Salon.com > Peak Oil

Energy wars heat up

Thu, 10 May 2012 14:33:00 +0000

Conflict and intrigue over valuable energy supplies have been features of the international landscape for a long time. Major wars over oil have been fought every decade or so since World War I, and smaller engagements have erupted every few years; a flare-up or two in 2012, then, would be part of the normal scheme of things. Instead, what we are now seeing is a whole cluster of oil-related clashes stretching across the globe, involving a dozen or so countries, with more popping up all the time. Consider these flash-points as signals that we are entering an era of intensified conflict over energy.

From the Atlantic to the Pacific, Argentina to the Philippines, here are the six areas of conflict -- all tied to energy supplies -- that have made news in just the first few months of 2012:

America’s oil-fueled collapse

Thu, 15 Sep 2011 14:30:00 +0000

America and Oil. It's like bacon and eggs, Batman and Robin. As the old song lyric went, you can't have one without the other. Once upon a time, it was also a surefire formula for national greatness and global preeminence. Now, it's a guarantee of a trip to hell in a hand basket. The Chinese know it. Does Washington?

America's rise to economic and military supremacy was fueled in no small measure by its control over the world's supply of oil. Oil powered the country's first giant corporations, ensured success in World War II, and underlay the great economic boom of the postwar period. Even in an era of nuclear weapons, it was the global deployment of oil-powered ships, helicopters, planes, tanks, and missiles that sustained America's superpower status during and after the Cold War. It should come as no surprise, then, that the country's current economic and military decline coincides with the relative decline of oil as a major source of energy.

A new golden age for fossil fuels? Huh?

Wed, 01 Jun 2011 13:01:00 +0000

If Michael Lind's intention, in his Salon article published Tuesday, "Everything You've Heard About Fossil Fuels May Be Wrong," was to throw so many bombs at once that critics would be too buried by shrapnel to respond, then he at least partially succeeded. It's hard to know where to start grappling with a column that simultaneously dismisses the challenge of global warming, declares a new golden age of fossil fuels that could last millennia, ridicules renewable energy technologies such as wind and solar while advocating a massive nuclear power buildup, and even throws in a few digs at city living and organic agriculture, just for fun. Readers who might more logically expect to see such sentiments espoused in the National Review or the American Spectator than in Salon were unsurprisingly annoyed.

Stupid Republican budget tricks

Thu, 10 Feb 2011 17:47:00 +0000

House Republicans will release a slate of proposed budget cuts on Thursday. High on their list of priorities, reports the New York Times, is the goal of crippling Obama's energy and environment initiatives. Republicans want to cut $900 million from energy conservation and efficiency programs and $1.8 billion from the EPA.

As indicated by the House Energy and Commerce hearing on Wednesday in which Republican legislators unsuccessfully attempted to savage EPA administrator Lisa Jackson, the GOP position starts with the premise that climate change is a hoax, and then falls back to a secondary line of defense contending that even if the earth is warming it's too expensive to do anything about it. Failing all else, we should just let the market take care of things. Republicans have even introduced legislation that would overturn the scientific finding that greenhouse gas emissions pose a threat to human health. As for the rising price of oil? Who cares? Again, let the market be the arbiter.

Peak globalization

Tue, 24 Nov 2009 17:47:00 +0000

Wishful thinking or apocalyptic doom forecasting? Fred Curtis, an economist at Drew University, has put together a mashup of peak oil, global warming, and patterns in global trade liberalization and arrived at the principle of "Peak Globalization." (Found via Globalisation and the Environment.) A double whammy of higher energy costs and extreme climate events will disrupt global transportation patterns, reversing the historical trend towards greater and greater levels of global trade and forcing a process of "relocalization" -- "The major implication is that supply chains will become shorter for most products and that production of goods will be relocated closer to where they are consumed, although this will happen neither quickly nor easily."

Who cares about peak oil when you have corn cobs?

Thu, 19 Nov 2009 23:56:00 +0000

The old joke about cellulosic ethanol -- biofuel made from lignocellulose, the tough, woody, hard-to-break-down structural elements of plants -- is that it is always five years away from commercial deployment, and has been for the last 20 years, at least. The problem is not inherently technological: We know how to do it; the difficulty has always been in making the process cost-competitive with other fuels.

So the news that POET, the largest ethanol producer in the U.S., has managed to cut production costs for cellulosic ethanol from $4.13 a gallon to $2.35 a gallon in the past year at its trial plant in Scotland, South Dakota, is potentially significant. POET is now predicting big things, reports the Argus Leader:

"Two years ago, I would have told you this was a long shot," CEO Jeff Broin said. "Now I'll tell you that we will produce cellulosic ethanol commercially in two years."

Two years instead of five! That's a big improvement! According to Broin, the factors involved include "reducing energy use, enzyme costs, raw material requirements and capital expenses."

Peak oil? Don’t worry — Obama’s on the job

Wed, 04 Nov 2009 17:21:00 +0000

What if, as a result of efforts to fight climate change and boost energy efficiency, global oil demand peaked in the foreseeable future? You could argue that such an achievement would be one of the most historic accomplishments of human civilization to date, proof, indeed, that we are civilized. It's a task that will require lots of hard work all over the globe, but based just on the actions taken by President Obama in his first year of office, in the United States, we have made real progress toward that goal.

The International Energy Agency, reports Spencer Swartz in the Wall Street Journal, is predicting that even if China and India continue to consume ever more oil, overall, the world's appetite for crude is slowing down.

The IEA, which advises rich nations, such as the U.S., on energy matters, is set to use its closely watched annual World Energy Outlook report to forecast that improved energy-efficiency measures in developed nations, as well as climate-change legislation, will help to slow the rate of global oil consumption.

The happy prospect of peak gasoline demand

Fri, 02 Oct 2009 16:46:00 +0000

Did U.S. gasoline demand really peak in 2007? According to Reuters, that's what Exxon CEO Rex Tillerson said earlier this week at an Economic Club of Washington dinner.

"We think going forward that because of the emphasis on energy efficiency, ongoing improvements in vehicle miles standards and hybrid (cars), that motor vehicle gasoline demand is down, is headed down, and is going to continue to head down," said Tillerson.

The implications of Tillerson's forecast, if it pans out, are extraordinary. A peak in gasoline demand in the U.S. implies that mature developed economies may reach a stage where their hunger for transportation fuels does not continue to expand indefinitely. Gasoline accounts for a whopping 45 percent of all oil consumption in the United States, according to the Energy Information Agency. So if gasoline demand peaks, we're nearly halfway to a peak in overall oil demand. And what that means -- if the principles of conservation and energy efficiency are applied all across the energy-consuming economy on a consistent ongoing basis, is that we might not be as disastrously hobbled by the threat of a supply peak as some of the more downbeat peak oil futurists fear.

New oil discovery in the Gulf: Big, yes, but not cheap

Wed, 02 Sep 2009 15:51:00 +0000

It's not every day that an oil company announces the discovery of a "giant" new field, so energy geeks are paying a lot of attention to the news that BP, after drilling the world's deepest exploratory well in the Gulf of Mexico, has tapped a bonanza. As much as 3 billion barrels of oil may be lurking at the so-called Tiber Prospect.

BusinessWeek is especially effusive, speculating that the discovery might be one of the biggest finds of the decade, and, by the time it is fully deployed the latter half of the next decade, will be "raking in cash" like its BP operated Gulf-neighbor, Thunder Horse.

I am having some trouble reconciling the figures, however. BusinessWeek cites Fadel Gheit, an analyst at Oppenheimer (OPY) in New York, as figuring "that at a price of $60 per barrel, BP will earn pretax profits in the mid-$20s per barrel from Thunder Horse."

Iraq, the world’s oil pump

Fri, 17 Jul 2009 10:16:00 +0000

Has it all come to this? The wars and invasions, the death and destruction, the exile and torture, the resistance and collapse? In a world of shrinking energy reserves, is Iraq finally fated to become what it was going to be anyway, even before the chaos and catastrophe set in: a giant gas pump for an energy-starved planet? Will it all end not with a bang but with a gusher? The latest oil news out of that country offers at least a hint of Iraq's fate.

For modern Iraq, oil has always been at the heart of everything. Its very existence as a unified state is largely the product of oil.

In 1920, under the aegis of the League of Nations, Britain cobbled together the Kingdom of Iraq from the Ottoman provinces of Basra, Baghdad and Mosul in order to better exploit the holdings of the Turkish Petroleum Company, forerunner of the Iraq Petroleum Company (IPC). Later, Iraqi nationalists and the Baath Party of Saddam Hussein nationalized the IPC, provoking unrelenting British and American hostility. Hussein rewarded his Sunni allies in the Baath Party by giving them lucrative positions in the state company, part of a process that produced a dangerous rift with the country's Shiite majority. And these are but a few of the ways in which modern Iraqi history has been governed by oil.

Goodbye to cheap oil

Mon, 15 Jun 2009 10:20:00 +0000

Every summer, the Energy Information Administration of the U.S. Department of Energy issues its International Energy Outlook (IEO) — a jam-packed compendium of data and analysis on the evolving world energy equation. For those with the background to interpret its key statistical findings, the release of the IEO can provide a unique opportunity to gauge important shifts in global energy trends, much as reports of routine Communist Party functions in the party journal Pravda once provided America's Kremlin watchers with insights into changes in the Soviet Union's top leadership circle.

As it happens, the recent release of the 2009 IEO has provided energy watchers with a feast of significant revelations. By far the most significant disclosure: The IEO predicts a sharp drop in projected future world oil output (compared with previous expectations) and a corresponding increase in reliance on what are called "unconventional fuels" — oil sands, ultra-deep oil, shale oil and biofuels.

Falling gas prices: Where’s the outrage?

Tue, 14 Oct 2008 19:33:00 +0000

In any other U.S. election year, a drastic decline in the price of gasoline in the last few months before voters headed to polls would bring the conspiracy theorists out of the woodwork. Yet here we are in the middle of October, with the average price of a gallon of gasoline having fallen almost 25 percent since July (4.3 cents overnight between Monday and Tuesday), and hardly anyone is making a peep.

There are obvious reasons for this: Financial market chaos and bazillion-dollar banking system bailouts are distracting. The price of a barrel of crude may be falling fast (it closed at $81 on Tuesday) but the Dow has been falling faster. We also have a clear explanation for the drop in the price of oil and gas: A worldwide economic slowdown is depressing demand and popping all kinds of commodity price bubbles. No conspiracy theory necessary. Recessionary winds are blowing out inflationary fires.

Jimmy Carter — the peak oil president

Wed, 06 Aug 2008 15:50:00 +0000

Brad DeLong excerpts Jimmy Carter's 1977 speech on the energy crisis in his blog today.

The timing is extraordinarily appropriate, and not just because energy is the campaign issue of the week. The wave of Republican mockery currently assaulting Barack Obama's recommendation that Americans properly inflate their tires flows squarely within the tradition of scorn and derision that conservatives have heaped on Carter for decades -- in part because of his call for conservation and sacrifice in 1977.

But the speech holds up pretty darn well today, even as right-wing flailing increasingly manifests itself, to borrow a slam made by Obama against his critics on Tuesday, as risibly "ignorant." I particularly liked the following passage, if only because of its prescience.

But we do have a choice about how we will spend the next few years. Each American uses the energy equivalent of 60 barrels of oil per person each year. Ours is the most wasteful nation on earth. We waste more energy than we import. With about the same standard of living, we use twice as much energy per person as do other countries like Germany, Japan and Sweden.
Continue Reading...

Why $140-a-barrel oil is no surprise

Thu, 26 Jun 2008 21:05:00 +0000

A reader observed in an e-mail this morning that for him, and a lot of the people he has talked to recently, the sharp rise in the price of oil and gas over the past year seemed to have come out of nowhere, out of the blue. Why now, he wondered? What triggered this sudden upsetting of the apple cart?

It's a sentiment I encounter frequently in the HTWW comments section from people who are (usually angrily) reacting to my posts on energy issues. If the law of global supply and demand is the true determining factor in the cost of oil, then why has the price more than doubled in just the last year? What's changed?

It's not just the hoi polloi who are suspicious. Economist Arnold Kling, who believes speculation must be part of the explanation, posed a variation of this exact question to economist Paul Krugman, who is convinced speculation isn't the culprit. If "fundamentals" justify the current cost of oil, then why was the price so low last year? Global economic growth certainly didn't double in the same time frame. Quite the contrary: It slowed down.

The Wall Street Peak Oil Journal

Thu, 22 May 2008 14:24:00 +0000

Page A1: The Wall Street Journal, Thursday, May 22, 2008:

A growing number of people in the industry are endorsing a version of the "peak-oil" theory: that oil production will plateau in coming years, as suppliers fail to replace depleted fields with enough fresh ones to boost overall output. All of that has prompted numerous upward revisions to long-term oil-price forecasts on Wall Street.
How the World Works has been closely following the Journal's coverage of oil-related issues for several years -- today's front page story is the most pessimistic piece I've seen the newspaper publish. Two years ago (when a barrel of oil cost a mere $75), the phrase "peak oil" was more likely to be accompanied by the modifier "so-called" or to be ridiculed in a headline like, "Poking at Peak Oilers."
But new record-setting prices nearly every day have a way of focusing the mind (in trading Thursday, crude oil futures broke $135). The International Energy Agency is getting gloomier by the minute, reports the Journal.

Continue Reading...

Ask the pilot

Fri, 16 May 2008 10:50:00 +0000

These days you can't crack open a newspaper or click to a Web site without stumbling across one or more front-page stories about the airlines. Bankruptcies, safety scandals, fuel woes, you name it. And if there's a common thread in this media barrage, it's that none of the stories are positive. For carriers the future looks uncertain at best, nightmarish at worst.

Everybody knows the airline business is cyclical. The boom-bust cycle has been playing out since before deregulation. What's different, this time, is how potentially devastating this latest scorching might be, and how quickly it followed on the heels of the post-Sept. 11 industry wipeout. The recovery period was brief, to say the least.

The culprit, obviously, is the price of petroleum. Jim May, president of the Air Transport Association, says that soaring fuel prices are "the worst economic shock since 9/11, and, possibly, one that is worse." The cost of aviation kerosene, i.e., jet fuel, has gone up 70 percent in the past year alone. A week ago oil hit $125 a barrel, and in some corners of the globe a gallon of Jet-A is selling for upward of $6. Five years ago, the average cost per gallon was less than 86 cents. Ten years ago, it was 51 cents. I remember analysts sucking their teeth when the price topped a dollar. Such anxiety seems quaint. In an ATA press release, Dave Emerson, head of the Bain & Co. airline consulting firm, said, "The reality is that there's no U.S. airline that has a sustainable business model if $117-a-barrel oil prices endure." That was $8 per barrel ago, with no end in sight.

The peak oil culture wars

Mon, 12 May 2008 16:17:00 +0000

Sky-high oil prices are not primarily the fault of evil hedge fund speculators, writes Paul Krugman in his Monday New York Times column. If they were, then at some point oil stockpiles would have to rise in order to support prices that are not justified by demand. But that's not happening.

Fair enough. But then Krugman goes on to say that normally, it is critics from the left, outraged at capitalist manipulation, who inveigh against speculation. But this time around, he says, it's the right that's yelping the most. Krugman explains that this is because conservatives don't like taking the bus.

... The odds are that we're looking at a future in which energy conservation becomes increasingly important, in which many people may even -- gasp -- take public transit to work.
I don't find that vision particularly abhorrent, but a lot of people, especially on the right, do. And so they want to believe that if only Goldman Sachs would stop having such a negative attitude, we'd quickly return to the good old days of abundant oil.
Continue Reading...

Peak oil explains lack of UFOs

Tue, 06 May 2008 20:37:00 +0000

In my previous incarnation as a technology reporter covering the free software movement during the dot-com boom heyday, I was constantly running into Tim O'Reilly, founder and CEO of the computer book publisher O'Reilly Media. I was even a part-time employee of his company for about six months at one of the earliest entrants in online publishing, Web Review. But as my focus gravitated away from software and Internet culture towards economic affairs, energy issues, and globalization, I've lost touch with the world in which O'Reilly is a significant player.

But all worlds collide. And now Tim O'Reilly, writing in his online column, joins the ranks of those worried about the challenges of climate change and peak oil. But he throws a great new angle into the mix -- the Fermi Paradox.

The Fermi Paradox is an attempt to wrestle with the question of why we haven't yet encountered any evidence of alien civilizations. Wikipedia defines the paradox as follows:

Continue Reading...

Hillary Clinton throws economists off the bus

Mon, 05 May 2008 16:01:00 +0000

The econoblogosphere is in an uproar following Sen. Hillary Clinton's comment on "This Week With George Stephanopoulos that "I'm not going to put my lot in with economists." Former Labor Secretary Robert Reich went so far as to hurtfully invoke the illustrious record of our current president as part of his denunciation.

In case you've missed it, we now have a president who doesn't care what most economists think. George W. Bush doesn't even care what scientists think. He rejects all experts who disagree with his politics. This has led to some extraordinarily stupid policies.
Anyone who pays attention to the intersection of politics and economics knows that economists hardly have a stranglehold on any such a thing as absolute truth. They may be united as never before on the subject of the stupidity of the gas tax holiday, but they are certainly not infallible. But her associated slam, "We've got to get out of this mind-set where somehow elite opinion is always on the side of doing things that really disadvantage the vast majority of Americans," reveals another group that Clinton is deciding not to join hands with: peak oilers.
Continue Reading...

The education of an oil reporter

Tue, 29 Apr 2008 14:25:00 +0000

Jad Mouawad, New York Times reporter on the oil beat, in March 2007:

There is still a minority view, held largely by a small band of retired petroleum geologists and some members of Congress, that oil production has peaked, but the theory has been fading.
Within the last decade, technology advances have made it possible to unlock more oil from old fields, and, at the same time, higher oil prices have made it economical for companies to go after reserves that are harder to reach. With plenty of oil still left in familiar locations, forecasts that the world's reserves are drying out have given way to predictions that more oil can be found than ever before.
Jad Mouawad, October 2007:

"There are no easy barrels left," said J. Robinson West, chairman of PFC Energy, an industry consulting firm in Washington. "The only barrels are going to be the tough barrels."
Jad Mouawad, April 2008:

Continue Reading...