280 comments on Why oil costs over $130 per barrel: the decline of North Sea Oil
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Well,
Honestly it seems to be a variety of things IMO. Politicians are generally very ignorant people, who either haven't heard of peak oil, don't understand it or are in completely denial of it. Many politicians and the MSM have been talking about the falling dollar and speculation mainly. Today on C-Span, Michael Greenberger
http://www.law.umaryland.edu/faculty/profiles/faculty.html?facultynum=05...
did a good job of being ignorant of the oil markets in front of the senate who regarded him as an expert. He stated 50-60% of the current price could be speculation, and then Senator Olympia Snow R-Maine, proclaimed this is not a supply and demand issue. When you have lawyers, Politician and Businessmen, trying to mess with energy policy and grasping energy markets, you are bound to worsen the problem. Most people as I have seen many a time again, are simply not willing to sit down and do a small amount of research over the subject. America has two emotions and only two, complacency and panic, we won't do hardly anything till we are on the downside of the curve. It's kind of sad, but as days go by I have a less and less hope for the future seeing our ignorant politicians and stupid people. Good for you though, you sat down and did some research, and you know the future, which 99.9% of people do not, that's an advantage right?
Thanks for the reply, Swords and hello again. Still haven't decided if it's an advantage or not (perhaps if I had shares in Woodside; but a definate NO at parties - "Please, no more red wine for the crazy guy in the corner asking gloomy questions!").
Then again, my dad, who's turning 68, and myself are booked in to get our motorbike licenses in July. Guess that's a start.
Regards, Matt B
Dear Joe,
you can do one of two things at this point:
1. Prepare yourself and your family for the Tsunami (i.e. get off the beach)...
2. Run around on the beach asking why everyone is still sun-bathing while its 'obvious' that the white crispy froth on the distant horizon is "not right"...
I've tried 2 for a while, I'm leaning more and more towards "1 Mode" now...
To get a decade perspective multiply direct fossil fuel cost inputs to your life by a factor of 5 {transport, heat, electricity, food) and determine the effect... Is your life changed? Only the very rich will answer "No".
Nick.
Thanks Nick and you're probably right... Though, I would have flapped my arms about for at least a few minutes before grabbing the kids; and probably would have shouted, "there's a tidal wave coming", in the days before people knew what a tsunami was.
BTW, that's one of my complaints about the term "Peak Oil" (someone once replied, "P Coyle? Who's that?"). A term like, "The world is running out of oil", or something more mainstream should be discussed further.
As for running around on the beach first, I sent the following off this morning to one of the local so-called TV current affair shows, along with an intro, just for the hell of it. But as you say, doubt I'll get a reply...
True or False?
• An estimated 100 tons of organic material must be cooked for millions of years under ideal conditions to produce a single barrel of crude oil.
• Each year, mankind consumes more than 30 billion barrels of crude; or around 160,000 litres every second.
• We use crude for the majority of transport, rubber and plastic (mostly non-recyclable and toxic), bitumen, pesticides, crop farming, to name a few.
• In the last 30 years, few significant new oil fields have been found to replace the aging ones. This year alone, oil companies will spend over 100 billion dollars in exploration, with no guarantee of success. Nonetheless, they will want to recoup their costs.
• Significant fields that have been discovered are deep beneath the ocean and very expensive to get to.
• Within the next decade, most of the 500 largest fields will near their use-by dates for cheap and affordable oil.
• Mother Nature created a limited amount of liquid energy. Man-made alternatives (on a massive scale) are decades away and will cost trillions.
• By 2050, the world population is expected to be around 9 billion people. To get there, on average an extra 75 million births (that’s on top of those that cancel out deaths) must occur each year. That’s around an extra 200,000 births each day – mouths to feed, clothe and shelter.
So…
Is the world running out of “easy” (affordable) oil?
What will a litre of petrol cost in 2020? Or a plane ticket to Sydney?
Will there be enough liquid fuel to go around?
Is life as we know it today sustainable for decades to come? Or a mere few years?
If there’s a problem with how much affordable oil is left (no-one really knows how much remains!), shouldn’t we be discussing this in a little more depth?
Or are the above points and questions not A Current Affair?
Around 4 years, if you are not too picky about 'as we know it today' would be my estimate.
ACA is far too busy one-upping Today Tonight, defending convicted drug-runner Corby, and castigating single mums, dole bludgers, and dodgy used car salesmen moonlighting as Home Removators who are killing our fat kids to be bothered with such a piddly little item such as Cheap Oil running out.
No, much easier to do an 'expose' on petrol stations ripping off 'working families' by putting the price up the day before a Long Weekend. Damn you, Big Oil! :p
In late 2005 I bought the website: www.megatrends2020.com with the intention of defining the major themes that will impact our lives to 2020. I chose to research Energy first as it seemed to me the single most important theme (I had heard somewhere that the oil price accounts for ~40-50% of GDP swings so that sounded like a reasonable backdrop to the rest of the trends).
So off I went researching...
I got into this one thread so much I never finished the others. The more I discovered the more I realised that none of the others really mattered. This was the one 'trend' that would define the shape of our lives in the decades ahead. The problem was that it wasn't a trend, it was a trend reversal!
Rather than continue I decided last summer to write up all I had learned -I called the result: Peak Oil Joining The Dots:
http://www.megatrends2020.com/Peak_Oil__Joining_The_Dots.doc
I have updated the specualtive timeline and it is now available online:
http://www.flickr.com/photos/8745365@N04/2504887199/sizes/o
Personally I have a very rough 5 year plan that basically involves going 'off grid'/Home food production/no debt and I am now in the process of downsizing to prepare (selling my Thai Penthouse -I live in London, UK). I don't think most airlines will last the next decade, airlines that operate business traveller level fares with passengers packed in like sardines might just survive...
My 'best guess' at when things start to get 'really sticky' -i.e. major amounts of demand destruction kick in- is around 2012 +- a year or two, so not long really...
Regards, Nick.
I'd go along with most of that - fine job, Nick!
Where I differ would be mainly in moving some of the events forward in time.
What would be useful if you have time would be a greatly expanded view for 2008-15.
A lot of 'interesting' things should happen in this time frame.
I would suggest for one that this winter should see an emergency budget in the UK as the balance of payments widens towards infinity and the budget deficit spirals with rising unemployment and low or nil growth.
Long distance tourist destinations should get a huge hit together with property prices there and tourist airlines in the following summer.
Nick, I am thinking that we are about at the stage that a sector by sector forecast could be attempted, although it would be patchy as none of us are full-time on these matters.
To take one example, it seems to me that the age of the Football mega event may be on the wane.
In the UK, major clubs are highly leveraged, with Manchester United, for instance, having large debts after a £790million takeover, requiring an interest payment of £62million pa.
Wages to turnover is over43%:
http://news.bbc.co.uk/1/hi/business/7180767.stm
BBC NEWS | Business | Success boosts Man Utd finances
I would expect that business model to rapidly unravel, with the most highly leveraged clubs having to sell players to reduce the wage bill, as recession means falling ticket sales and prices and reduced sales of replica kit etc.
Nationally backed teams like Real Madrid should do relatively well, as the politicians try to keep the circuses part of bread and circuses going at all costs for a depressed population.
By 2010 I would expect distress sales of large British clubs, and re-negotiation of players salaries downwards.
American football should do even worse, I assume, as large distances are regularly covered to play matches across a much greater area.
Hi Nick,
Are you going 'off grid'/Home food production in London? Would be interested in where and what you are planning to do.
Thai Penthouse sounds like a good central location for a TOD party.
Let's do it! :o)
http://www.knightfrankphuket.com/sale/RS0174.htm
noutram
I think your "joining the dots" document is a nice compilation.
The only thing I think you might want to reconsider is that the current reserves of Uranium should not be considered a constraint on future production.
There is a few orders of magnitude more out there once we bother to look for it (no one has in the past ~15 years due to the Russian nuke decommissioning flooding the market).
Other than what I consider an overly pessimistic view on the future potential of fission, I think you are spot on with the energy analysis.