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Approaching the Olduvai Cliff?

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#91 Mind

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Posted 06 March 2004 - 02:30 PM

When the "oil supply" reaches local news, you know a lot more people are thinking about it. Here is a story that ran at my local TV station. Sorry, it is poorly formatted because it was taken directly out of script. It is about more people being interested in hybrid cars. Gas prices are going up and people want to save money. The more the price goes up, the more people will take drastic action: by using less oil, or using different energy sources. One funny part of the article is where the owner of the car dealership claims we won't see a completely hydrid (car) society until 2050. I myself, doubt there will even be cars by 2050.







#92 advancedatheist

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Posted 07 March 2004 - 04:17 AM


Energy security drives need to cut thirst for oil


The rapid growth in demand for metals from China, India and other emerging market economies has sent prices, from copper to scrap metal and coking coal, soaring.

Could the same thing happen with oil prices? At the very least, hot growth in Asia could mean the world is probably moving into an era of permanently higher oil prices, with important implications for economies around the world.

A new report this week from the International Energy Agency warns the world's richest countries, including Canada, account for the greatest share of oil consumption but that efforts to curb use have wavered over the past decade. Our appetite for gas-guzzling sport-utility vehicles and light trucks has soared, along with increased use of trucks to move freight. According to the IEA, trucks on average use 4-20 times more energy to move a tonne of goods one kilometre than does rail.

It's not surprising, then, that oil traded above $37 (U.S.) a barrel yesterday, well above the average of recent years.

Increased production could come from Russia, Iraq and the Caspian Sea over the next several years, adding something to global supplies. But as the U.S. economy recovers, and as countries such as China and India continue red-hot growth, supply and price pressures will intensify. Pressures will become even more intense as automobile usage also grows in countries such as China.

Looking further ahead, there will be growing demand for oil throughout the developing world, where the great majority of the world's population lives, and where there are legitimate demands for a higher standard of living. Significant population growth in the developing world will add to this demand for oil.

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#93 advancedatheist

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Posted 07 March 2004 - 03:35 PM


Global Energy War Looms in


MARCH 07, 2004 22:41
by Seung-Jin Kim Hyung-June Park ( sarafina@donga.com lovesong@donga.com)

As China consumes more and more oil, a silent energy war has broken out on a full scale. China’s thirst for oil is now to the point that a direct pipeline between China and Saudi Arabia, the world’s largest, simply won’t quench it.

The U.S. and Japan, the number 1 and number 2 energy consumers of the world respectively, are on alert as the more oil China wants, the less they can take. This shortage would hurt their economies.

Large energy consumers have begun to woo producers in order to gain an upper hand in the competition. Oil market watchers opined, “The energy issue will become an important aspect of national security.”

Energy War Triggered by China—

China, which exported oil as late as 1992, has become a net importer starting in 1993. Currently, it is the second largest oil consumer of the world. China is the world’s second largest by imported volume and the third largest by consumption growth rate. China’s growth rate in oil consumption is six times as large as the international average.

In 2002, on average, China consumed 19.7 million barrels daily. Apart from its daily production of 7.69 million barrels, if China consumes all of Saudi Arabia’s average daily production of 10.15 million barrels via a direct pipeline, it won’t meet the Chinese daily demand for oil.

If China’s economy grows by six percent annually until 2030, its demand for fossil fuel will rise to 2.4 billion tons from 850 million tons in 1999. A ton of fossil fuel is equivalent to 7.33 barrels of oil. China is projected to import 570 million tons of oil and 140 million tons of natural oil annually

In 21 out of China’s 31 provinces, autonomous regions and municipalities, the supply of energy is running short. The National Energy Regulatory Commission of China said, “The production capacity of some regions has reached the ceiling.”

China versus the U.S.--

China is putting all efforts into securing a supply of energy from across the world. In January, China and Saudi Arabia entered into a contract to jointly explore and produce natural gas. China and Saudi Arabia’s state-owned Aramco formed a $3 billion petroleum chemical joint venture. All these moves make the U.S. uneasy as it depends on two key allies in the region, Saudi Arabia and Egypt, for control of the Middle East. Some signs suggest that Saudi Arabia and China are developing a weapons-for-oil deal.

A government-sponsored energy policy group in the U.S. estimated that the U.S.’s dependence on foreign oil, which rose to 50 percent in 2003 from 30 percent in 1985, will reach 70 percent by 2020.

This is why the U.S. sees China’s search for stable energy sources as a challenge to its world hegemony. Along with the conflict over trade, military rivalry, and the space development race, the competition over energy will be an important axis of the U.S-China competition over international dominance. It explains why China does not support the war in Iraq.

China versus Japan—

Japan, which has little natural resources to turn to, is probably facing an impending energy crisis.

Last year, Mitsui and Co. said it would buy 10.7 percent in the world’s largest natural gas project from a British developer. It prompted PetroChina, China`s state-owned oil company, to urgently negotiate with the British and they successfully appropriated some of the share the Japanese wanted.

In September of last year, Japanese Prime Minister Junichiro Koizumi said Japan would offer $1 billion in aid to Africa and cancel $3 billion in debt African countries owed to Japan. Chinese president Hu Jintao, while on his visit to Gabon and Algeria, promised to cancel $1.3 billion that 31 African countries owed to China. China signed a supply agreement for oil with Gabon and it entered into a contract to jointly explore and produce oil and gas with Egypt.

China’s wooing of Africa still continues. It sent a group of military advisers and about 1,000 soldiers to Africa last year.

Late last year when China and Russia entered into a preliminary agreement to build a pipeline linking oilfields in Angarsk, near Lake Baikal in Siberia, to Daqing, Heilongjiang province, Japan attempted to reverse that decision by promising to foot the bills of $5 billion in construction costs for the pipeline and $10 billion in exploration costs. Russia has yet to announce its final decision, but it is increasingly likely to route the pipeline to Nahotka, Japan.

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#94 advancedatheist

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Posted 07 March 2004 - 03:39 PM


Running Out of Oil -- and Time
Panic will strike if we're not prepared with new technologies.

By Paul Roberts, Paul Roberts writes about the energy industry for Harper's Magazine and other national publications. His new book, "The End of Oil: On the Edge of a Perilous New World," will be published in May.

SEATTLE — The news last month that the vast Saudi oil fields are in decline is a far bigger story than most in the media, or the United States, seem to realize. We may begrudge the Saudis their 30-year stranglehold on the world economy. But even the possibility that the lords of oil have less of the stuff than advertised raises troubling questions. How long will the world's long-term oil supplies last? As important, what will the big importing nations, like the U.S., do the day world oil production hits its inevitable peak?

For more than a century, Western governments have been relentlessly upbeat about the long-term outlook for oil. Whenever pessimists claimed that supplies were running low — as they have many times — oil companies always seemed to discover huge new fields. It's now an article of faith among oil optimists, including those in the U.S. government, that global oil reserves won't run out for at least four decades, which seems like enough time to devise a whole suite of alternative energy technologies to smoothly and seamlessly replace oil.

But such oil optimism, always questionable, is now more suspect than ever. True, we won't "run out" of oil tomorrow, or even 10 years from now. But the long-term picture is grim. In the first place, it's not a matter of running out of oil but of hitting a production peak. Since 1900, world oil production — that is, the number of barrels we can pump from the ground — has risen in near-perfect step with world oil demand. Today, demand stands at about 29 billion barrels of oil a year, and so does production. By 2020, demand may well be 45 billion barrels a year, by which time, we hope, oil companies will have upped production accordingly.

At some point, however, production simply won't be able to match demand. Oil is an exhaustible resource: The more you produce, the less remains in the ground, and the harder it is to bring up that remainder. We won't be "out of oil"; a vast amount will still be flowing — just not quickly enough to satisfy demand. And as any economist can tell you, when supply falls behind demand, bad things happen....

As production falls off this cliff, prices won't simply increase; they will fly. If our oil dependence hasn't lessened drastically by then, the global economy is likely to slip into a recession so severe that the Great Depression will look like a dress rehearsal. Oil will cease to be viable as a fuel — hardly an encouraging scenario in a world where oil currently provides 40% of all energy and nearly 90% of all transportation fuel. Political reaction would be desperate. Industrial economies, hungry for energy, would begin making it from any source available — most likely coal — regardless of the ecological consequences. Worse, competition for remaining oil supplies would intensify, potentially leading to a new kind of political conflict: the energy war.

#95 advancedatheist

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Posted 07 March 2004 - 03:47 PM


Natural gas drying up

Experts say shortfall in commodity will mean higher prices
By Dave Anderton
Deseret Morning News

Natural gas once was touted as the abundant, affordable energy source of the future.

Now there are escalating worries about a massive shortfall of the commodity, and that could lead to higher prices for the fuel that is used to heat most Utah homes and run some of the state's power plants.
Sounding the alarm is Andrew Weissman, founder and chairman of Energy Ventures Group LLC, based in Washington, D.C.

Weissman, a graduate of Harvard Law School who has focused his 26-year career on the energy industry, said natural gas-fired power plants are driving volatility, putting tremendous pressure on electricity prices.

Today natural gas is the fuel used for about 19 percent of U.S. electric power generation.

According to the U.S. Energy Information Administration, natural gas prices have more than doubled since the late 1990s, when prices averaged $2 to $3 per thousand cubic feet. In the past three years prices have ranged between $4 and $6 per thousand cubic feet.

"I don't think those are short-term events," Weissman told a group of journalists last month at an energy seminar sponsored by the Knight Center for Specialized Journalism at the University of Maryland. "They're early warning signs of what is to come."

In fact, Weissman said the pending natural gas shortage will present the biggest challenge facing energy providers and the U.S. economy for most of the next decade.

#96 Mind

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Posted 07 March 2004 - 05:28 PM

What I would like to find out, from anyone "in the know" is; At what price per barrel of oil (or price per cubic foot of natural gas) does solar power become competitive. Oil at $37.00 per barrel must be getting close.

#97 advancedatheist

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Posted 07 March 2004 - 07:07 PM


March 7, 2004 

James Flanigan:
Pump Prices Just a Drop in the Bucket of Fuel Woes
Lots of motorists are ticked off that refinery outages in California have pushed the price of gasoline to $2.20 or more a gallon. But if they understood the real cloud hanging over our energy future, their anger would rightly give way to a different emotion: fear.

People, of course, have heard all this before, and many dismiss it as Chicken Little rhetoric. The prospect of running out of oil is always a vague threat in the distance; it sounds bad, but it never seems to get any closer to becoming reality.

Despite price run-ups, like the one Californians are now experiencing, "people are told there is plenty of oil around," notes David Goodstein, a physics professor and vice provost of Caltech in Pasadena. "They don't perceive a crisis."

This time, though, Goodstein believes they well should.

In a new book called "Out of Gas: The End of the Age of Oil" (W.W. Norton), Goodstein looks at the history of oil exploration and finds that 2 trillion barrels is as high as proven reserves have ever gotten.

We have run through almost half of that total today, he says, and are no longer replacing all that we consume through new discoveries and development.

"The world," Goodstein writes, "will soon start to run out of conventionally produced, cheap oil."

In November, the International Energy Agency projected that it would cost about $16 trillion to meet projected energy demand during the next 20 years — far more than had been spent in previous decades. Indeed, big investments will be needed even to maintain, much less increase, output from places such as Saudi Arabia.

"When producing energy becomes extremely capital intensive or energy intensive — using more energy in processes like liquefying natural gas to get less out — you're already fighting a losing game," Goodstein says.

"Civilization as we know it will not survive," he adds, in an unabashedly dire tone, "unless we can find a way to live without fossil fuels."

#98 advancedatheist

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Posted 12 March 2004 - 01:24 AM


Posted on Thu, Mar. 11, 2004

Energy Watchdog Sees Tighter Oil Supplies


Associated Press

LONDON - Hunger for imported oil in China, scanty global inventories of crude, and political unrest in petroleum-rich Venezuela could combine to drive gasoline prices higher this summer, the International Energy Agency warned Thursday.

Oil output from OPEC producers has lagged behind the growth in demand in China and other parts of Asia, squeezing oil inventories that already stood at historically low levels. Refiners, meanwhile, are adding to a squeeze on gasoline supplies by planning to shut down their plants for routine maintenance as sales of home heating oil ebb in the Northern Hemisphere, the agency said in its monthly oil market report.

These constraints suggest that energy markets face an unusually volatile transition as they shift their focus to gasoline before the peak summer driving season in the United States and Europe.

#99 advancedatheist

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Posted 12 March 2004 - 01:40 AM


Nobel prize scientist calls for research taxes


By SIMON COLLINS science reporter

New Zealand-born Nobel Prize winner Alan MacDiarmid has called on all countries of the world to divert a percentage of their military budgets to solving a looming world energy crisis.

Dr MacDiarmid, 76, told Apec science ministers in Christchurch yesterday that energy was the single most important problem facing humanity.

He called for "a new crash programme, similar to the Apollo programme that put a man on the moon", to develop energy sources to replace oil, coal and natural gas.

Burning those fuels was destabilising the global climate, and in any case the world was running out of fossil fuels that could be extracted easily.

#100 advancedatheist

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Posted 12 March 2004 - 01:44 AM


Posted on Wed, Mar. 10, 2004

Hike in Natural Gas Prices to Be Felt in California Fertilizer Purchases

By Ching Lee, Appeal-Democrat, Marysville, Calif. Knight Ridder/Tribune Business News

Mar. 8 - While the nation has felt the pinch of rising natural gas prices through home heating bills, farmers can expect to feel the same impact through what they will pay for fertilizer this year.

"It's approaching the highest price I've ever seen," said Dean Miller, general manager of Big Valley Ag Services Inc. in Gridley. "Some (growers) are going to have some sticker shock this year."

Natural gas is a major cost component of making nitrogen-based fertilizers, Miller said, and right now, world demand for natural gas far exceeds supplies.

"So we're just paying through the nose," he said.

The price of natural gas in the United States is now more than double the historic average, said Tim McGahey, fertilizer manager of Helena Chemical Co. in Sutter. Such high prices have forced many nitrogen producers in this country to shut down, he said. In California, they have been extinct for the past 10 to 15 years. Today, the majority of nitrogen producers in the United States are in the Midwest, but many of them are shutting down as well.

"The end result of that is a shortening of supply," McGahey said. "Therefore, we're forced to go to the world market to get (nitrogen)."

#101 advancedatheist

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Posted 12 March 2004 - 04:36 AM

In one formerly "oil-rich" country after another, oil extraction is declining:


Oil declining, Colombia offers new deal in Houston
Reuters, 03.09.04, 1:26 PM ET

By Phil Stewart

BOGOTA, Colombia, March 9 (Reuters) - Scrambling to halt a slide in crude output, Colombian officials head to Houston this week to sweeten the terms for foreign companies that search for oil in the war-torn South American country....


Oil output in Colombia dropped to 541,000 barrels per day last year from 815,000 bpd just five years ago as the biggest fields decline. Output is forecast at 530,000 bpd in 2004.

#102 advancedatheist

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Posted 13 March 2004 - 05:57 PM


Oil patch must look beyond border to grow

Saturday, March 13, 2004 - Page B2

The Western Canadian Sedimentary Basin is no longer where it's at for big oil and gas players looking for growth.

If the announcement last week that Penn West Petroleum was considering its strategic options (including the possibility of becoming a royalty trust) sent a strong message about how difficult it is to grow from an asset base exclusively focused in Western Canada, Petro-Canada more than reinforced that perspective during its investor update held in Toronto this week.

It's no secret that conventional oil production peaked in North America almost 30 years ago while consumption of natural gas has consistently exceeded what has been replaced since 1996.

The numbers are staggering.

In 1997, a record year for natural gas drilling, 4,862 wells were completed and 4.3 trillion cubic feet (tcf) of reserves were added. Last year, 13,963 natural gas wells were drilled and preliminary estimates are that the year will end flat, with all that drilling merely replacing 2003 production of six tcf.

It's clearly a losing battle even when promising plays such as EnCana's Cutbank Ridge in northeastern British Columbia, which is estimated to hold reserves of four tcf, are factored in.

#103 advancedatheist

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Posted 14 March 2004 - 07:18 PM


Senate oil move highlights US price fears

By Kevin Morrison in London

Published: March 14 2004 18:17 | Last Updated: March 14 2004 18:17

The growing concern about the effect of high oil prices on the US economy was underlined by the US senate's decision last week to stop further purchases by the Bush administration for the country's strategic petroleum reserve.

Michael Lewis, head of commodities research at Deutsche Bank, said the US was more sensitive to higher oil prices than other large economies because of the fall in the dollar's value. Oil prices in euro and yen terms had not risen as sharply and therefore posed a smaller threat to economic growth.

"US consumers have had a $50bn increase in their tax bill since last May through higher oil prices, but instead of paying their taxes to the US government, they are paying more to Saudi Arabia for the same amount of oil," said Mr Lewis.

#104 advancedatheist

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Posted 15 March 2004 - 03:53 PM


Oil market tightness is likely long term


UPDATED AT 10:40 AM EST  Monday, Mar. 15, 2004

If the depletionists are right, global production of conventional crude oil should be peaking within the next couple of years, at somewhere in the neighbourhood of 65 million barrels a day.

Recent production estimates from the International Energy Agency show global oil production in January is already well through that mark at 82 million barrels. But the IEA numbers include eight million barrels a day of non-conventional production such as oil sands and deep-water oil, and another eight million to nine million barrels of liquefied natural gas.

Strip out unconventional sources of supply, and crude production is hovering around 65 million barrels, where it has been for the past four years. Has the world already seen the peak in conventional crude production?

Not only has conventional production not grown over the past four years, but there is virtually no spare capacity left among producers belonging to the Organization of Petroleum Exporting Countries. Excluding the brief period when Kuwaiti and Iraqi oil wells were ablaze during the Persian Gulf war, OPEC has not operated with such spare capacity -- 2.7 million barrels a day at present -- in nearly 30 years.

You can call it just-in-time inventories or you can call it what it really is -- Saudi Arabia running out of reserves. In fact, some commentators such as Matt Simmons of Simmons Associates believes the giant Ghawar field, home to one-eighth of the world's known oil supply, may be 80 per cent to 90 per cent depleted. Moreover, Mr. Simmons notes that depletion from Ghawar, whose production has already slowed despite massive injections of salt water to maintain well pressure, is far exceeding the discovery of replacement oil elsewhere in the kingdom.

#105 advancedatheist

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Posted 16 March 2004 - 01:21 AM


This Week From Barron's
Crude Calculations

By Jacqueline Doherty
March 15, 2004

OIL PRICES HAVE CLIMBED to levels not seen since the Iraq war — the first or the second. But the market doesn't believe they can last. The benchmark crude currently fetches about $35 a barrel, but the futures market thinks the price will retreat below the $30 barrier next year and will be around $28 in five years. Industry executives pencil in an even lower price, something in the low-to-mid-$20 range, when they make their long-term plans.

But this time they and Mr. Market may both be wrong. As the price of crude has moved steadily higher in the past five years, the market had assumed that each increase would be relatively short-lived. Supplies always were ample to meet demand, even as it expanded both in the U.S. and elsewhere around the globe, most recently in China.

That may not continue if, as some experts expect, oil output reaches a peak and subsequently declines in not too many years. The era of cheap, plentiful oil may be coming to a close.

"If you do not include [the Organization of Petroleum Exporting Countries], we are at the peak of oil production. And if OPEC production is included, peak production is pushed out five years or so," says Felix Zulauf, founding partner of Switzerland's Zulauf Asset Management and a member of the Barron's Roundtable. "Before the end of the decade is over, we will have $60 oil," he concludes.

An extreme forecast, to be sure, but one consistent with the estimates of Colin Campbell, a 72-year-old retired geologist who believes production will peak around 2010 and the world will ultimately produce a total of 1.8 trillion barrels of oil. "Everybody calls me a pessimist, but I may turn out to be an optimist," says the Brit, who boasts a doctorate in geology from Oxford and did stints at major oil concerns including Texaco, BP and Amoco from 1957 till 1990.

#106 advancedatheist

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Posted 17 March 2004 - 04:14 PM


Chemical Industry in Crisis

Natural Gas Prices Are Up, Factories Are Closing, And Jobs Are Vanishing
By Greg Schneider
Washington Post Staff Writer
Wednesday, March 17, 2004; Page E01

NITRO, W.Va. -- Soon after the Flexsys chemical plant celebrates its 75th anniversary this month, demolition crews will tear it down.

"Nothing over three inches high is going to be left here," plant manager Jon McKinney said.

The former explosives factory gave the town its name, and its demise will eliminate 205 jobs and yet another piece of the once-powerful U.S. chemical industry.

Chemicals are an unglamorous part of the manufacturing world, with products that have unpronounceable names and often hazardous qualities. But they are essential to a host of industries, from automaking to textiles to agriculture. Hardeners make tires more durable. Polymers put the spring in athletic shoes, and nitrogen fertilizers increase crop yields.

As the nation's manufacturing base seems to shrink daily from factories closing or relocating overseas, the health of the chemical sector is a crucial measure of how deep the problem goes. And chemicals are in crisis, squeezed not only by cheap foreign competition but also by soaring energy costs.

#107 advancedatheist

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Posted 18 March 2004 - 04:49 PM

High oil prices are inflicting tangible harm on South Korea's economy:


Nation Launches Energy-Saving Drive

By Kim Sung-jin
Staff Reporter

Drivers will be encouraged to use public transportation, while shopping malls and public buildings will be urged to cut their energy consumption by switching off outdoor lighting and refraining from unnecessarily using elevators from next week.

The government on Thursday decided to set in motion the first phase of three-phased emergency measures to cope with soaring international crude oil prices, as the price of Dubai cash crude continued to hover above the $30 per barrel mark for more than two weeks.

#108 advancedatheist

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Posted 21 March 2004 - 06:06 AM


Peering into oil's future

Experts try to predict when the world will start running low on the natural resource that keeps all the engines running

Verne Kopytoff, Chronicle Staff Writer
Sunday, March 21, 2004

The world began running out of oil soon after the birth of modern drilling during the 1850s. The question since then has always been:

When will the spigot start drying up?

Mounting evidence suggests that an important turning point may be close. According to several studies, oil production is expected to begin a permanent decline within a few years, prompting social and economic upheaval across the globe.

Or maybe not. A rival school of thought says that oil's imminent demise is exaggerated and that crude will be plentiful into the near future.

Whom can you believe? It all depends on how accurate researchers are in calculating such complex variables as future oil consumption, production and discovery.

"One has to be very skeptical about any prediction," said David Goodstein, author of the recently published book "Out of Gas: The End of Oil," and a physics professor at California Institute of Technology in Pasadena.

The numbers that some researchers are relying on "are extremely undependable" and are being put forth "by companies and countries that have strong interest in tilting them one way or another," Goodstein said.

Worries over falling crude production inevitably arise when fuel prices spike, as they have recently. Oil futures, at $38.08 per barrel, are near a 13- year high, while the average price of a gallon of unleaded gasoline in California hit a record $2.18 earlier this month.

Historically, researchers have been woefully inept at predicting a permanent decline in global oil production. They have made dire forecasts since at least the 1920s, only to eat crow as pumping increased.

What researchers are trying to determine is when oil production will begin to taper off as a natural consequence of dwindling reserves. At some point, there just won't be enough oil left to keep pumping increasing amounts from underground, analysts agree.

As it is, global oil production has grown most years since the turn of the last century. The world produced nearly 67 million barrels of oil a day in 2002, up 11 percent from a decade earlier, according to the U.S. Energy Information Administration.

The added crude has fueled economies across the globe, including the United States, and enabled millions of new drivers to take to the road. Without the new supplies, oil and gasoline would undoubtedly cost a lot more.

But the era of abundance is in peril, judging from an important industry yardstick. More oil is being produced each year than discovered.

It's similar to when you spend more money than you bring in. Unless the pattern changes, your bank account will eventually run dry.

#109 advancedatheist

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Posted 21 March 2004 - 04:27 PM

South Korea is getting ready to enforce energy rationing:


Seoul warns of curbs if oil prices rise more

The government is considering compulsory measures beginning next month if there is another jump in international oil prices. Dubai oil currently costs $31 per barrel.

The government is considering forcing cars off the road one day in every 10, reducing nighttime business hours, cutting elevator service to lower floors and banning outdoor lights.

The government said it would encourage Koreans to reduce energy consumption beginning this week.

An official at the Ministry of Commerce, Industry and Energy said yesterday, "After looking at the results of the Organization of Petroleum Exporting Countries meeting on March 31 and the price changes afterward, we will decide on how much force to use."
OPEC announced early last month that it would cut daily oil production by 1 million barrels beginning April 1.

But the ministry official said, "We are not planning to take compulsory measures immediately, because supply and demand is still in balance even though oil prices recently soared."

He added that the government would continue for as long as possible to support policies that encouraged Koreans to reduce their energy consumption voluntarily.

The government said it was also planning to increase Korea's oil reserves from current 132 million barrels to 138 million barrels.

The new target, the government said, would allow Korea reserves totaling 110 days of domestic oil consumption, nearly a week more than the current oil reserve supplies. The United States and Japan both have stockpiles that would last for 120 days if oil imports were cut off.

by Chang Se-jeong


#110 advancedatheist

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Posted 21 March 2004 - 04:30 PM


You can't be sure of Shell
(Filed: 21/03/2004)


The disclosure on Thursday that Europe's second-largest oil company had been forced to reduce its estimate of reserves by a further 470m barrels sent shares down over 3 per cent to 361.50p, wiping some £1.5bn off its market capitalisation at one stage. Embarrassingly, it turned out that estimates of the 2003 reserves - given as recently as its annual results on February 5 - were incorrect, mainly in respect to the Ormen Lange field in Norway, which has been reassessed....

"All the recent events are manifestations of a deeper issue, the depletion issue," says one City analyst. "What you've got is a super-major that is looking at the prospect of going ex-growth and the key question is - where is the growth going to come from?"

Reserves at the company declined throughout the first half of the 1990s because discoveries simply did not keep pace with production. According to reports in the US, Shell's executives were so worried about this that they allowed accounting guidelines used to book reserves to be relaxed, effectively enabling the company to book reserves in fields years before making significant investments to get the oil and gas out of the ground.

#111 advancedatheist

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Posted 21 March 2004 - 10:42 PM

Indonesia, an OPEC member(!), reports declining oil extraction on the order of 10% or so in one year:


Review - Oil & Gas: Production to Fall
March 21, 2004 11:19 PM,

Laksamana.Net -  Indonesia’s crude oil output is expected to fall below 1 million barrels per day (bpd) in 2004, down from 1.09 million bpd the previous year, due to declining productivity, a senior energy official said Friday (19/3/04).

"The expected decrease is related to a drop in the productivity of a number of oil fields in the country," Oil and Gas Director General Iin Arifin Takhyan was quoted as saying by state news agency Antara.

The government had originally forecast production of 1.05 million bpd for this year, but output is currently at about 1 million bpd. Indonesia, the only Asian member of the Organization of Petroleum Exporting Countries (OPEC), has a quota of 1.27 million bpd from the cartel.

Although a net exporter of crude oil, Indonesia has become a net importer of refined oil products due to rising domestic demand and flagging production.

#112 Lazarus Long

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Posted 22 March 2004 - 03:59 PM

Here is the other side of the Industrial Spin.

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Painful for some, but hardly a crisis
Mar 18th 2004
From The Economist Global Agenda

Light crude is hovering around a 13-year high. But are companies protesting too much about high oil prices?

FOR the last 30 years, the price of oil has been the single most important determinant of the economy and the stockmarket.” So claim the authors of “Oil Factor”, one of a spate of gloomy new books about energy. They claim that the oil price will soar above $100 a barrel “by the end of the decade, and possibly sooner”. Such a spike, they say, would drag the global economy into a severe recession.

You do not need to believe such scenarios (which rest on the dubious assumption of imminent oil scarcity) to be worried about the impact of oil prices today. After all, the OPEC cartel, which controls roughly half the world’s crude exports, has kept prices above $30 a barrel for much of the past three years. In America, petrol prices at the retail pump are approaching all-time highs. Headlines on both sides of the Atlantic have proclaimed an energy crisis.

On the face of it, oil consumers have much to worry about. On Wednesday March 17th, American light crude ended trading in New York at $38.18 a barrel, the highest closing price since October 1990, in the run-up to the first Gulf war. So far this year, consumers have paid an average price of $35 per barrel (based on American light crude), compared with $31 in 2003. Prices have been driven higher in the past week by concerns about terrorism in the wake of the Madrid bombings. Add to that worries about stocks in America: on Wednesday, the government released data showing that gasoline stocks fell last week by 800,000 barrels, to a level 5% below their five-year average, raising fears of a supply crunch (though crude stocks have risen slightly from their near-30-year lows in the winter).

At least for some gas-guzzling industries, the fear of exorbitant prices seems justified. Airlines, for example, have been hit hard by the surge in the price of jet fuel. American, Delta and several others announced a temporary fuel surcharge of $10 per ticket to compensate, only to reverse it when rivals did not follow suit. The chemicals business is also vulnerable, as it uses hydrocarbons both as a feedstock and as a source of energy. Du Pont, the world’s biggest chemicals firm, recently estimated that a $1 rise in the price of both oil and natural gas adds about $135m a year to its pre-tax costs.

But look beyond the most energy-intensive sectors, and the notion that high oil prices are quashing demand and wrecking firms is overdone. One reason is that OECD economies are less energy-intensive than three decades ago when the first oil shocks occurred, thanks to the shift out of manufacturing into services and information technology. And, in real terms, even the current “high” oil price of over $38 a barrel is still below half its historic peak.

The story is further complicated by the recent plunge of the dollar, the only currency in which oil is traded. The relative strength of the euro and sterling has greatly reduced the pain of dollar-price increases for firms in Europe (see chart).

But what of other big oil-guzzling economies? “Americans might whine about it, but they aren’t in pain because the oil price is $35,” argues Roger Diwan of PFC Energy, a consultancy. As evidence, he points to the robust growth in demand for oil in America in recent months—one of the main reasons why prices are now so high.

The same is true of China, which has a currency peg to the dollar and is thus fully exposed to the rising oil price, and has also, like many other developing countries, become much more reliant on oil in recent years as its economy has moved from agriculture to heavy manufacturing. Higher prices have not dented Chinese demand. In fact, China has just passed Japan to become the world’s second-largest oil consumer.

Certainly, some firms in energy-intensive industries are in for a rough ride as OPEC tries to keep prices high through America’s summer “driving season”. Indeed, the cartel shows no sign of reversing its recent decision to cut its official production limit (of 24.5m barrels per day) by 4% from April 1st. But claims that today’s oil prices amount to anything approaching a crisis for business at large are unfounded.

#113 advancedatheist

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Posted 23 March 2004 - 09:40 PM


China's oil giant plans for lowering annual yields 

www.chinaview.cn 2004-03-23 21:13:25

HARBIN, March 23 (Xinhuanet) -- China's leading petroleum producer,Daqing Oil Field, will cut its crude oil output by an annual 7 percent for the next seven years, a local official has revealed.

The reduction will bring the yearly crude oil output of the oilfield, dubbed "China's oil tank," down to 30 million tons by 2010,said Ge Ruyin, mayor of Daqing in the northeast Heilongjiang province.

Before 2003, the yearly crude oil output of the petroleum giant,which contributes some one-third of the country's oil, had remained above 50 million tons for 27 years since it was put into production in 1960.

If the reduction continues at such a rate, Ge said, the annual output of the oil field will drop to 10 million tons by 2020.

The reduction program indicates the oil field is facing imminent exhaustion of exploitable oil reserves.

#114 advancedatheist

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Posted 25 March 2004 - 10:26 PM


March 25, 2004 

Say Bye-Bye to Cheap Oil
Surplus capacity is history. The jolts will start with $3 gas pump prices.

By Paul Roberts

For the tens of millions of American motorists patiently waiting for gas prices to come back to Earth, the news from the oil markets is not encouraging.

For the last year, government forecasters have reassured us that the unusually high oil prices we've seen since 2002 — around $30 a barrel — were temporary: As soon as global markets recovered from the mess in Iraq, oil prices would drop and gasoline prices would eventually follow.

Yet nearly 12 months after "victory" in Iraq, oil prices are at an eye-popping $38 a barrel, or about $15 above the two-decade average, and some forecasters are now offering a far less sanguine prognosis: Not only will oil stay high through 2005, but the days of cheap crude are history. These aren't exactly glad tidings for a global economy designed to run on low-priced oil, nor for a White House that gambled it could deliver low oil prices with a mix of diplomatic muscle and market liberalization.

What happened? In simplest terms, what we're seeing are the final months of a 25-year oil boom. That boom was sparked by the oil shocks of the 1970s, when sky-high prices touched off a feeding frenzy among oil producers. Eager to cash in on the good prices, oil companies and oil-rich states drilled thousands of new wells, built massive pipelines, developed fantastic exploration and production technologies and generally expanded their capacity to find and pump oil.

This surge in capacity eventually brought prices down and helped buffer consumers from subsequent oil crises. When a disruption occurred — for example, when Saddam Hussein knocked out Kuwait's huge oil fields in 1990 — the world's other oil producers, such as Saudi Arabia, simply tapped their own surplus capacity and filled in the shortfall. Surplus capacity helps explain why oil prices since 1982 have averaged just $22 a barrel.

Now, however, the world's surplus capacity is disappearing. Many Middle Eastern countries lack the cash to expand production. Private oil companies are struggling to discover oil fields. Worse, even as industry worries about supply, global demand is growing far faster than predicted — largely because China's economy has outpaced even Beijing's expectations. And as everyone knows, when supply falls behind demand, prices head for the sky.

Also you might want to look up Paul Roberts's new book, The End of Oil : On the Edge of a Perilous New World, due out in May.

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#115 advancedatheist

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Posted 25 March 2004 - 10:40 PM


La. oil executives warn of national energy crisis

Advocate business writer

Louisiana oil executives on Wednesday raised the specter of a looming national energy crisis, warning that soaring prices and dwindling reserves pose serious risks to the nation's economy.
Their explanations for higher oil and natural gas prices echo what other industry experts have cited over the past few years: A mix of economics and overly restrictive government policies.

But the escalating rhetoric underscores industry representatives' increasing calls for government intervention and more capital investment to calm bustling markets.

"We should all be considering ourselves in a panic mode right now, from the federal government on down," Mitch Ackal Jr. said. "Congress refuses to look at a sophisticated, viable energy policy, and all of us are going to end up suffering with this."....

Ackal and other executives said that while domestic demand for energy remains as high as ever, production is not keeping pace.

The reason, they said, is that the industry is maturing, meaning that much of the nation's most easily accessed petroleum deposits have been tapped.

"All the low-hanging fruit in this market has already been picked," said Matt Hardey, vice president of finance and chief financial officer for Newpark Resources, a New Orleans supplier of environmental and drilling services to oil and gas producers.

#116 advancedatheist

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Posted 26 March 2004 - 03:04 AM


North Sea oil output falls

March 26 2004
North Sea oil and gas production fell by 0.4% in January and was down 5.1% compared with last year, according to the latest industry figures.

#117 advancedatheist

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Posted 02 April 2004 - 04:32 PM


Press Release Source: The Conference Board

U.S. Companies Dominate Energy Issue
Thursday April 1, 10:48 am ET 
Business Use Accounts for More Than Half of U.S. Energy Consumption

NEW YORK, April 1 /PRNewswire/ -- In a severe energy crisis, the biggest consumers of energy -- U.S. companies -- could find themselves being both the victims of -- and blamed for -- rising prices and energy shortages, according to a report released today by The Conference Board.

"Business' domination in energy consumption, with everything it implies in terms of exposure, risk, responsibility, and reputation, will continue as companies plan for growth and further globalization," says Meredith Whiting, Senior Research Fellow at The Conference Board and co-author of the report with Conference Board Senior Research Associate Charles J. Bennett.

Industrial and commercial use account for more than half of the nation's energy flow, according to the Energy Information Administration.

"The phrase 'fueling the nation's economy' is not just a metaphor," says Bennett. "While rarely acknowledged in the media, manufacturing and commercial activities use more energy than any other category of energy consumption, including transportation and residential heating and cooling appliances."

The report is based on a survey of 103 large U.S. companies. When asked to rate the overall importance of energy to their business, more than 80 percent rated it either very or extremely important.

Energy is an essential commodity for businesses and, in some ways, is much like other commodities, although energy has a higher public profile because of its relationship to key environmental and geo-political issues. Perhaps the most significant unknown regarding the future of energy relates to evolving public concern for and policies about climate change and environmental quality.

While variations in energy management depend somewhat on type of business and overall dependence on energy -- measured as a percent of operating costs -- they generally aren't consistent along those lines, says the study. A variety of priorities and management approaches occur across sectors.


Despite quite different circumstances in other parts of the world, energy in the U.S. has long been a relatively low-cost and generally abundant business commodity. But now, especially for U.S. business, traditional assumptions of abundant supplies and low costs are threatened by more frequent and more varied crises, ranging from prolonged regional blackouts to price spikes and/or potential supply shortages due to aging distribution infrastructure, to backlash from environmentalists and governments.

    The TCB survey shows that:

    *    Oil is the backbone of the transportation economy and remains
          abundant but very unevenly distributed.  As Bob Ebel, energy
          director for the Center for Strategic and International Studies,
          underscored at a recent Conference Board forum on energy management,
          much of our future petroleum supply will come from politically
          unstable regions and countries.  Recent unrest or conflict in key
          oil-producing countries -- Venezuela, Nigeria, and Iraq -- have
          contributed to historically high oil prices in the United States and
          elsewhere. At the same time, developments in oil exploration and
          recovery technology continually push back the date on which
          shortages are anticipated. The situation is further complicated by
          the rapid increase in demand as developing countries become more

    *    Natural gas prices in the U.S. have increased dramatically, with
          little immediate relief in sight.  At least part of the decline in
          U.S. manufacturing jobs and competitiveness in some industrial
          sectors is increasingly attributed to this price rise. Global
          supplies are abundant and will be more readily available. Many of
          the major consuming nations (e.g., the U.S.), however, do not have
          sufficient supplies to meet demand growth (gas use is expect to
          double globally by 2030).  Improved liquefied natural gas (LNG)
          transportation and storage technology will undoubtedly ensure
          availability, but prices are expected to remain high. Many of the
          leading sources of LNG are the same politically troubled regions
          where oil is abundant, and the proposed developments of some LNG
          facilities in the U.S. have encountered "not in my backyard"

    *    Coal is both abundant and cheap, and one of the most widely-cited
          causes of fueling poor local air quality as well as of global
          climate change. This is driving the trend toward increased use of
          natural gas. Public opinion and potential regulation may hinder
          further development of this resource without costly and, in many
          cases, unproven coal-cleaning or conversion technology.  Because
          coal is so abundant, research into cleaner coal technology --
          especially carbon capture and sequestration -- is underway. As the
          cost of other primary fuels increases, so, too, will the
          competitiveness of cleaner coal technology. Reclamation of mining
          landscapes will continue to be an issue in the U.S.

    *    Electricity is heavily dependent on natural gas or coal. Electricity
          costs are increasing and likely will continue to do so as prices for
          its underlying fuels rise. And demand is rising dramatically
          throughout the world. While supplies in the U.S. are adequate, the
          2003 blackout experienced by more than 50 million people underscores
          frailties in the distribution system. As Kurt Yeager, CEO of the
          Electric Power Research Institute, said recently at The Conference
          Board's energy management forum: "Our existing electrical
          infrastructure is being exploited for short-term advantage. Without
          huge investments to increase capacity, reliability, security, and
          service capabilities, our electrical industry will not have the
          critical infrastructure needed to support the digital society of the
          21st century.

A relatively small number of survey participants (just under 12 percent) categorize energy management as primarily a strategic business issue, while more than 37 percent consider it to be an operational one, and 50 percent consider it to be both.

"This perhaps reflects the idea that present use of energy is largely an operational matter, whereas future energy use may be more of a strategic matter that will require significant planning and investment decisions," concludes Whiting.

        Source: Strategic Energy Management: The State of the Debate
                Research Report #1346, The Conference Board

#118 advancedatheist

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Posted 08 April 2004 - 04:52 AM

Apparently technological progress won't help us in "squeezing the rocks" for oil for too much longer.


Oman's Oil Yield Long in Decline, Shell Data Show

Published: April 8, 2004

The Royal Dutch/Shell Group's oil production in Oman has been declining for years, belying the company's optimistic reports and raising doubts about a vital question in the Middle East: whether new technology can extend the life of huge but mature oil fields.

Internal company documents and technical papers show that the Yibal field, Oman's largest, began to decline rapidly in 1997. Yet Sir Philip Watts, Shell's former chairman, said in an upbeat public report in 2000 that "major advances in drilling" were enabling the company "to extract more from such mature fields." The internal Shell documents suggest that the figure for proven oil reserves in Oman was mistakenly increased in 2000, resulting in a 40 percent overstatement.

The company's falling production and reduced reserves in Oman are part of a broader problem facing Shell, the British-Dutch oil giant that earlier this year lowered its estimate of worldwide reserves, a crucial financial indicator, by 20 percent, or 3.9 billion barrels.

Documents show that senior executives were told the calculations of reserves were too high in 2002, at least two years before the company downgraded its estimate this January.

While Oman represents a small part of Shell's reserves, oil industry experts say the company's experience there highlights broader questions about the future role of Western oil companies and their technology in the Persian Gulf, which has most of the world's oil reserves.

In the case of the Yibal field, for example, Shell and Omani oil engineers and auditors have expressed concerns that a technique Sir Philip said would recover more oil not only did not do so, but also increased the amount of water in the extracted oil to as much as 90 percent of the total volume, increasing production costs.

"In Oman, Shell seems to have fumbled on technology," said Ali Morteza Samsam Bakhtiari, a senior official with the National Iranian Oil Company.

Perhaps more ominously for the world's oil outlook, he added that the failure of Shell's horizontal drilling technology in Oman suggested that even advanced extraction techniques "won't bring back the good old days."

#119 advancedatheist

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Posted 12 April 2004 - 04:13 PM


DuPont to Cut 3,500 Jobs

Monday, April 12, 2004; 9:55 AM

NEW YORK (Reuters) - DuPont Co. , the No. 2 U.S. chemicals maker, on Monday said it will cut 3,500 jobs, or 6 percent of its work force, as part of a previously announced plan to reduce costs by $900 million in the face of high raw material prices....

The company has said the cost cuts will make it more competitive. Like other U.S. chemicals makers, it has struggled with high energy and raw material costs caused by shrinking natural gas production and the war in Iraq.

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#120 advancedatheist

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Posted 15 April 2004 - 05:30 AM


Last Updated: Wednesday, 14 April, 2004, 06:43 GMT 07:43 UK 

Norway prepares for dry North Sea

By Lars Bevanger
In Oslo, Norway 

Norway's once vast oil reserves in the North Sea are dwindling, and the government is facing tough choices when planning for the country's economic future.

Since oil was discovered on the Norwegian continental shelf in 1971, this small nation has been propelled into the world's third largest oil and gas exporter, and petroleum activities contribute 20% of the gross domestic product (GDP).

But now forecasts suggest the country's economic mainstay has started its inevitable decline.

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