Posted by Max Dunn
Thu, 26 Jun 2008 23:25:29 GMT | no comments
When the price of something goes up, it makes sense that demand for it should go down and production should go up. But in the case of oil, that doesn’t seem to be true. Oil prices have gone up 400% over the last 5 years while consumption has been flat in the US and global oil production has been relatively flat for the last 3 years.
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Posted in Peak Oil
Posted by Max Dunn
Wed, 25 Jun 2008 05:34:22 GMT | no comments
When people attempt to prove that the world has plenty of oil left, they often quote oil reserve numbers. But can we really trust these numbers?
Here is a graph of the commonly accepted ‘proven’ oil reserves:

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Posted in Peak Oil
Posted by Max Dunn
Tue, 24 Jun 2008 23:29:27 GMT | no comments
There is speculation that the increased cost of shipping due to rising oil prices will reduce globalization since it will be cheaper to make products locally than ship them all over the world. For some bulk items where shipping is a major component of the price, this could be true. But for many high-value items, manufacturing them in low-cost countries and then shipping them by boat will still be more economical than making them locally.
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Posted in Peak Oil
Posted by Max Dunn
Fri, 13 Jun 2008 16:59:44 GMT | no comments
What are the top 5 countries that the US imports its oil from?
Most people would probably guess that Saudi Arabia is on the list, but they might also think that Russia is on it too, which it isn’t. (Russia is at number 14.)
Surprisingly, Canada is at the top of the list with 1.9 million barrels per day (mbd) and Canada exports more oil to the US than it uses itself. It gets about half of its oil from tar sands, and while there is a lot of oil locked up in tar sands it takes so much natural gas and water to get the oil out that it is unlikely that the daily production can be increased much more.
Saudi Arabia is second on the list and while it exports a total of about 9 mbd, the US gets only 1.5 mbd of this.
Mexico is third at 1.2 mbd which represents 80% of their exports, but their production is falling. The Cantarell field was the second largest producing oil field in the world before it peaked in 2004, and since then its output has fallen by an ominous 50%.
Would you guess that Nigeria is the 4th largest importer to the US at 1.1 mbd? It is, however Nigeria is a very unstable country and militant attacks routinely cause production to fall below its maximum potential.
Lastly, at number 5 is our friendly South American neighbor Venezuela at 1.0 mbd.
This list often surprises people. Most wouldn’t know that Canada is the top provider of our imported oil and that Nigeria is close behind at number 4.
References:
- EIA: ‘Crude Oil and Total Petroleum Imports Top 15 Countries’
- Will Canadian Oil Sands Save Us?
- ODAC: Output slumps at Mexico’s Cantarell superfield
Posted in Peak Oil
Posted by Max Dunn
Thu, 12 Jun 2008 15:15:18 GMT | 13 comments
According to the accounting firm Ernst and Young, in 2007 the average manufacturing company made 8.9 cents per dollar of sales. The U.S. oil industry did slightly worse at 8.3 cents per dollar of sales, even though this was a record year for them. Contrast that to beverage and cigarette companies that earned 19.1 cents and drugmakers that earned 18.4 cents. So even though oil prices have skyrocketing, are oil companies really making too much money?
(Source: Forbes June 2, 2008 Page 30 Shooting Ourselves in the Foot)
Posted in Peak Oil
Posted by Max Dunn
Wed, 04 Jun 2008 15:38:31 GMT | 1 comment
There is a lot of talk floating around that if the US would just end the ban on drilling in environmentally sensitive areas, we would find plenty of oil and prices would go down. Let’s look at this more closely to see if it is true.
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Posted in Peak Oil
Posted by Max Dunn
Tue, 03 Jun 2008 01:06:32 GMT | no comments
Some countries tax gasoline heavily, others subsidize it. Here is a chart that shows how much people pay for gas around the world:

(Source: The Economist – Crude measures)
Posted in Peak Oil
Posted by Max Dunn
Tue, 27 May 2008 18:00:55 GMT | 7 comments
Here is an interesting thought experiment: how would our lives change if gas cost $100 per gallon?
Posted in Peak Oil
Posted by Max Dunn
Thu, 01 May 2008 17:36:35 GMT | 1 comment
Once everyeone realizes that oil production has peaked, the main factor on whether the world can make an orderly transition to renewable energy depends mainly on how fast production falls. If oil production falls slowly, we will be able to build up our alternative energy infrastructure with only major inconveniences. However, if it falls rapidly, dire consequences could result including recession, famine and war.
The best way to tell whether the decline will be fast or slow is to look at existing large oil fields that are in decline. If we base this on Cantarell, the news is not good.
Cantarell was the second largest producing oil field in the world. It peaked in 2004 and production fell 31% in the following 3 years. This year, it will likely decline by 18%. At this rate, production from Cantarell will drop by 80% in just 5 years.
Let’s hope that Cantarell is not indicative of the other super-giant oil fields, or the world would be in for severe trouble.
Posted in Peak Oil
Posted by Max Dunn
Thu, 01 May 2008 15:51:51 GMT | no comments
Thomas Friedman, author of ‘The World is Flat just wrote a very intelligent op-ed piece for the New York Times titled: ‘Dumb as We Wanna Be’. Here are some edited excerpts:
Hillary Clinton has decided to line up with John McCain in pushing to suspend the federal excise tax on gasoline for this summer’s travel season. This is not an energy policy – this is money laundering. The idea is so ridiculous, so unworthy of the people aspiring to lead our nation, it takes your breath away.
Good for Barack Obama for resisting this shameful pandering.
The McCain-Clinton proposal is a reminder to me that the biggest energy crisis we have in our country today is the energy to be serious — the energy to do big things in a sustained, focused and intelligent way. We are in the midst of a national political brownout.
Posted in Global Warming, Peak Oil