Peak Oil is You
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Page added on January 14, 2018
The equations are changing for the oil industry
In 1846, the US was the behemoth of the whaling industry, with Nantucket Island and New Bedford, Massachusetts its twin capitals. Demand for whale oil, as industrial lubricants or as fuel for heating and lighting, had driven the growth of the whaling industry by a factor of fourteen since 1816.
New Bedford had the highest per capita GDP in the world. Yet within two decades, the industry that had contributed over $227 million per year to the GDP of the US (when adjusted for inflation) was dying. Growing demand from Europe first for coal oil and then kerosene replaced demand for whale oil. New Bedford diversified to textiles and light industrial manufacturing thanks to its easier access to railroads, while Nantucket collapsed as its population moved ashore as whaling expeditions declined.
Over a century later, the global energy and transportation industries are having a fierce debate on whether a similar structural change is at hand in the oil market. Though today, the geopolitical consequences have expanded globally.
Overall, the transportation sector accounts for about 60 per cent of global oil demand and current total oil demand growth projections range between 1-1.5 per cent per year. Yet 80 per cent of that projected growth is projected to come from Asia, and major policy initiatives to promote electric vehicles and other modes of clean transportation to meet climate, pollution, and energy security goals and become market leaders in new technologies, could significantly impact future oil demand. Innovations in heavy transport and aviation, though not yet commercially viable, are on the horizon and could also dampen demand for oil as a transportation fuel.
The uncertainty in the technology and its rate of adoption, questions about the commitment to the policy interventions driving much of the change, and projected increases in oil demand from the petrochemical and other sectors have driven the debate about the likelihood and timing of peak oil demand. Statoil and BP have projected that demand for oil could peak somewhere in the mid-2030s or 2040s, respectively. But Aramco CEO Ameen Nasser said in April that peak demand was “equally as misleading” as past theories about peak oil supply, while Chevron and ExxonMobil, the two largest US oil companies, conclude that peak demand is not in sight.
Despite the uncertainty, it is at the very least plausible that, with continued technological advances and policy support, oil demand will peak in the not-too-distant future — though the timing, pace, and severity of this peak remain in question. In aggressive scenarios, the potential geopolitical and geo-economic consequences of this prospective peak are extraordinary.
Government budgets of major oil producers would be squeezed, competition for manufacturing leadership in electric vehicles and other new markets would alter trade flows, and traditional great power dynamics could gain new, perhaps sharper, edges.
Most likely, the changes would be gradual. In the short-term a shift to short-cycle plays such as US shale is underway as companies and investors look to minimise risk as they develop a better understanding of the changing medium-long term dynamics of the oil market. The investment climate for big, long-term projects such as deepwater and Canadian oil sands where returns are measured in decades has already been undermined.
As demand declines and prices drop, we could see a marked shift to low-cost producers who take advantage of a longer tail of oil consumption. Yet even among relatively low-cost producers, countries that are too dependent on oil revenues to withstand lower prices or diversify into other sources of income will face increasing economic and budgetary challenges. This in turn could weaken stability in the Gulf, or force Russia into greater risk-taking in its foreign policy.
This said, a structural shift in oil demand would not only produce losers. Oil importing countries have already seen significant advantages even in the mildest of oil demand change scenarios.
Revenues traditionally reserved for oil could be used for investment in new technologies, accelerating the transition away from oil while allowing new countries to firmly claim leadership in the new energy economy. For example China, a leader in EV production and adoption, has considerable deposits of the critical elements needed to produce batteries such as lithium, cobalt, and aluminium.
The record of even informed predictions in the oil market is poor but it is clear, however, that the energy mix and the levers of global oil demand are changing, and geo-economic and geopolitical changes will follow in turn. We would be wise to take note of which of these levers are most important, keeping a keen eye to the possibility that the changes on the horizon are even more dramatic and geopolitically significant than those seen on New England coast over a century ago.
The writers are with the Global Energy Centre at the Atlantic Council.
38 Comments on "The equations are changing for the oil industry"
Cloggie on Mon, 15th Jan 2018 12:08 am
Ford to invest 11 billion in e-vehicles until 2022:
http://www.spiegel.de/auto/aktuell/detroit-auto-show-2018-ford-will-elf-milliarden-dollar-in-e-autos-investieren-a-1187870.html
Mad Kat on Mon, 15th Jan 2018 1:19 am
““Millions of Americans are drinking water with potentially harmful levels of radioactive elements, but the outdated federal standards mean many people don’t know about the risk they face when they turn on the tap.” In Texas, about 80 percent of the water tested contained detectable levels of two radium isotopes.”
https://inhabitat.com/drinking-water-for-170-million-americans-tainted-by-radiation/
And the beat goes on…
deadly on Mon, 15th Jan 2018 2:13 am
The answer is to farm whales, increase the density of the whale population in all of the oceans, then harvest the whales for the whale oil.
Have GMO whales for maximum whale oil content.
A renewable resource, whales will have a significant amount of whale oil, it could power the earth forever.
Millions of GMO whales for the whale oil is a distinct possibility. A whole new industry awaits development.
Whale oil will change the equation.
Out with old (oil), in with the new (new whale oil).
Everything will be as it once was.
Time to rescue the whales, raise them properly, then harvest them for the oil.
Save the whales to destroy the whales.
The oil conundrum is solved by Mother Nature herself.
A project worth consideration.
Mad Kat on Mon, 15th Jan 2018 4:07 am
deadly, I guess you are aware that whales are intelligent creatures and have relationships similar to humans? Also live to be as old as humans?
I personally think that whalers should be harpooned and eaten if they are going to do so to whales. Ancient whalers were ignorant of those facts and can be excused but modern whalers are just greedy killers. Japan heads the list.
Davy on Mon, 15th Jan 2018 4:20 am
“deadly, I guess you are aware that whales are intelligent creatures and have relationships similar to humans? Also live to be as old as humans?”
Geeze, you are a dense old man. Have you ever heard of sarcasm. mad kat, he is being funny stupid.
Mad Kat on Mon, 15th Jan 2018 4:22 am
Sarcasm it may be, but even the suggestion is sick or a lack serious of modern education. Must be an American. lol
Davy on Mon, 15th Jan 2018 4:27 am
mad kat, who is the “the Environmental Working Group”? There are no references for who these people are. I think this article is a bogus attempt a scare mongering. Something you do daily here. Please stick to legitimate news.
“https://inhabitat.com/drinking-water-for-170-million-americans-tainted-by-radiation/”
Davy on Mon, 15th Jan 2018 4:30 am
“Sarcasm it may be, but even the suggestion is sick or a lack serious of modern education. Must be an American. lol”
it is meant to make stupid people like you look stupid and it worked stupid.
Davy on Mon, 15th Jan 2018 4:38 am
“Mohammed Is Most Popular Name For Newborn Boys In Holland For 2nd Year Straight”
https://tinyurl.com/y986bebc
The author says, it is the second year in a row that Mohammed is the most popular name for baby boys: In 2016 there were 724 baby’s named Mohammed (or one of it’s Arabic alternatives) in the Netherlands.
Davy on Mon, 15th Jan 2018 4:45 am
Neder, it seems the US is not the only country with technological issues.
“German Engineering Yields New Warship That Isn’t Fit for Sea”
https://tinyurl.com/y9uqr3hn
“Defense experts cite the warship’s buggy software and ill-considered arsenal—as well as what was until recently its noticeable list to starboard—as symptoms of deeper, more intractable problems: Shrinking military expertise and growing confusion among German leaders about what the country’s armed forces are for. A litany of bungled infrastructure projects has tarred Germany’s reputation for engineering prowess. There is still no opening date for Berlin’s new €6 billion ($7.2 billion) airport, which is already 10 years behind schedule, and the redesign of Stuttgart’s railway station remains stalled more than a decade after work on the project started. Observers have blamed these mishaps on poor planning and project management, which also figured in major setbacks for several big military projects. But experts say military efforts have also been hampered by the lack of a strategic vision for Germany’s armed forces, resulting in vague, hard-to-execute briefs. Before the frigate project foundered, a contract to build a new helicopter hit snags, costs for a new rifle overran and an ambitious drone project simply failed to get off the ground.”
Mad Kat on Mon, 15th Jan 2018 5:24 am
Davy, it makes you look stupid because You didn’t recognize the reason behind my comment. I was pointing out that whaling is immoral and is mostly illegal. His comment gave me the opening.
Mad Kat on Mon, 15th Jan 2018 5:33 am
Davy, killing the messenger is not going to take the radioactivity out of the water. That was just one ref out of many other sources saying basically the same thing. The US water supply is dangerously full of invisible pollutants. Even well and spring water.
https://www.forbes.com/sites/jeffmcmahon/2011/04/09/radiation-detected-in-drinking-water-in-13-more-us-cities-cesium-137-in-vermont-milk/#6247aad4aa86
And:
https://www.thoughtco.com/map-of-natural-radioactivity-in-the-us-3961098
Granite is a good source of radioactivity as is radon in shale areas. Not to mention the nuclear tests and industry.
Davy on Mon, 15th Jan 2018 6:00 am
“His comment gave me the opening.”
His comment demonstrates how stupid you are and this is not the first time. Many times jokes or sarcasm is used here and it flies right over your dumbass. You need to lighten up before you have a stroke.
Davy on Mon, 15th Jan 2018 6:08 am
“Davy, killing the messenger is not going to take the radioactivity out of the water.”
Mad kat, I am not denying the good or bad of the US water supply. I am asking you to have valid sources for wild exaggerations. You are peddling junk science and that is because you are an extremist peddling a message of personal hate instead of honest science. FRAUD
Davy on Mon, 15th Jan 2018 6:08 am
Since you are in the P’s why not report on this.
“Philippines’ water and sanitation crisis”
https://tinyurl.com/y7rokhdr
“Out of 101 million Filipinos, nine million rely on unimproved, unsafe and unsustainable water sources and 19 million lack access to improved sanitation. Families without a safe water source in or near their home often spend significant time and energy collecting water. Those without a sanitary toilet facility at home face a number of unattractive choices, including venturing out at night or suffering the embarrassment of asking to use the toilet of a neighbor.”
Antius on Mon, 15th Jan 2018 6:40 am
““Millions of Americans are drinking water with potentially harmful levels of radioactive elements, but the outdated federal standards mean many people don’t know about the risk they face when they turn on the tap.” In Texas, about 80 percent of the water tested contained detectable levels of two radium isotopes.”
All water that comes out of the ground does and always has. Radium salts come of rocks and leach into the water. Your extract makes it sound like this is some new and dangerous thing, but the reality is that it has always been this way in places where people drink ground water.
deadly on Mon, 15th Jan 2018 7:33 am
MK pegged out the gullibometer. Redlined the thing. Got fished in.
Cloggie on Mon, 15th Jan 2018 11:51 am
“Mohammed Is Most Popular Name For Newborn Boys In Holland For 2nd Year Straight”
Muslims don’t have that many names. But I agree that 900k Muslims are 900k Muslims too many in the Netherlands of 17 million, courtesy USA multicult empire aka the f* West (where the sun sets) .
But that’s OK. The end of the US empire will come in war and flames and these Muslims have a mobilizing effect on the Dutch population. It has been peace for too long already.
Cloggie on Mon, 15th Jan 2018 4:03 pm
Autonomous electric inland shipping coming to Europe this summer:
https://theloadstar.co.uk/port-liner-launches-first-emission-free-barges-europes-waterways/
Cloggie on Tue, 16th Jan 2018 10:56 am
New Approach Pumped Hydro Storage
https://deepresource.wordpress.com/2018/01/16/new-approach-pumped-hydro-storage/
MASTERMIND on Tue, 16th Jan 2018 11:17 am
Clogg
You are so fucking dumb and please stop spamming this site with fake news! Renewable s are never going to happen.Only an idiot would be something that produced one percent total energy after 40 years in production.
MASTERMIND on Tue, 16th Jan 2018 11:19 am
UC Davis Study: It Will Take 131 Years to Replace Oil with Alternatives (Malyshkina, 2010)
http://pubs.acs.org/doi/abs/10.1021/es100730q
University of Chicago Study: predicts world economy unlikely to stop relying on fossil fuels (Covert, 2016)
https://www.aeaweb.org/articles?id=10.1257/jep.30.1.117
Fossil Fuel Share of Global Energy since 1990 – BP 2017
https://imgur.com/k7VecMq
Solar and Wind produced less than one percent of total world energy in 2016 – IEA WEO 2017
https://www.iea.org/publications/freepublications/publication/KeyWorld2017.pdf
Cloggie on Tue, 16th Jan 2018 11:31 am
Only an idiot would be something that produced one percent total energy after 40 years in production.
Yes, we are all going to die.
Sad.
“Germany breaks green energy record by generating 35% of power from renewables in first half of 2017”
http://www.independent.co.uk/news/world/europe/germany-green-technology-record-power-generation-35-per-cent-renewables-solar-wind-turbines-a7820156.html
“44% Wind — Denmark Set New Wind Energy Record In 2017”
https://cleantechnica.com/2018/01/06/44-wind-denmark-smashed-already-huge-wind-energy-records-2017/
“Scotland sets renewable energy record as wind power provides equivalent of 118% of nation’s electricity”
http://www.independent.co.uk/environment/scotland-renewable-wind-energy-power-electricity-three-million-homes-118-per-cent-of-households-a7855846.html
If we are to believe millimind, everybody is going to die, except for Europeans.
MASTERMIND on Tue, 16th Jan 2018 11:41 am
Clogg
You are not disproving my argument you idiot and your sources are all fake news! you have been duped according to the IEA the worlds leading energy authority.
Cloggie on Tue, 16th Jan 2018 11:44 am
Solar and Wind produced less than one percent of total world energy in 2016 – IEA WEO 2017
https://www.iea.org/publications/freepublications/publication/KeyWorld2017.pdf
As always millimind refuses to give the page number of this mysterious “less then 1%” number. Probably because it is not true.
Oh wait, it is not true:
https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/primary-energy.html
Share wind & solar global primary energy is 3.2% and rapidly growing.
Cloggie on Tue, 16th Jan 2018 12:04 pm
“If we are to believe millimind, everybody is going to die, except for Europeans.”
I can live with that, pun intended.
MASTERMIND on Tue, 16th Jan 2018 12:33 pm
Clogg
Sorry Europe is plugged into BAU and global economy just like everywhere else. i have said a million times we are headed for a global collapse..And i have submitted five scholarly studies to prove it beyond any reasonable doubt.
MASTERMIND on Tue, 16th Jan 2018 12:35 pm
Clogg
As always millimind refuses to give the page number of this mysterious “less then 1%” number. Probably because it is not true.
You said this before you fucking retard its on page ONE! Maybe if you weren’t such a fucking close minded idiot you could learn something. And that BP three percent includes wood burning and dung…the IEA is the only ones who break down solar and wind. And its less than one percent! PAGE ONE!
Cloggie on Tue, 16th Jan 2018 1:13 pm
“PAGE ONE!”
Page 1 of 97 is the title page. Be exact you fake academic.
GregT on Tue, 16th Jan 2018 2:05 pm
“i have said a million times we are headed for a global collapse”
You have probably said it here less than 100 times, and just because you say something does not make it true.
“And i have submitted five scholarly studies to prove it beyond any reasonable doubt.”
You have done nothing of the sort. You’re more than a few bricks short of a load MM.
MASTERMIND on Tue, 16th Jan 2018 3:16 pm
Greg
Here are five peer reviewed scientific studies authored by top experts that prove beyond any reasonable doubt that global civilization will collapse within the next decade.
http://www.sciencedirect.com/science/article/pii/S0921800914000615
http://www.energybulletin.net/sites/default/files/Peak%20Oil_Study%20EN.pdf
http://rspb.royalsocietypublishing.org/content/280/1754/20122845
http://sustainable.unimelb.edu.au/sites/default/files/docs/MSSI-ResearchPaper-4_Turner_2014.pdf
http://www.feasta.org/2012/06/17/trade-off-financial-system-supply-chain-cross-contagion-a-study-in-global-systemic-collapse/
Once again proved Greg the paranoid misanthrope wrong! NEXT!
Cloggie on Tue, 16th Jan 2018 3:17 pm
Millimind is a one-trick pony.
And the trick is of 2010.
MASTERMIND on Tue, 16th Jan 2018 3:29 pm
Clogg
You are a one percent pony that is one percent total energy from solar and wind after 40 years and trillions of dollars wasted! LOL
Cloggie on Tue, 16th Jan 2018 3:34 pm
Europe is not “the world”.
For an egalitarian like you perhaps difficult to grasp.
But you are on the way out anyway, like the USSR.
http://buchanan.org/blog/trump-immigration-debate-race-matters-128528
MASTERMIND on Tue, 16th Jan 2018 3:45 pm
Clogg
Pat Buchanan is a religious nutter! You can never site any scholarly or mainstream sources..its always fake news! you are dumb as rocks! You need a girlfriend dude!
Cloggie on Tue, 16th Jan 2018 3:59 pm
“Pat Buchanan is a religious nutter!“
Says who?
He was a presidential candidate where you are a kindergarten dropout.
MASTERMIND on Tue, 16th Jan 2018 5:22 pm
Clogg
Buchanan is fat ignorant blowhard! Spreading immigrant phobia! Its not the immigrants fault its YOUR FAULT You are an economic loser! Get a girlfriend or a puppy! Then maybe you can see there is more to life than hate and bigotry!
MASTERMIND on Tue, 16th Jan 2018 5:59 pm
What immigration wave?
https://imgur.com/a/mbXDE