Heading Out

Seeking the winds that help to sail on Shakespeare's tide.

Monday, March 07, 2005

Nightline credibility on oil

Watching the story on Nightline tonight it is interesting how blindered the report seems. It is fairly clear from my earlier blogs and from articles that have appeared in the national press that world demand is reaching supply capabilities, just at the time that supply is peaking and starting to head over into decline.

Yet the experts that they have on seem to think that all that is required to get supply back into line is to jawbone OPEC, while they also feel that perhaps Chinese demand will magically stop increasing. Both of these are totally unrealistic. The Chinese demand increase, which any logical review would conclude has not even reached an equilibrium growth rate, given their current growing wealth, can only continue to go up since there are still major power shortages around that country. And OPEC folks is running at about maximum capability (and the world tanker fleet is fully occupied).

So the suggestion is that Congress do something (I blog as I listen) - what are they supposed to do ? If it ain't available, it ain't available. And you cannot legislate geology. All the innovative solutions take decades to have significant impact, and yes we have lost much of that momentum, but even if we switch R & D on, and we really desperately need to, it is too late to solve the problem in any realistic near-term future. We actually, short term, need to invest more in tertiary recovery of oil from fields that have produced in primary and secondary mode. And we should be doing more of the research to develop this. But we won't. And so the price will go over $75 this year, and probably will be over $100 next year. And since the end of this year will likely see Hubbert's Peak, then from then on it will really get ugly.

I don't believe this, one of their experts concludes by saying that within a year we will be awash in oil, based on oil projects coming on line around the world, and as a result prices will be way down. Sorry expert, but the cognoscenti have already reviewed all those projects and they don't cover the increase in demand and the declining production rates in older fields. Six month prediction from this old ferret is right in the last paragraph, and sadly if anything its optimistic.


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