Peak Oil News

“It is getting much more expensive to find Oil these days.”

While it is true that it is getting more expensive to find oil, one has to examine whether that increase is of a permanent nature as many argue. The reason that it is getting more expensive to find oil is mainly because service, drilling and other costs are sharply increasing. While this may seem like a circular argument at first, my intention is to demonstrate that the cost of finding oil is rising to a cyclical peak, and that it is not secular in nature. Read more…

Walking Beam Compressor

All the data shows that the cost of finding Oil is rising sharply. Why? Very simply because of a self reinforcing boom in exploration and production, which led to a capacity shortage in oil services and drilling as demand for rigs and services increased faster than supply. Other costs, such as for steel, or the acquisition of existing producing properties has also increased for the same reason, a shortfall in capacity in various sectors, or an imbalance between supply and demand.

The north sea will continue to provide oil for another 100 years, twice as long as previous estimates, according to industry analysts.

Dr Richard Pike, a former oil industry consultant and now the chief executive of the Royal Society of Chemistry, said: “Rather than only getting 20 to 30 billion barrels [from the North Sea] we are probably looking at more than twice that amount.”

His analysis is supported by petroleum experts who believe there are some 300 fields off the coast of Britain still to be explored and tapped properly. If energy prices continue to soar, companies will become increasingly willing to tap previously uneconomic oil fields. Read more…

 Stripper wells

When gasoline prices first hit $2 a gallon three years ago, drivers gritted their teeth and kept on pumping in the hope that the damage would be temporary.

Now, prices have doubled and the distress shows no sign of disappearing.

Worse, the pace of the pain has accelerated: As recently as February, metro Atlanta gasoline averaged less than $3 a gallon.

Why the run-up? Why the recent surge?

One answer is “peak oil.” That argument — dismissed a few years ago as alarmist, wacky or worse — now receives a more serious hearing.

The notion is that about half the oil beneath the earth has been extracted. With demand still rising and production at its peak, prices can only keep rising, say peak oil adherents: $4 a gallon will soon seem cheap. But there is a countervailing contention that oil — like the Nasdaq before it — has become something of a “bubble,” its prices puffed up by a massive flow of speculation.

The Journal-Constitution recently separately spoke with an expert in the workings of investments and another expert on the geology of fossil fuels. Read more…

Editor’s note: The notion that “peak oil” means we are running out of oil is false. “Peak oil” essentially implies that the world cannot indefinitely sustain and increase in oil discovery and therefore oil production.  We have certainly passsed the point of peak oil discovery. Peak oil production must follow according to mathematical certainty. Are we there? Maybe, Will the day come? Most certainly.

 Global Oil Flow

Markets confounded by new class of investors making long-term bets on crude; rare trading patterns mark shift in sentiment.

OTTAWA — Investors are placing huge bets that today’s record crude prices are headed sharply higher in the coming years, essentially gambling that scarce resources and a weak U.S. dollar will trump the age-old law of supply and demand.

As crude for near-term delivery shot past $133 (U.S.) a barrel yesterday, many analysts were more focused on the stunning price increases in futures contracts covering oil deliveries for the next eight years.

Amid “peak oil” warnings of scarce supply and a permanently weakened U.S. dollar, traders have driven future prices well above current levels, a rare pattern in oil markets known as contango.

“It seems that we’re living in a completely new world,” said Peter Beutel, president of Cameron Hanover, a Connecticut-based risk management firm. Read more…

Arjun N. Murti remembers the pain of the oil shocks of the 1970s. But he is bracing for something far worse now: He foresees a “super spike” — a price surge that will soon drive crude oil to $200 a barrel.

Mr. Murti, who has a bit of a green streak, is not bothered much by the prospect of even higher oil prices, figuring it might finally prompt America to become more energy efficient.

An analyst at Goldman Sachs, Mr. Murti has become the talk of the oil market by issuing one sensational forecast after another. A few years ago, rivals scoffed when he predicted oil would breach $100 a barrel. Few are laughing now. Oil shattered yet another record on Tuesday, touching $129.60 on the New York Mercantile Exchange. Gas at $4 a gallon is arriving just in time for those long summer drives.

Mr. Murti, 39, argues that the world’s seemingly unquenchable thirst for oil means prices will keep rising from here and stay above $100 into 2011. Others disagree, arguing that prices could abruptly tumble if speculators in the market rush for the exits. But the grim calculus of Mr. Murti’s prediction, issued in March and reconfirmed two weeks ago, is enough to give anyone pause: in an America of $200 oil, gasoline could cost more than $6 a gallon.  Read more…

Global Oil Flow

ABERDEEN, Scotland, May 21 (Xinhua) — After successfully forecasting current oil prices at the first All Energy conference in 2001, John Westwood, an energy expert, said here on Wednesday that “more pain is to come” for world energy.Speaking at the opening session of the All Energy’08, the 8th in the annual series, John Westwood, Chairman of energy analysts Douglas-Westwood, a research consultant company for international energy industries, said “there is a strengthening view that the ‘peak oil scenario’ is approaching much faster than any of us expected.”

He said people such as Christoph De Margerie, CEO of Total, and T. Boone Pickens believe the world will never exceed its current level of production as new oil fields fail to compensate for declining ones.

The energy expert said recently published statistics suggest production from ten out of the top 13 international oil companies, including BP, Chevron, Total and Shell may have already passed it speak.

He said that in 1970 such oil companies controlled about 80 percent of world reserves whereas today that 80 percent is in the hands of national oil companies.

“However, the Saudis have put their oil campaign on hold stating that it will not increase production to 15 million barrels per day; and despite oil prices hitting new records Russian output has slumped”, he said, adding that this may be another hint of the oil peak.  Read more..

Reclaiming declining stripper wells.

The AA polled 17,500 members, and found 27% had cut back on other areas of spending, 16% had decided to travel less by car, and 21% had done both.

Petrol prices have risen sharply this year, although government figures have only shown car traffic falling 2%.

The Petrol Retailers Association says that average prices could go up as much as 5 pence a litre by the weekend.

“I expect that motorists and diesel users in particular are going to pay more at the pumps in the coming weeks, possibly as soon as the bank holiday, from where they are now,” said Ray Holloway, director of the Petrol Retailers Association.

“The simple reason is that the wholesale price of oil sent diesel up 3 pence last week and there’s more to come.” Read more…

 Walking Beam Compressor

Oil prices continue to rise and rise, with no end in sight. Virtually all other commodities seem to be following to be the same suit. Some now say a new economic system is emerging from the ashes of the old and now crumbling financial structure. Failing to meet even the basic needs of the common man, the current economic system is facing its worst crisis and appears in doldrums. It has miserably failed the underprivileged of this world.

Markets appear divorced from the fundamentals. F. William Engdahl strongly says in a recent write up that the oil markets (and other markets too) today are controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60 percent of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. Read more…

Has Peak Oil, as a meme, “tipped”? Our latest oil price poll suggests that well over 70% of the sample (N>3000 now) thinks that oil will at least stay above $114 a barrel for the next two months–and almost half think it will hit $140 a barrel in that timeframe. Search volume on Google for the term is up dramatically in the past month, as is traffic at The Oil Drum. One indicator of a “tipping point” for acceptance of Peak Oil may be the state of backwardation in oil futures. Read more…

 Global Oil Flow

ScienceDaily (May 17, 2008) — Physicist Bram Hoex and colleagues at Eindhoven University of Technology, together with the Fraunhofer Institute in Germany, have improved the efficiency of an important type of solar cell from 21.9 to 23.2 percent (a relative improvement of 6 per cent). This new world record is being presented on Wednesday May 14 at a major solar energy conference in San Diego.

The efficiency improvement is achieved by the use of an ultra-thin aluminum oxide layer at the front of the cell, and it brings a breakthrough in the use of solar energy a step closer.

An improvement of more than 1 per cent (in absolute terms) may at first glance appear modest, but it can enable solar cell manufacturers to greatly increase the performance of their products. This is because higher efficiency is a very effective way of reducing the cost price of solar energy. The costs of applying the thin layer of aluminum oxide are expected to be relatively low. This will mean a significant reduction in the cost of producing solar… Read more…