Eschew Obfuscation: Category Peak Oil

Per Capita GDP and Oil Consumption

Max Dunn — Sun, 03 Apr 2011 09:25:00 -0700

In Peak Oil in 2012, I looked at the strong link between worldwide GPD and oil consumption. But what about per capita oil consumption? It turns out that there is a very interesting story there too.

As reported by Frank Holmes in Seeking Alpha, China currently consumes 2 barrels of oil per per per person. At the same PPP level of $5,000 per year, Japan consumed over 18 barrels, Taiwan 6 barrels and Korea 4 barrels!

Since China currently consumes about 10 million barrels a day, just doubling their per capita usage would require an extra 10 million barrels a day, which is 12% of the world total. Since oil production has been relatively flat since 2005, it is unlikely that additional oil production will ever be able to provide that amount.

This is just another indicator that our worldwide oil supplies will never again be able to meet our total oil demand.

How Much Oil Do We Use ?

Max Dunn — Sat, 12 Mar 2011 10:13:00 -0800

How much oil do we use in the United States and where does it come from? This is a question that hasn’t been exactly clear for me until I read this article on the Energy Information Administration (EIA) website. Here is the quick answer.

The US is the largest oil consumer using 19.1 million barrels per day (mbpd). We are the the third largest crude oil producer at 5.5 mbpd. In addition, we produce 3.9 mbpd of biofuels, natural gas liquids and processing expansion. This means we need to import about half our oil, or 9.3 mbpd.

Contrary to popular belief, two of our largest oil suppliers are Canada and Mexico. Overall, Western Hemisphere nations provide about half of our imported petroleum.

Now you have it. While the US uses about 19 mbpd, we produce 5.5 mbpd of crude oil and create another 4 mbpd of fuel products so the 9 mbpd we import is about half our usage.

References:

EIA. (November 29, 2010). How Dependent Are We On Foreign Oil? U.S. Energy Information Administration. Retrieved March 12, 2011 from http://www.eia.gov/energy_in_brief/foreign_oil_dependence.cfm

EIA. (March 8, 2011). Short-Term Energy Outlook. U.S. Energy Information Administration. Retrieved March 11, 2011 from http://www.eia.doe.gov/emeu/steo/pub/contents.html

U.S. Census Bureau. (March 10, 2011). U.S. International Trade in Goods and Services. January 2011 U.S. Census Bureau. U.S. Bureau of Economic Analysis. CB11-41, BEA11-09, FT-900 (11-01). Retrieved from http://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf

Note: All numbers for 2010 except oil additions for 2009.

Electric Cars Best Way To Reduce U.S. Oil Dependency

Max Dunn — Thu, 30 Sep 2010 07:11:00 -0700

A new report from Rice University confirms what I have been saying for a long time – electric vehicles (EVs) are the best way to reduce America’s oil dependency.

The report found that if only 30% of vehicles are electrified by 2050, oil usage would be reduced by 2.5 million barrels a day and carbon emissions cut by 7% – even if the electric generation mix remains the same as today. They also found that a carbon tax of $30 a ton would actually increase US dependence on foreign natural gas!

So even if our government is not able to get its act together and institute a comprehensive renewable energy policy, the widespread adoption of EVs will do the job anyways.

(Source: AllCarsElectric.com)

Oil Company Tax Breaks

Max Dunn — Tue, 06 Jul 2010 20:05:00 -0700

I have long heard that oil companies get a lot of special tax breaks, but no-one has ever been able to explain clearly what those tax breaks actually are. Now an article in the New York Times As Oil Industry Fights a Tax, It Reaps Subsidies provides the best explanation I have seen. Some of these tax breaks are:

Moving corporate headquarters offshore to avoid taxes in the US
Capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general
Leasing rigs, like the Deepwater Horizon, to take advantage of a special oil industry tax break that allows them to write off 70% of the leasing cost
A lingering provision from the Tariff Act of 1913 that allows many small and midsize oil companies based in the United States to claim deductions for the lost value of tapped oil fields far beyond the amount the companies actually paid for the oil rights
Reclassifying the royalties charged by foreign governments to American oil drillers as taxes which entitles the companies to subtract those payments from their American tax bills

While some of these ploys are also employed by other industries, like moving their headquarters outside the US, the US tax code makes it especially easy and profitable for oil companies to employ these tactics.

Furthermore, many of these tax breaks no longer have any valid reason for existence since they were enacted a century ago to encourage oil exploration in the fledgling industry and then later in the 50s to decrease Soviet influence in the Middle East.

It is estimated that these tax breaks averaged $12 billion from 2006 to 2008. While this is a large number, it is only a small fraction of the $280 billion the oil industry was taxed in this period.

Nonetheless, with a growing deficit, dismantling these archaic tax breaks for the oil industry would raise badly needed revenue and help reduce the unfair advantage that the oil industry holds over cleaner forms of sustainable energy.

US Military Warns of Oil Shortages by 2015

Max Dunn — Mon, 12 Apr 2010 08:13:00 -0700

The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact.

“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day,” says the Joint Operating Environment report from the US Joint Forces Command.

It adds: “While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India.”

(From: guardian.co.uk)

Shale Oil Extraction Energy - Put In EVs Instead

Max Dunn — Sun, 28 Mar 2010 07:17:00 -0800

There was an interesting article today on The Oil Drum today titled Using heat to refine kerogen from oil shale. The basic idea is that in order to get oil out of shale you need to heat it up, but then the oil can flow away and water can flow in. So first, it is necessary to create an ice wall around the site.

However, both the freezing and the heating takes tremendous amounts of energy. The article states:

“It has been suggested that the technology would need a dedicated power source of some 1.2 gigawatts, in order to yield a production of 100,000 bd.”

Let’s look at these numbers: 100,000 barrels of oil contains 4.2 million gallons of oil and if this were all converted to gas and used in standard cars that get 20 miles per gallon, it would power cars 84 million miles.

However, a 1.2 GW power plant would produce about 28 million kWh of electricity per day and if used for a standard electric vehicle (EV) which gets about 3 miles per kWh (plant to wheels) then it would power cars for 86 million miles.

So why spend all that effort and energy to extract oil from shale when the same amount of energy would power EVs farther?

We mistook an energy shock for a financial crisis

Max Dunn — Sat, 06 Mar 2010 21:52:00 -0800

I have often thought that the recession was really caused by the high price of oil and not by subprime mortgages. However, I haven’t seen any credible source to back this up until I read a post by Jeff Rubin today called: We’re all PIGS now.

Rubin worked for nearly 20 years as the chief economist of CIBC World Markets and here is what he believes:

It wasn’t subprime mortgages but triple-digit oil prices that brought down the world economy. And unless that economy started to wean itself off an ever-depleting supply of affordable oil, there would be other recessions to follow as economic recoveries would simply push oil prices right back into triple-digit range.

While I took exception with a lot of what Rubin said in Why Your World is About to Get a Whole Lot Smaller, here he is in the territory he knows best – economics – and I think his conclusion that record oil prices caused the recession is right on the money.

Petrobras: Peak Oil in 2010

Max Dunn — Tue, 09 Feb 2010 08:39:00 -0800

The CEO of Petrobras gave a presentation in December of 2009 which shows world oil capacity peaking in 2010 because new oil projects won’t be able to offset the decline in existing oil fields.

These statements are in line with other oil company like Aramco that believes world oil production is on a peak plateau, and Total that doesn’t see global oil production ever exceeding 89 mbd.

(Reference: The Oil Drum: World Oil Capacity to Peak in 2010 Says Petrobras CEO)

Demand For Oil Likely To Beat Supply Next Year

Max Dunn — Wed, 25 Nov 2009 08:20:00 -0800

Oil demand is predicted to rise by 1.3 million barrels per day (bpd) next year to 85.9 million bpd, according to a Reuters poll of the ten top oil-tracking analysts and organizations. This bodes ill for the prospect of meeting the world’s oil demand, which is feared to erode the huge crude stockpiles which resulted from the global recession.

Even though major US crude ETFs like the United States Oil Fund LP (NYSE: USO) and oil companies like Exxon Mobil Corporation (NYSE: XOM) are not showing robust results today, if the demand curve beats the supply curve next year, these stocks will see a major upgrade. "The key question for prices is supply," Barclays Capital analyst Costanzo Jacazio said.

Investment banks Goldman Sachs and BofA-Merrill Lynch have the most bullish outlook for demand, projecting 86.4 million bpd and 86.7 million bpd respectively. This is good news for the likes of USO and XOM.

(Posted on 11/24/09 at 1:45pm by Ed Liston on Benzinga: The Stock Idea Network. Demand For Oil Will Likely Beat Supply Next Year)

Peak oil, not speculation

Max Dunn — Tue, 12 May 2009 08:53:00 -0700

by Steven Kopits, Managing Director, Douglas-Westwood, New York, 5/11/2009

NEW YORK: In seeking to explain the run up in oil prices from 2004 to 2008, commentators often turn to “speculation” as the primary cause. While speculation – or at least a kind of piling-on – may have explained the very late stages of the oil price rally, the willingness to attribute oil prices primarily to financial investors – as the CBS news show ‘60 Minutes’ did a few months back – risks drawing the wrong lesson from the period. Let’s re-wind the clock and recall the events of the time.

Peak Oil in 2012!

Max Dunn — Mon, 09 Mar 2009 14:24:00 -0800

Sometimes people talk about "running out of oil", but the world will never completely run out of oil. There will always be some oil remaining somewhere that can be scavenged from old fields, reclaimed from tar sands or stripped from oil shale.

There is, however, a limit to how fast we can pull oil out of the ground. Peak Oil will occur when the world hits this peak in production – and this will likely happen soon!

Oil Usage Graph

Max Dunn — Sat, 07 Mar 2009 21:18:00 -0800

Previously, I posted a table showing how oil in the US is used. Here is a graph that shows the same information in a prettier form:

(Reference: Year 2000 data from Ending the Oil Age)

The True Cost of Gas

Max Dunn — Tue, 27 Jan 2009 17:35:00 -0800

The price we pay for a gallon of gas at the pump doesn’t include all the costs associated with it, like environmental costs and tax subsidies. One older study found that if we included all of these, we would be paying and extra $5 to $14 per gallon!

However, if we look at just the cost spent on military defense of oil in the Persian Gulf, it would be less than this.

One rough estimate would be to assume that 15% of the $430 billion DoD budget was spent on defending our oil interests in the Persian Gulf. Spread over the 142 billion gallons of gas we use each year, it works out to $0.46 per gallon.

Of course the hard number to determine is how much of the military budget goes to just protecting oil in the Persian Gulf. The $65 billion seems to fall in the middle range of what is spent on that region, but there is a lot of differences in opinion over how much spending would be reduced if we didn’t need to protect the oil there.

Here are some of the studies and what they determined we would need to add to the price of a gallon of gas to cover the cost of protecting oil in the Persian Gulf:

$0.02 to $0.20: Mark A. Delucchi, 2007. Resources for the Future: The Cost of Protecting Oil in the Persian Gulf
$0.03 to $0.15: Mark A. Delucchi, James J. Murphy, 2008. Institute of Transportation Studies: US military expenditures to protect the use of Persian Gulf oil for motor vehicles
$0.35 to $1.05: Ogden, J.M., Williams, R.H., Larson, E.D., 2004. Institute of Transportation Studies: Societal lifecycle costs of cars with alternative fuels/engines

So don’t assume the price you pay at the pump is the true cost of gasoline. There are a lot more costs hidden away in making that gasoline available and in the environmental problems it causes that you pay for elsewhere.

Coming Chaos? Maybe Not

Max Dunn — Sun, 25 Jan 2009 16:24:00 -0800

Here is an interesting article written by Michael W. Foley, a former professor in the social sciences, that looks at various examples around the world where there was social breakdown, what the factors led to ensuing violence, and how the US might react given a similar crisis situation:

Coming Chaos? Maybe Not

He found that while there were many cases where economic and ecological collapse led to violence, there were also many cases where it didn’t. The major determining factors were:

Political motivation
Police
Leadership
Community

His conclusion is that prospects for violence in the US following a “hard landing” are very small, except in some isolated locations where police and community support break down.

Military Cost of Oil

Max Dunn — Tue, 02 Dec 2008 08:43:00 -0800

It is well known that a large part of our military expenses goes to protecting the flow of oil from the Persian Gulf. What has not been as clear is the actual cost of this protection. However a recent study sheds some light on this hidden expense.

In this study, Mark Delucchi of the Institute of Transportation Studies at UC Davis estimates that American taxpayers spent between $27 billion and $73 billion in 2004 (which was the most recent year data was available) for military protection of US oil interests in the Persian Gulf region.

While this is a huge number by itself, it works out to only $0.03 to $0.15 cents per gallon of gas for motor vehicle use.

Oil Price Fluctuations, Part 2

Max Dunn — Thu, 20 Nov 2008 17:25:00 -0800

Previously we discussed oil price fluctuations in terms of non-elastic supply and non-elastic demand. Here is a short video that graphically illustrates this same principle:

Oil Price Fluctuations

Max Dunn — Mon, 03 Nov 2008 14:36:00 -0800

Oil went up to $147 per barrel and is now down to $64. Does this mean that the oil shortage is over and that we can go back to driving SUVs? No, not unless you can afford to drive your gas hog when the price of gas goes back up over $4 per gallon. Actually, this type of wide oil price fluctuation is to be expected.

The reason for these fluctuations is the inelasticity of both the supply and demand for oil. On the supply side, nowhere in the world is it possible to just turn up a tap and pump more oil – everyone is pumping as much as they can. (Saudi Arabia and Iran do have extra capacity for heavy, sour crude, but that doesn’t help.) So in order to increase the supply of oil, it is necessary to drill more wells or employ advanced extraction techniques, all of which take time.

On the supply side, demand is very inelastic as well. When the price of gas goes up, you don’t immediately ditch your SUV and buy a Prius or find a job closer to home. In the short term, you still need to drive to work, take the kids to school and heat your house, so you pay whatever it costs.

So now we have an inelastic supply meeting an inelastic demand and what do you get? That’s right, wildly fluctuating prices! As soon as demand creeps just a little bit above supply, the price shoots up. Then when the supply goes up just a little, and demand goes down just a little, prices fall.

This is a classic pattern and one that we have seen before with whale oil. Whale oil mimics closely what we are seeing with fossil oil in that techniques to extract it got better and better and overran the natural supply. As the supply started to peak, prices went through some wild fluctuations too:

So don’t be fooled by the current low oil prices. They are not a sign that all is well, but only a sign that the worst is yet to come.

(For more information, see Peak Oil and EVs)

GCEP Fourth Symposium

Max Dunn — Thu, 16 Oct 2008 09:45:00 -0700

The Global Climate and Energy Project (GCEP) held its fourth annual energy research symposium at the beginning of October.

GCEP is an interesting group based at Stanford University that seeks new solutions to one of the grand challenges of this century: supplying energy to meet the changing needs of a growing world population in a way that protects the environment. With funding of $225 million from Exxon, GE, Schlumberger and Toyota, GCEP supports a lot of diverse high-risk and high-reward projects in areas such as solar energy, batteries, cellulosic ethanol, hydrogen, CO2 capture and storage, advanced combustion and more

This was a fantastic symposium where researchers from Stanford and around the world discussed GCEP’s projects. Some of the highlights for me were:

Burning coal in super-critical water to capture all CO2 and other emissions
The benefits of using miscanthus for cellulosic ethanol (which is better than switchgrass)
Using nano structures to improve photovoltaics
Using biological organisms to split hydrogen
Various techniques to make fermenting cellulosic ethanol a reality
Improvements in lithium-ion battery cathodes

For more information, see my notes of the symposium presentations..

Offshore Drilling - Not A Solution

Max Dunn — Mon, 13 Oct 2008 16:44:00 -0700

If anyone still believes that offshore drilling will significantly increase our oil supplies, take a look at the map below. The areas in blue are those that are already being drilled and also those with the most oil. The areas in white are the ones they might open for drilling, but these areas aren’t expected to yield much oil anyways:

If that isn’t enough, consider that the U.S. Energy Information Administration (EIA) recently did a detailed study of the likely outcome of offshore drilling. Their conclusion:

The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.

(References: The Oil Drum – Offshore Drilling Debate, Climate Progress – EIA Bombshell)

Oil Price Increase Due to Dollar Devaluation?

Max Dunn — Fri, 11 Jul 2008 20:49:00 -0700

It is commonly thought that a large part of the increase in the price of oil is due to the devaluation of the dollar. For instance, since the the euro is now 60% higher than the dollar it seems to make sense that 60% of increase in the price of oil is due to this devaluation of the dollar. However when you look more closely at the economics behind oil pricing, you will find that this is not the case at all. Actually, it doesn’t make any difference what currency oil is priced in because the price would still be the same.

Price Elasticity of Oil - Short Term and Long Term

Max Dunn — Thu, 26 Jun 2008 16:17:00 -0700

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.

Proven Oil Reserves - Fact or Fiction?

Max Dunn — Tue, 24 Jun 2008 22:33:00 -0700

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:

Will Increased Shipping Costs Decrease Globalization?

Max Dunn — Tue, 24 Jun 2008 16:09:00 -0700

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.

Top 5 US Oil Importing Countries

Max Dunn — Fri, 13 Jun 2008 07:59:00 -0700

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:

Do Oil Companies Make Too Much Money?

Max Dunn — Thu, 12 Jun 2008 08:08:00 -0700

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)

Is the Solution to High Oil Prices to Open Up More Drilling in the US?

Max Dunn — Wed, 04 Jun 2008 08:07:00 -0700

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.

Gas Prices Around the World

Max Dunn — Mon, 02 Jun 2008 18:04:00 -0700

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)

Gas at $100 per Gallon

Max Dunn — Tue, 27 May 2008 10:59:00 -0700

Here is an interesting thought experiment: how would our lives change if gas cost $100 per gallon?

Slippery Slope: Cantarell Leading the Way?

Max Dunn — Thu, 01 May 2008 10:10:00 -0700

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.

Friedman: Our Political Brownout on Energy Policy

Max Dunn — Thu, 01 May 2008 08:40:00 -0700

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.

Cost Breakdown of a Gallon of Gas

Max Dunn — Wed, 09 Apr 2008 08:49:00 -0700

With gas prices spiking up, it is interesting to look at the breakdown of the cost of a gallon of gasoline.

A barrel of oil holds 42 gallons. So if oil is at $100 per barrel, a gallon would cost about $2.40. Refining the oil adds another $0.35 and taxes about $0.65 (in California). Add another $0.10 for distribution, marketing and profits, and you have a gallon of gas costing $3.50.

Using these same numbers, if oil goes to $200/barrel, a gallon of gas will cost almost $6!

Only Locally Grown Food After Peak Oil?

Max Dunn — Fri, 14 Mar 2008 20:33:00 -0800

Many peak oil people envision that after oil becomes scarce, civilization will revert back to the way it was 100 years ago. In particular, they feel that large, centralized farms will not be viable and that only locally grown food will be available. I believe otherwise. I think that centralized farming is much more energy efficient than a multitude of local farms and will continue to supply the bulk of our food.

This was reinforced by some statistics I saw that showed that out of the total energy needed to produce and prepare food, only 14% was related to transportation of that food. Since this is a small percentage of the total energy usage, and electric vehicles could make this even more efficient, you can’t make an argument that transporting food is going to be the main problem after peak oil

(From University of Michigan: Food Fact Sheet)

Will Canadian Oil Sands Save Us?

Max Dunn — Thu, 06 Mar 2008 20:04:00 -0800

There is a lot of oil in Canadian oil sands. So it is easy to believe that even when OPEC’s production starts to fall, Canadian oil sands can make up the difference. However, the problem is not the amount of oil – the problem is separating the oil from the sand which is a slow and resource intensive process.

According to the Master’s thesis of Bengt Söderbergh [1], natural gas availability is likely to limit oil sands production in the long term to about 3.6 million barrels per day (mbd).

David Hughes, a geologist with Natural Resources Canada, believes that the peak will never exceed 2.5 mbd due to natural gas, water, diluent and infrastructure constraints. [2]

For comparison, the U.S. uses 22 mbd and worldwide demand is 86 mbd. So it is unlikely the Canadian oil sands will be able to ever provide a significant amount of the world’s oil.

Saudi's Admit Peak Production?

Max Dunn — Mon, 03 Mar 2008 20:02:00 -0800

Last weekend, the Saudi Oil Minister, Ali al-Naimi said, “From now there’s a line below which prices won’t fall.” Further, he added that the Saudis have no plans to expand oil production beyond the 12.5 million barrels per day it hopes to have by 2009.

This statement could be the first real admission by the Saudis that they can’t pump as much extra oil as they previously claimed, and a real sign that they have reached, or are close to, peak production.

Bike Riding for Errands

Max Dunn — Tue, 12 Feb 2008 12:30:00 -0800

I should ride my bike more. It is good exercise and saves the environment. However, I don’t like to ride my bike on everyday errands.

I was reminded of this today when I got new tires for our car. Like usual, I threw my bike in the back and rode home after dropping off the car. It isn’t far, about 2.5 miles, but I was hot and sweaty when I got home. I was smart this time and brought a piece of string to wrap around my pant leg. Usually I forget this and wind up getting chain oil on my pant leg.

When the car was ready, I rode back to the shop to pick it up, and I was a bit tired.

So it certainly worked out fine to ride my bike, but it isn’t something that I would normally do. Also, for the same reasons, I don’t think we can expect many Americans to forgo their cars and start doing a lot more bike riding either. Good thing I have my electric scooter to scoot around on!

Cantarell Field Decline

Max Dunn — Tue, 05 Feb 2008 17:10:00 -0800

Back in 2004, there were four oil fields in the world which produced over one million barrels per day. Ghawar, which produced 4.5 million barrels per day (bpd), Cantarell in Mexico, which produced nearly 2 million bpd, Burgan in Kuwait which produced 1 million bpd and Da Qing in China which produced 1 million bpd [1].

However, Contarell hit its peak in 2004 and has been in decline ever since. In 2008, it is expected to produce about 1.4 million bpd [3] and continue to decline at a rate of about 14% [2].

The Cantarell field provides 60 percent of Mexico’s total production. Mexico is the second largest supplier of oil to the U.S. [3].

This is another indication that the world-wide supply of oil will soon fall below demand.

References:

[1] Trouble in the World’s Largest Oil Field-Ghawar
[2] Cantarell Field
[3] Peak Oil is Now Official

Oil Depletion Levels in Ghawar

Max Dunn — Tue, 05 Feb 2008 15:24:00 -0800

The Ghawar field in Saudi Arabia is by far the largest oil field in the world accounting for more than one-half of all oil production in Saudi Arabia. It was discovered in 1948 and has been producing 5 million barrels of oil per day for the last 10 years [1]. However, many believe that Ghawar has passed its peak [2][3][4].

Here is another detailed and technical analysis of the oil depletion levels of Ghawar by Stuart Saniford [5]:

Depletion Levels in Ghawar

While much of this information is very technical and difficult to browse through, the pictures that show how much of Ghawar is now filled with water graphically illustrates the problem. Saniford shows:

“The northern half of Ghawar is quite depleted.”

and

“In particular, Saudi oil production has been falling with increasing speeed since summer 2005, and overall, since mid 2004, about 2 million barrels of oil per day in production has gone missing. That’s 2.5% of world production.”

Are Buses Bad for the Environment?

Max Dunn — Wed, 30 Jan 2008 16:05:00 -0800

It is common knowledge that buses are energy efficient, right? I mean shouldn’t we all ride the bus rather than drive a car? Well a study looked at this more closely and found out something interesting. Here are some figures for passenger miles per gallon (PMPG) for various forms of transportation:

Light rail – 120 PMPG
Trolley bus – 104 PMPG
Commuter rail – 86 PMPG
Intercity rail – 66 PMPG
Car, average trip – 44 PMPG
Transit bus – 33 PMPG

Wow, look at that: city buses only get about 33 PMPG – this is even less than a normal car with 2 people which gets 44 PMPG! I guess to be more green, we should all avoid the bus and drive our cars instead. :-)

Reference: Comparison of Energy Use & CO2 Emissions From Different Transportation Modes

Oil Usage

Max Dunn — Wed, 23 Jan 2008 08:29:00 -0800

What do we use all our oil on? Here is a breakdown from the year 2000:

From: DETAILED BREAKDOWN OF U.S. PETROLEUM USE

In summary, cars use about 41%, trucks 13% and planes 7%. So if we want to reduce the amount of oil we use, then reducing our transportation usage will be effective, since transportation comprises about 60% of all oil usage.

Food versus Fuel - Which Wins?

Max Dunn — Tue, 08 Jan 2008 07:04:00 -0800

Here is a very long and detailed analysis of food-based biofuel production and how it could cause problems with the food supply:

Fermenting the Food Supply

The scary point about this article is that it illustrates how profitable it is to make biofuel when oil prices are high and how this could lead to devastating consequences if we have a bidding war between the gas tanks of the roughly one billion middle class people on the planet, and the dinner tables of the poor.

War in the 21st Century

Max Dunn — Fri, 28 Dec 2007 19:53:00 -0800

War in the 21st century is going to be all about oil – including what wars will be fought over as well as determining the ability to wage war.

Analysis: China’s fuel oil reserves

Peak Oil Prediction

Max Dunn — Sat, 22 Dec 2007 10:34:00 -0800

I haven’t written in my blog yet about peak oil, although my friends and family have certainly gotten an earful. I will be writing more about it in the future, but for now I wanted to put a stake in the ground and publish my prediction of worldwide peak oil. Here it is.

I believe that worldwide our demand for oil is now passing our total possible production which will lead to sporadic shortages and continuing price increases. (Of course there will be ups and downs along the way, but this will be the overall trend.) In concrete terms, I believe that sometime before the end of 2011 oil will hit $200 a barrel, gas will cost $7 a gallon and there will be times when we won’t be able to get gas to fill our cars.

There it is, my peak oil prediction has now been published.

When to Buy an Electric Car?

Max Dunn — Tue, 04 Dec 2007 09:09:00 -0800

That is the question – whether to buy a low-speed electric vehicle now, or wait for a high-speed electric vehicle later? Here are the factors I am looking at:

What type of transportation do I need?
When will high-speed electric vehicles really arrive?
How much will they actually cost?
When will the severe oil shortages start?
Will there be subsidies for electric vehicles?

The short answer is that I am going to buy a low-speed NEV now and wait for later to buy a freeway capable electric car. Here is the long answer: