nearly half of Britain’s North Sea oil. (...) But the Conservatives sought to make political capital from the unrest. On Sunday, they argued that the strike was a byproduct of his weakness. “Whether it is teachers or whether it is oil workers or whoever else, they’re actually saying we can push this guy around,” David Cameron told the BBC. The Tory leader argued that Mr Brown was indirectly to blame for the dispute because of his changes as chancellor to employer pension schemes. “Who is the man who wrecked the British pension system? He is the prime minister,” Mr Cameron said. The Grangemouth workers are protesting over the company’s intention to close their final-salary pension scheme to new employees from August 1. Ineos has offered to suspend plans to make existing employees start making contributions, pending further talks.

I'd like to flag just a few points that seem to be typical of our times, and maybe warrant making this a symptom of the Anglo Disease, ie the wholesale domination of our economies by reckless financial capitalism: