• 10 hours Thanksgiving Gas Prices At 3-Year High
  • 14 hours Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 16 hours South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 19 hours Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 20 hours Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 21 hours Iraq Steps In To Offset Falling Venezuela Oil Production
  • 23 hours ConocoPhillips Sets Price Ceiling For New Projects
  • 3 days Shell Oil Trading Head Steps Down After 29 Years
  • 4 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 4 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 4 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 4 days Venezuela Officially In Default
  • 4 days Iran Prepares To Export LNG To Boost Trade Relations
  • 4 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 4 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 4 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 5 days Rosneft Announces Completion Of World’s Longest Well
  • 5 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 5 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 5 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 5 days Santos Admits It Rejected $7.2B Takeover Bid
  • 5 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 5 days Africa’s Richest Woman Fired From Sonangol
  • 6 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 6 days Russian Hackers Target British Energy Industry
  • 6 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 6 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 6 days Lower Oil Prices Benefit European Refiners
  • 6 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 7 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 7 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 7 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 7 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 7 days OPEC To Recruit New Members To Fight Market Imbalance
  • 7 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 7 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 7 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 8 days GE Considers Selling Baker Hughes Assets
  • 8 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 8 days Saudi Aramco To Invest $300 Billion In Upstream Projects

Breaking News:

Thanksgiving Gas Prices At 3-Year High

Post Carbon

Post Carbon

Post Carbon Institute provides individuals, communities, businesses, and governments with the resources needed to understand and respond to the interrelated economic, energy, environmental, and equity…

More Info

How Will Peak Oil Fare in 2012

How Will Peak Oil Fare in 2012

The returns are in and we now know that world price of a barrel of oil averaged $111 in 2011. This was up 14 percent from last year and well above the previous high of $100 set in 2008.
The average barrel of oil that we bought last year cost $15 more than the year before. Here in America, we burn about 6.7 billion barrels of the stuff each year. Therefore, our collective oil bill for 2011 was about $100 billion higher for the same amount of energy that we burned in 2010. This $100 billion created few new jobs here in the USA. Much of it went overseas and into the coffers of people who don't like us very much.

Last year's news was dominated by the Arab spring and its derivatives which spread from Wall Street, to Moscow, to villages in China as the revolution in communications technology coalesced in the hands of a new generation making dissidence against governments everywhere far easier to organize. By the way, the latest count of cell phones shows that in excess of 5 billion have been produced. Not all of these are still active, of course, but for a world of 7 billion people, many of whom are too young to talk much less carry a mobile phone, that is an impressive number. It is clear the world is changing in ways we cannot yet comprehend.

The peak oil story changed little last year. Global oil production hung in around 88 million barrels a day (b/d) despite the Libyan uprising which took nearly 1.6 million b/d out of production for several months. For much of last year global oil production was below consumption resulting in a gradual drawdown of world reserves. With OECD stockpiles of about 2.6 billion barrels, plus the new reserves being accumulated in China, a slight shortfall in production is not a problem for the time being.

During 2011 it became apparent that the demand for diesel is becoming a worldwide problem. While the demand for gasoline has been falling, at least in the OECD nations, the demand for diesel has been increasing. As electricity production falters around the world mainly due to droughts, aging equipment, and unaffordable fuel prices, the demand for diesel generated backup electric power has surged. Vital uses for electricity such as in hospitals, public safety, and water pumps will continue no matter what the cost. It should be noted that much of the increase in "oil" production in recent years has been made up of natural gas liquids and ethanol which are not commonly used to produce diesel, leaving the quantity of feedstock for diesel production stagnant.

The year ended with little change in the assessment for the prospects for global oil supplies. Despite all the hype concerning new oil finds and technological breakthroughs in oil production, these developments still are not contributing enough new oil to offset the annual decline of 3 million b/d from existing fields and the annual increase of circa 1 million b/d of new demand. The bottom line among those following this issue is that global oil production likely will start to decline in the next one to five years as depletion gets ahead of very-costly-to-produce new sources of "oil."

Keep in mind the phenomenon of falling net exports. As oil exporting countries grow larger and wealthier, they are consuming an increasing share of their own oil production leaving less and less to export. Most of us really don't care how much oil in produced in the world; the real issue for most countries is how much is available that can be imported for domestic use. Jeffrey Brown, a Texas geologist and one of the leading students of net exports, notes that if you leave out the oil going to two growth powerhouses - China and India - then for the last five years the oil available for import by the rest of the importing nations has been dropping at the rate of 2.8 percent each year. Brown estimates that if current trends continue, the oil available for import by most of the world will fall by 5 to 8 percent each year for the rest of the decade.

Much of the burden of this decline in exports is falling on poorer nations, many of which are already being priced out of purchasing some of the fuel necessary to run their electric power stations. In a certain sense, oil available for import has already peaked. Note the 14 percent increase in price last year. In America, we still seem to be able to import as much as we need, but an increasing share of our refined products are now being exported as domestic consumption is falling.

From oil's point of view, 2011 was an unusually turbulent year. Not only did we have Arab Spring which reduced oil and gas exports from several countries during the year, we also saw increasing tensions across the region which have the potential to do serious damage to oil exports in coming months. Balancing the political problems in the Middle East were the economic problems that are coming to a head in most OECD countries and possibly China as well.

How these opposing forces play out in the coming year could easily determine the course of world events for years to come. The EU could muddle along in the midst of a mild recession patching together financial arrangements as necessary to hold the Eurozone together. Alternatively many are talking about a financial collapse in the EU that could trigger a global depression and lower demand for oil.

There are so many forces at work in the Middle East it seems irresponsible to attempt to prognosticate an outcome. At best matters will bump along with only an occasional impact on oil exports. At the other end of the scale is the possibility of major hostilities, either civil or international, which could alter many of the political balances that have obtained since World War II and could easily inflict damage to the global economy on a scale not seen since the 1940's.

By. Tom Whipple

Source: Post Carbon

Back to homepage

Leave a comment
  • Fred Banks on January 09 2012 said:
    Well, with that average price, OPEC banked a cool one trillion dollars last year. I say good for them, because our political masters need to think more about our energy future, and less about the coming and going on the other side of the world.
  • Zach on March 26 2012 said:
    I think people really miss the point of these arguements. Whether we have to worry about oil now, maybe not, but even with the worst statistics in mind, "40 years". Thats not good. even in 100 years, are we going to focus on the problem at hand, which is that oil is not an unlimited resource. Will we find out what we need to find out in the end? Or will it go back to square one...

    People tend to forget what the term "fossil fuels" actually means.
  • Steven Manders on April 08 2012 said:
    In a letter dated March 9 from Leon Benoit a member of our Canadian federal government, from Alberta, he said "the oil reseerves in Canada are so vast that if we continue extracting oil at the present rate, it would take more than 300 years to deplete the Alberta reserve alone." Therefore, we have nothing to worry about at all. The problem is that most is not extractable, and as conventional reserves decline, it cannot be ramped up fast enough to replace it. It takes $100,000 capital investment to produce one barrel of bittumen (oil) per day there. Many Americans believe that the Bakken oil field is a similar almost infinite resource. These people are in positions of influence, saying that peak oil is a long way off. We have a lot of educating to do with these people of influence.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News