Friday, 12 October 2007
Oil price at record high - is this the beginning of the end?
With the BBC reporting that oil prices are staying near the record high set in September, the 'peak oil' debate has started again.
'Peak Oil' is the theory that we are nearing the economic limit of oil exploration and extraction, beyond which the cost of extracting the fuel will soar. Estimates of when the peak will occur range from now (Association for the Study of Peak Oil and Gas) to 2037 (US Govt advisors). Others reject the idea that peak oil is happening at all, such as Deborah White, senior energy analyst at Societe Generale in Paris (quoted by the BBC) who said "We don't endorse the idea at all."
The difficulty is that the oil & gas supply is a function of many different factors: politics (see Russia switching off Ukraine's gas supply in 2005), economics, geology (where the gas & oil is and in what quantities) and technology (what was uneconomic last year could be economic today). Apart from the geology, these factors are interrelated, unpredictable and may combine in unexpected and sudden ways.
If it is happening, we will be forced to decarbonise our economies swiftly. The only problem is, we won't probably know until long after it has started. If it isn't, then we should do it anyway for climate change and security of supply reasons.
'Peak Oil' is the theory that we are nearing the economic limit of oil exploration and extraction, beyond which the cost of extracting the fuel will soar. Estimates of when the peak will occur range from now (Association for the Study of Peak Oil and Gas) to 2037 (US Govt advisors). Others reject the idea that peak oil is happening at all, such as Deborah White, senior energy analyst at Societe Generale in Paris (quoted by the BBC) who said "We don't endorse the idea at all."
The difficulty is that the oil & gas supply is a function of many different factors: politics (see Russia switching off Ukraine's gas supply in 2005), economics, geology (where the gas & oil is and in what quantities) and technology (what was uneconomic last year could be economic today). Apart from the geology, these factors are interrelated, unpredictable and may combine in unexpected and sudden ways.
If it is happening, we will be forced to decarbonise our economies swiftly. The only problem is, we won't probably know until long after it has started. If it isn't, then we should do it anyway for climate change and security of supply reasons.
Labels: climate change, oil prices, peak oil
Comments:
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Peak Oil Prices - very interesting topic. As long as price of oil can be politically controlled like OPEC does, one cannotunderstand the reality. There are reserves or not, the demand is ever increasing and supply is inadequate to meet the demand.
What is more important to debate is does the oil price that is decided is a simple realistic market demand -supply differential indicator or not. If it is then it is worrisome. If it is not and we can still produce and sell oil at much lower say 30-50% lower than the current price level, then it is a case of collective extortion.
Human greed is the root cause of many of mankind miseries and Oil price hikes are no more than a fallout of collective extortion games the oil producing countries play to satisfy their own short-sighted short term selfish interests.
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What is more important to debate is does the oil price that is decided is a simple realistic market demand -supply differential indicator or not. If it is then it is worrisome. If it is not and we can still produce and sell oil at much lower say 30-50% lower than the current price level, then it is a case of collective extortion.
Human greed is the root cause of many of mankind miseries and Oil price hikes are no more than a fallout of collective extortion games the oil producing countries play to satisfy their own short-sighted short term selfish interests.
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