Tuesday, March 07, 2006

Oil, Simmons, Iraq and the forthcoming Electricity Crisis.

Matt Simmons and Peak Oil
There have been some very interesting articles written in recent days. Take Matt Simmons's very good article Outlook 2006 What a Difference 20 Years Makes in Crude Oil Prices. The key point to be taken from this article is how fundamentally wrong most economists got it over the last 20 years. Simmons illustrates how demand has exploded and new supply has shrunk. Typically Middle East oil made up any supply shortfalls however increasingly it seems we have already past the peak supply of sweet light crude, the easiest oil to produce, the simplest to refine into a final product.

Until 2005, OPEC had risen to the occasion and supplied constant surges in unexpected demand. Now it is clear - for anyone closely studying OPEC production announcements and other data on the true status of OPEC oil output - that the countries comprising OPEC membership are all producing at maximum levels.

By the middle of 2005 every rig capable of drilling in the world was in use, every key oil pipeline and processing facility is operating at 100%. Oil supply according to Simmons is tighter than it ever has been but more concerning;

2005 will go down in history books as perhaps the poorest year for exploration success for both oil and gas since World War II. This dismal success was not for lack of effort. Record amounts of funds are being plowed into E&P capital spending, which is why all the world's rigs are now in use.

Peak oil advocates are always going head to head the Panglossian optimists, those that place their blind faith in the market, or argue that technology and science will come to the rescue, "the world won't run out of oil for another 70 years or so.." Most of this crowd don't actually understand what peak oil means, nor do they understand the fundamental problem increasingly complex societies are faced with.

Economic growth necessarily requires an energy subsidy, and as existing energy sources become scarce and marginal returns diminish due to increasing societal complexity a civilisation must find a cheaper more abundant energy source to replace the scarce one. Otherwise, economic growth flounders, empires shrink, political and civil disarray emerges. Even technological investment itself is subject to diminishing returns, 4-5% increases in investment in technology are needed to produce around 2% boosts in productivity, at this rate we'd all end up scientists.

2006, Simmons suggests will be the year the Peak Oil debate intensifies into a debate on the scale of climate change.

Another good article dicussing peak oil appears in Scientific American, with a link to the infamous Hirsch Report (which strangely appears back on a US DOE website after going AWOL for sometime during 2005) is titled Facing the Facts on Oil. Worth a read!

Someone way too frightened to face the facts on Peak Oil is Nathan Paulsen, Minnesota Daily. Nathan wrote an article entitled Complacent and Addicated. Showing some weak concern, hey I guess we can say Nathans heart is in the right place but he just couldn't face telling the truth. I know this because I emailed Nathan and he came back to me saying in a meek rodent kind of tone, writing the column caused him a lot of "anxiety", and "I imagined that not one in a hundred of my peers has ever heard of peak oil". A lame excuse for bullshit I say. Nathan argued with reference to the Hirsch report that according to "broad scientific consensus" peak oil will occur within the next 25 years. Fucking Bullshit!

Wake up Nathan! If you had actually read the Hirsch Report and done even a minimal level of research, you would have recognised (AND REPORTED) that the most optimistic suggestions by the discredited IEA themselves (International Energy Agency) is in fact 25 years, nothing like erring on the side of "don't scare the horses" or maybe Nathan is afraid that in Minnesota he'd be lynched by a mob of Ford Explorer Lumberjacks. The other crock of shite from the IEA is that only after several trillion dollars (13 from memory, yes trillion is what I said) has been invested, several mega-oil-fields are found, ones the size of the mighty Ghawar field in Saudi, and all this assumes Canada's oil tar sands can be bought on board meanwhile to make up the shortfall.

Get it right Nathan, peak oil according to broad scientific consensus will occur by the end of the decade, if not already, or else very shortly after. I hate to think what life might be like in 25 years. I had a go at predicting what it might be like in 15 years (two years ago) In 25 years time Nathan there'll be fuck all of anything left, but love, hope, kids, shelter and life, a life red in tooth and claw, nasty brutish and short. Chur Hobbes.

There is an awakening backlash in the United States. People are sick of Iraq, not to mention the Iraqis are no doubt sick of the United States. This marriage made in hell is on the rocks and an ugly divorce is well overdue. After all ask yourself again why did they go there? Weapons of Mass Distruction? Terrorism. None of the 9/11 terrorists were from Iraq. There was no terrorism in Iraq before the US marched in. No, the US are there in an attempt to secure some large oil reserves. They've realised the project is a fucking failure and so just a week or two ago Bush announces we need to reduce our addiction to oil. A very good article predicting the downfall of the Bush regime was published on Scoop. Article by Bernard Weiner titled Conservatives Jumping Ship: Bush is Going Down. Essential reading!

Electricity Crisis Time! (already?!)
Roy Hemmingway Electricity Commissioner earlier last week inferred (my inference) that Meridian's Dr Keith Turner was an idiot. Well, lets face it if you have a theory or opinion and someone calls it a myth then they are calling you an idiot in a roundabout way.

Dr Keith Turner is warning of an electricity crisis due to low hydro lake levels, lake levels are similar to 1992 however electricity demand is much much greater today than 92. I like Keith Turner, he's committed Meridian to renewable energy development, he tells it as it is. He's not afraid of bad news.

But what I wanted to say was this.

If Keith Turner is right, he's warned everyone very clearly, that unless action is taken now there is a high probability of a very serious situation this winter, and Hemmingway is wrong

"Mr Hemmingway told the annual National Power Conference in Auckland yesterday that it was not the case that electricity supply would be short this winter."

"Roy Hemmingway says it is a myth there is a high risk of Auckland blackouts from 2010 and another myth that there will not be enough power this winter." (From Stuff)

If Hemmingway is wrong - he should resign.

Steve McKinlay
PowerLess NZ

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