Tuesday, April 26, 2005

Peak Oil – The Broken Record

Last week I attended a seminar in Houston about the global oil and gas business which was put on by some friends of mine who work for a significant and politically connected oil and gas consulting firm. For the purpose of truth in advertising, I want to be clear – these guys (and gals) suckle at the hind tit of both international and national oil companies (as opposed to me who suckles at the front tit). They put on a series of seminar talks titled things like: How Much Cash – Where is it Going; and The Last Land Grab; and Iraq and Iran: Two Faces of US Policy in the Middle East; and of course – The Gathering Storm: US Energy Policy. Here is a brief synopsis of what they had to say.

- Consider the current oil prices (and gasoline prices) a long term floor
- Peak oil is a reality (although they did not use those words). Demand could exceed available supply within the next 5 years. Supply is likely to peak in an absolute sense before 2015.
- OPEC and non-OPEC countries have been producing an average of 16 billion barrels per year more than they have found for decades
- The US Government is concerned about gasoline prices (for short term political reasons) but
- The US Government is clueless about the real long term energy outlook for the US and the world
> The US Government relies on the Energy Information Agency (EIA) to do long term forecasts of crude production
> The EIA’s forecasting method is based in fantasy and is completely unrelated to the rate at which new reserves of oil is being discovered and developed.
- Competition for energy with Asia (mostly China) will become a major theme in the next decade