Energy / Crude Oil

• Sell Oil for a Stock Hedge

  Over the last month, asset classes everywhere have downshifted to new, lower trading ranges, reflecting the very rapid chopping of GDP growth forecasts for 2011 from 4% to 2%. Oil is no exception. I think the new range for Texas tea rises from the $75 low we put in on the August 8th melt down day to a high of $90. So I am going to use today’s $3 rally in crude triggered by hurricane Irene to get some downside exposure through buying puts in the oil ETF (USO). There is no sign of any disruption of oil supplies or…

• Brazil’s Rapidly Expanding Offshore Oil Industry

  While the US Obama administration carries on a de facto offshore oil moratorium, Brazil is rushing to develop its own vast offshore petroleum resources. Brazil is spending over $220 billion in an attempt to almost triple its offshore production from over 2 million bpd to over 6 million bpd in 2020. Brazil's oil industry faces tremendous challenges, working far offshore and deep under the surface. ...the technical and logistical challenges involved in tapping this oil are immense – the oil is under a layer of salt as far below the waves as commercial jetliners cruise above them. As a result,…

• Libya’s Post Gadhaffi Future - Who gets the Oil?

  Muammar Gadhaffi’s 42 year-old regime is in its death rattle – maybe today, maybe tomorrow, his administration that has ruled Libya with a quixotic and brutal hand is about to pass, in Trotsky’s piquant phrase, “into the dustbin of history,” prompting the question “what next?” The glittering prize is Libya’s 1.6 million barrels per day output of high quality crude, which accounted for about 2 percent of global oil output drawn from Africa's largest oil reserves, whose exports have been stymied since the NATO-led campaign began six months ago. Projecting into the future, analysts believe that has reserves to sustain…

• What Aren't we Being Told About Peak Oil

  Peak Oil will be one of the defining events of this century. Forecasts by professionals in energy-related fields fall in a large range between 2006 and 2025+, with most forecasts by institutions in the later half of this range. Estimates vary widely due to two very different kinds of factors. Factor #1:  Known Unknowns • We know so little about many factors that experts can only guess at their effects over the next 20 years.• Economic growth. Today growth in global real GDP of 5%/year increases oil consumption by about 1% – 2%/year, although this relationship varies over time.• Technological progress improving efficiency…

• Why a Limited Supply of Cheap Oil is Pushing us Into Another Recession

  People wonder what has been happening recently, with wildly gyrating financial markets and government debt problems. It seems to me that we are bumping up against an economic growth ceiling, brought on by a limited supply of cheap oil. As a result, we appear to be headed back into recession. Debt deleveraging can be expected to play an important role as well, and may cause this recession to be much worse than the last one. Connection with Cheap Oil Economists tend to believe that economic growth can continue, essentially forever. We are now reaching a reality check, with the recent…

• Peak Oil: Grim Reality or Conspiracy Myth?

  “The era of cheap oil is over and will never come back… Conventional oil peaked in 2006,” - Fatih Birol, International Energy Agency Chief Economist, 25 May 2011 There is perhaps no more divisive issue in the world energy markets than the concept of “peak oil,” which has ignited vociferous debate on both sides of the issue. Shorn of its complexities, peak oil boils down to a half-empty/half-full glass debate. The peak oil theory, first enunciated by Marion King Hubbert, a geologist working at Shell’s research lab in Houston, stated that any finite resource (including oil), will have a beginning, middle, and…

• The Loss of Oil Hegemony in the West

  This author put out an article on dollar supremacy, Jesters, Economics and American Dollar Supremacy, which showed some weak correlations between oil prices and said dollar supremacy. The article you are now reading sets out to elucidate how that change in dollar supremacy means a problem not only for the US, but all countries included based upon simple ideas about trade. With a world in constant motion it should not come as a surprise to anyone who is not overtly nationalist that the US could not maintain uni-polar power. Countries in the global south are on the rise, and with…

• Promising Economic and Environmental Developments in Oil Sands Production

  Canadian oil sands producers are making progress on many fronts, to produce a cleaner and more environmentally friendly product, in ever greater quantities. Brian Wang discusses the N-Solv Process, and in situ bitumen extraction process that does not require water and uses 85% less energy.NSolv Image via NBF In N-Solv, heated solvent vapour is injected at moderate pressures into the gravity drainage chamber. The vapour flows from the injection well to the colder perimeter of the chamber where it condenses, delivering heat and fresh solvent directly to the bitumen extraction interface. The N-Solv extraction temperature and pressure are very gentle…

• Will Less Oil Lead to Lower Standards of Living?

  The amount of oil that is extracted from the ground each year has been close to flat since 2005, regardless of what has happened to price. Since world population has been growing, this means less and less is available for each person. We use oil in many important ways, including growing food, manufacturing and transporting goods, and in some parts of the world, heating homes. There is a clear tie of oil with standard of living. If we have less oil, the tendency is for people’s standard of living to drop.Figure 1. OPEC and Non-OPEC Oil Production, Compared to Oil…

• Our Oil Future may not be as Bleak as it Seems

  The wide-ranging Al Fin hit upon a graph that will stun the peak oil believers.  You’ll want to save this.  The flip side is it comes from the International Energy Agency (IEA) – a point that many will use to cast justifiable suspicion.  Yet absolute accuracy isn’t needed, the blocks paint a picture of a ratio that even if wrong by 50%, there is a huge amount of petroleum supply yet to be used.Future Oil Sources from the IEA. Comparing the yellow block of production to date with the sum of the others is a shock to many doomers –…