George Monbiot has written another piece on the current oil situation, but whilst I agree mostly with what he says, he still doesn’t ‘get it’………
Oil, the industry that threatens us with destruction, is being bailed out with public money
By George Monbiot, published in the Guardian 3rd February 2016
Those of us who predicted, during the first years of this century, an imminent peak in global oil supplies could not have been more wrong. People like the energy consultant Daniel Yergin, with whom I disputed the topic, appear to have been right: growth, he said, would continue for many years, unless governments intervened.
Oil appeared to peak in the United States in 1970, after which production fell for 40 years. That, we assumed, was the end of the story. But through fracking and horizontal drilling, production last year returned to the level it reached in 1969. Twelve years ago, the Texas oil tycoon T. Boone Pickens announced that “never again will we pump more than 82 million barrels”. By the end of 2015, daily world production reached 97 million.
Following one of those links, I have to admit, surprised me….. I had no idea the US’ oil production had almost reached its 1970 peak….. I may have confused how much they were extracting with what they were consuming. And, that chart is already out of date, the extraction rate is now in freefall…
What everyone who comments on this fails to say is that whilst the numbers of barrels tabled in their spreadsheets might well be there, and they may be following the money, absolutely nobody is following the nett number of Megajoules. A barrel of oil from the last dot on the above chart may well contain less than a quarter of the nett energy content of one from a dot at the toe of the curve.
George then adds….:
Methinks he should visit Gail Tverberg’s site for proper analysis….
Saudi Arabia has been pumping flat out for years, with no discernible market flooding power. It may in fact be trying very hard to meet its own fast growing domestic demand which is having an obvious impact on how much it is exporting, which is discernably less than it was way back in 1980……. so how can you blame them for flooding the market?
George continues with…..:
Instead of a collapse in the supply of oil, we confront the opposite crisis: we’re drowning in the stuff. The reasons for the price crash – an astonishing slide from $115 a barrel to $30 over the past 20 months – are complex: among them are weaker demand in China and a strong dollar. But an analysis by the World Bank finds that changes in supply have been a much greater factor than changes in demand.
Whilst Gail Tverberg says…..:
Some people talk about peak energy (or oil) supply. They expect high prices and more demand than supply. Other people talk about energy demand hitting a peak many years from now, perhaps when most of us have electric cars.
Neither of these views is correct. The real situation is that we right now seem to be reaching peak energy demand through low commodity prices. I see evidence of this in the historical energy data recently updated by BP (BP Statistical Review of World Energy 2015).
Growth in world energy consumption is clearly slowing. In fact, growth in energy consumption was only 0.9% in 2014. This is far below the 2.3% growth we would expect, based on recent past patterns. In fact, energy consumption in 2012 and 2013 also grew at lower than the expected 2.3% growth rate (2012 – 1.4%; 2013 – 1.8%).
Recently, I wrote that economic growth eventually runs into limits. The symptoms we should expect are similar to the patterns we have been seeing recently (Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)). It seems to me that the patterns in BP’s new data are also of the kind that we would expect to be seeing, if we are hitting limits that are causing low commodity prices.
Of course, people like George who want to keep growth going, only using wind and nuclear power, don’t understand we are hitting limits.
When oil hit $147 at the time of the GFC, it literally bankrupted the economy. Having hit peak conventional oil, trillions of dollars had to be invested (read, borrowed…) to capitalise on the much higher hanging and less energetic fruit. Which made us get less with more, when we should be doing the exact opposite, doing more with less…..
George then has a big whinge about fossil subsidies at the expense of renewables. The way I see it however, is that as all renewables are manufactured with fossil fuels, as they get cheaper, the costs of making the renewables also goes down, so that to some extent, any fossil subsidy is a hidden renewables subsidy….. Furthermore, without further subsidies, oil and coal companies will go bust to which George says….:
A falling oil price drags down the price of gas, exposing coal mining companies to the risk of bankruptcy: good riddance to them.
Which, George, unfortunately also means good riddance to renewables…. He then ends with…….:
So they lock us into the 20th Century, into industrial decline and air pollution, stranded assets and – through climate change – systemic collapse. Governments of this country cannot resist the future forever. Eventually they will succumb to the inexorable logic, and recognise that most of the vast accretions of fossil plant life in the Earth’s crust must be left where they are. And those massive expenditures of public money will prove to be worthless.
Crises expose corruption: that is one of the basic lessons of politics. The oil price crisis finds politicians with their free-market trousers round their ankles. When your friends are in trouble, the rigours imposed religiously upon the poor and public services suddenly turn out to be negotiable. Throw money at them, trash their competitors, rig the outcome: those who deserve the least receive the most.
At last…… George recognises systemic collapse, for all the wrong reasons unfortunately. It may look like corruption to him, but it sure as hell looks like limits to growth to me.