Planning for Europe's Energy Future: My Submission to the Commission's 2010 Consultation on Energy

Link -
http://europe.theoildrum.com/node/6694

Just on way out, I will post full article later.

But I thought this chart was worth a look, purely to show some of the "official misdirection" of Governments & their agencies!

OPEC Going Sideways: Not a Good Time for Oil Importers

OPEC tells us it has lots of spare capacity, but how much should we believe them? Even when prices were much higher than they are now, back in 2008, they did not make use of all of the spare capacity that they supposedly had.


When one looks at a history of estimates of future productive capacity, we find too, that they have tended to decrease over time (up until the new 2010 report)--also raising questions about current estimates.

The International Energy Agency (IEA) recently put out its Mid Term Oil and Gas Market Report 2010 (MTOMR 2010). Although the report talks about a 7.1 million barrel a day decline between now and 2015 when all of the anticipated new capacity is added, total capacity is expected to increase from 34.85 barrels per day to 35.78 barrels a day (page 82) in that time period.


According to this table, the Iraq is expected to have the largest increase in capacity (amounting to .97 million barrels a day). The second largest increase in capacity is Saudi Arabia, and the third largest increase in capacity is UAE. Iran is expected to have the largest decrease in capacity.

The question is, "Will this large an increase in capacity really result in higher production?"

If we look at historical forecasts of capacity, alongside actual production, we discover a pattern not unlike that recently shown by Steve Kopits with respect to the EIA forecasts. The forecasted amounts keep coming down!


Each year, from the 2006 to the 2009 report, the medium term oil market reports bring the estimated capacity down by about 2 million barrels a day. In 2010, the capacity estimates increased a bit, but mainly because of Iraq.

More importantly, a huge gap between capacity and actual production has developed, suggesting there is plenty of spare capacity. While one may argue the 2009 drop in production was the result of less oil demand after Lehman Brother’s collapse, and financial turmoil and recession that followed, these adverse conditions did not exist in the 1st half of 2008 when the economy was booming and high oil prices encouraged maximum production. Yet, OPEC’s claimed oil production capacity did not turn into actual production!
Link -
http://www.theoildrum.com/node/6738
==========
Now, what was it that Don chip used to say, about keeping them honest?
Oh, yes, they are all bastards or something similar?

There are statistics, damned statistics & then there are government stats?  

Quote:


Quote:


There are actually some ups & some downs, both inside of OPEC & outside of OPEC.

But overall, it seems most countries are struggling to keep up with production, as can be seen by looking thru the following EIA site figures!

http://tonto.eia.doe.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=53&aid=1&cid...

Lloyd's 'Sustainable Energy Security' White Paper - Some hits; some misses

First, what does it get right? The big thing it gets right is what it lists as Conclusion 2:
2. Traditional fossil fuel resources face serious supply constraints and an oil supply crunch is likely in the short-to-medium term with profound consequences for the way in which business functions today.

Some other things it seems to get right include these points, listed as "Conclusions" to the report:

1. Energy security is now inseparable from the transition to a low-carbon economy and businesses plans should prepare for this new reality.

5. Increasing energy costs as a result of reduced availability, higher global demand and carbon pricing are best tackled in the short term by changes in practices or via the use of technology to reduce energy consumption.

6. The sooner that businesses reassess global supply chains and just-in-time models, and increase the resilience of their logistics against energy supply disruptions, the better.

7. While the vast majority of investment in the energy transition will come from the private sector, governments have an important role in delivering policies and measures that create the necessary investment conditions and incentives.

Where the Report Misleads
High Tech Alternatives

One of the problems I have with the report is the assumption that the world should be planning to transition to high tech alternatives. Furthermore, the report seems to say that there is lots of money to be made during the transition by those who plan right.

The report starts out with the following quote:

“In some cases, the surprise element is only a matter of timing: an energy transition, for example is inevitable; the only questions are when and how abruptly or smoothly such a transition occurs. An energy transition from one type of fuel (fossil fuels) to another (alternative) is an event that historically has only happened once a century at most with momentous consequences.”

I very much agree with the basic statement, that energy transitions take place at most once a century, with momentous consequences. We know we are reaching limits on oil, and that in not too long we will have to transition away from fossil fuels all together. The big question in my mind is what we transition to.

The Main Impact of Oil Shortages will be High Prices

The report seems to assume throughout the standard belief that oil shortages will cause high prices. There is an assumption, too, that this is all still in the future.

It seems to me that the biggest impact of oil shortages is recession--something that is not even mentioned in the report, and something that companies would do well to learn to adapt to. This means companies would probably do best to concentrate on basics, since people are likely to be buying fewer and fewer discretionary items.

What tends to happen if oil prices rise is that people will find the price of essentials (food, gasoline for transportation to work, and perhaps home heating costs) rising. With these prices higher, consumers will cut back on discretionary spending--vacation trips, new higher-priced homes, new cars, and going out to eat for example. These cutbacks will have a recessionary impact, and will tend to bring down the price of oil (as well as raise unemployment). Many people will find it harder to find the funds to repay loans (either because of the higher price of oil, or because they have been laid off from work, in the recessionary aftermath), so debt defaults will rise greatly as well.

Lloyd's 'Sustainable Energy Security' White Paper - Some hits; some misses (Cont)

While the report seems to indicate this is all in the future, it is really something that we are already experiencing, starting not long after world oil production hit a plateau in 2005.



We have already begun seeing recessionary impacts and problems with the credit system. We have seen very high oil prices, and a drop back in these high prices to prices which are lower, but still high by pre-2005 standards. In the years ahead, recessionary impacts and credit problems are likely to get worse. It is unclear to what extent oil prices will really rise and stay at extremely high levels.

Insurance companies are likely to be hit particularly hard by loan defaults, because many of their assets are bonds. For example, there are many municipalities that are having difficulties maintaining tax revenues, and may have difficulty repaying their debt.

Natural Gas as Transition Fuel

The other area where the report misleads is in giving more hope to natural gas as a transition fuel than would seem to be warranted.

There may be some potential for a small ramp up in natural gas production, but we need to remember that a major change in infrastructure to accommodate a much larger natural gas supply will take many years and significant fossil fuel resources.

But it is not clear there is really all that much more natural gas. First, the amount of natural gas used today is less than that of oil, so expanding natural gas to replace oil is not something that can really be considered. But even raising the current amount by say, 30%, is likely to be difficult. One of the issues is how much can be produced at affordable prices. If the prices are much higher than today, there may be some of the same issues with recession and cutback in demand as with high priced oil. And there are concerns that a huge expansion of natural gas will require drilling in populated areas, with possible environmental issues associated with fracking. A transition to natural gas as a primary fuel source--assuming we really do have enough--would likely take 40 years as Smil indicates, and by that time what natural gas we have would likely be gone.

The report seems to suggest natural gas might be used as a transition fuel, but if high tech alternatives that don't rely on fossil fuels really are lacking, it is doubtful that there will really be a new fuel supply to transition to--especially one that will permit business as usual.
Oil Drum Link -
http://www.theoildrum.com/node/6743
==========
Anyone that has not looked into the Oil Drum site, I reccommend Gail the Actuary (this articles author), she is a senior writer and has a good grasp of the issues!

Quote:


Quote:


As the saying says, never say never, but like Fusion Reactors, these new Energy sources keep being talked about, but that's as far as it goes!

Btw, freediver, does your bridge have Harbour views?

Congressman Bartlett and Peak Oil Revisited

This is US Congressman Bartlett, as distinct from Dr Albert Bartlett, but perhaps they are related, as they have some similarity in their messages.

In one section Congressman Bartlett points Global Oil usage in a single decade, being the same as Oil usage in all of previous history!

He also points to Peak Oil being a known certainty, for quite some time, but that moves have not been made to solve the upcoming crisis!  

The chart showing in part 2 is of interest because it shows how Global Oil discovery Peaked back in the 1960's and has been falling ever since and Consumption is now beginning to Decline, as is Production. 

Congressman Bartlett and Peak Oil Revisited [Part 1]


Congressman Bartlett and Peak Oil Revisited [Part 2]


Congressman Bartlett and Peak Oil Revisited [Part 3]