Re: Oil news

From: Al Koop <koopa@gvsu.edu>
Date: Sun Jan 25 2004 - 20:25:42 EST

I sent this a couple of hours ago but it never appeared, so this is
another try. Sorry if you get it twice.

Glenn Morton wrote:

I ran into a couple of very interesting things over the past few weeks
regarding oil supplies.

First, Shell has made some big news by de-booking 4 billion barrels of
reserves. What this means is that Shell had said that this was oil
which
where was little doubt could be produced. Now it is not sure.
Basically it
means that that oil won't likely come to market. Shell's stock took a
dive
but the important thing is that 4 billion barrels represents 8 weeks of
global usage.

Then there is the UK North Sea which last year produced 116 million
tonnes.
It looks like it will produce no more than 106 million tonnes this year.
UK
North Sea is producing 23% less oil than it was merely 4 years ago.

But demand continues to climb. The Financial Times (London) reports
that
China has now become the 2nd largest consumer of oil behind the US.
This
demand will continue to grow as China's economy grows.

And as the demand grows, OPEC's president was asked why OPEC didn't
raise
production in order to lower the price of oil back to the target range
of
$22-$28. He said that OPEC was producing all they could. Shawn Donnan,
"Oil output close to capacity, says head of Opec," Financial Times; Jan
21,
2004. Now, one can't always believe OPEC pronouncements, but if this
statement is true, then the price of oil will stay very high because
demand
is set to outstrip supply. With declines of production in the UK,
Norway,
US, Oman, Venezuela, Indonesia and many many other countries, Kenneth
Duffeyes, the author of Hubbert's Peak, may very well be correct when he
wrote in a recent article that he believes that 2004 will be the year we
peak oil production. I still think it is a couple of years away but I
may
be optimistic.

AK:

Indeed, all of the long term energy forecasts indicate that the world
will have less and less fossil fuel resources as time goes on. All but
the most extreme optimists recognize that it will not be long before
demand for fossil fuels will exceed supply. There are, of course, some
uncertainties about the amount that we have left. The funny thing is
that the optimists therefore assume that these uncertainies always lie
in their favor, but possibly the uncertainities in the realistic
estimates make these estimates too high rather than too low. Who can
know?

Whatever, it seems by all views that switching to some other fuels will
require significant new infrastructure development. This will take some
time as well as energy in addition to the financial outlay. Many think
we have already passed the time when this can be done without a great
deal of hardship on most of the world's people. Not just a few predict a
worldwide collapse with the loss of the majority of the world's human
population. Those who are knowledgeable wonder what person or persons
with enough political stature will be able to bring about legitimate
discussions about these issues, and they wonder when this will finally
happen. (I am disturbed about some of the blatantly false and
ridiculous statements made by our senators, congressmen, administration,
and businesses to mislead the common citizen.)

There is a moderated (by Tom Robertson) list serve site at Yahoo Energy
Resources that has all sorts of news items with much commentary on these
very issues. It has some of the well known names in this area of
depleting energy resources (and a few optimists) who post on this site.
It throws off about 60 or so posts a day (many quite lengthy and some
nearly worthless) so it is almost impossible to keep up with it if you
have other things to do, but anyone who is interested in such issues
will find their plates more than full at this site.

Recently there was a nice report on natural gas from the chair of an
energy hedge fund, Andrew Weissman. This appears to be a solid piece of
information about the North American gas situation. It is found at

http://www.financialsense.com/editorials/powers/2004/0104.html

Basically it says that we are in for difficult times soon. We had a
very optimist forecast in 1999 about natural gas supplies from a
government study. It is now obvious that this report was very wrong.
But we built many gas powered electrical generating units based on this
report and now these investments are looking for the gas to run them.
It gives a blow by blow report of our natural gas utilization over
winter and summer. It says that we basically can get by mild summers
with less natural gas but if we have hot summers with much air
conditioning required, much of the extra power can only be generated by
natural gas. We also have removed much of the demand from the system
that can be removed in the past couple of years so it will be harder and
harder to meet demand in the future.

It appears that natural gas will provide the first indication of energy
depletion to the average US citizen.

Al
 
Received on Sun Jan 25 20:26:27 2004

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