Whistleblower Claims IEA Is Downplaying Peak Oil 720
Yesterday the Guardian ran a story based on two anonymous sources inside the International Energy Agency who claimed that the agency had distorted key figures on oil reserves. "The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the [IEA] who claims it has been deliberately
underplaying a looming shortage for fear of triggering panic buying. The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves." Today the IEA released its annual energy outlook and rejected the whistleblowers'
charges. The Guardian has an editorial claiming that the economic establishment is too fearful to come clean on the reality of oil suppplies, and makes an analogy with the (marginalized, demonized) economists who warned of a coming economic collapse in 2007.
Re:peak oil clarification (Score:5, Interesting)
This is why we had $147/barrel oil a few years ago, not speculators.
If the world population were the only factor, oil would still be at $147/bbl, because the world population hasn't gone down.
I suspect that there was rampant speculation going on, and that a great many speculators lost their shirts when the bubble they'd created burst. But I don't know who the winners and losers were.
If you "smooth out" the spike, the price of oil is still going up pretty fast [wtrg.com] since its trough in the late 90s, even if not quite as fast as the speculation-fueled spike. That would suggest that you're correct: we are looking at a price rise, possibly just based on the supply and demand, and the current dip is just the spike evening itself out.
If that's the case, we'd expect to see oil continue a gradual rise of roughly 5% per year over inflation. But the spikes make it tricky to observe that with anything less than a five-year window.
Peak oil is not important, peak energy is (Score:2, Interesting)
More specifically, speak cheap and easy energy is important.
Right now we have easy access to oil, coal, natural gas, and in some places, hydro- and other power sources.
On the horizon are not-so-cheap but getting-cheaper-and-easier-every-decade sources such as new drilling technologies to recover fossil fuels that were previously infeasible to recover, solar power, wind power, wave power, and other sources.
As long as energy prices rise slowly enough so there isn't a panic, yet fast enough to spur investment in higher-than-current-oil-price-per-gigajoule fuel sources, we should be fine.
Yes, there is a finite supply of non-renewable energy. However, if you are willing to pay the equivalent of $150/barrel for that energy, it's a lot less finite than if you are only willing to pay $75. When it comes to most forms of renewable energy including wind, wave, and solar, there may be a limit on the wattage and transport of that energy, but there is virtually no limit on the number of years we can use it.
Not worried (Score:5, Interesting)
Re:If True, Fascinatingly Bizarre Logic (Score:5, Interesting)
> So, there are reserves that are "unattainable" because it is not energetically sane to extract, and they will never be economically feasible no matter the price.
As one witty peak oiler explained it: If I want an apple, I may pay a dollar for it. If I really want and apple, I might pay a thousand dollars for it. But no matter how much I like apples, there's one price I will never pay for one, and that is twoapples.
Re:Bah! (Score:3, Interesting)
I'm all for drilling for domestic oil. The problem is, if we drilled every damned energy positive, profitable will in the continental US and it's territorial waters, it probably wouldn't hold back peak oil a year (figures on www.theoildrum.com)
Granted, a year is a lot, particularly if your alternative during that year is "starvation."
But as usual, the liberal/conservative conflict is just bugs in a jar being shaken so they'll fight. Oil doesn't care. Physics doesn't care. Argue all you want, but the day it takes a barrel's worth of energy to get a barrel out of the ground (the problem we *really* need to watch, not peak oil, per se), it will start to become a remarkably unpleasant day.
Re:peak oil clarification (Score:3, Interesting)
Keep in mind that OPEC can and do slow production down to increase prices, but they can not increase production passed a certain point. That is where demand becomes higher than supply and prices go sky-high until they are high enough to make oil unaffordable for a whole lot of consumers. Oil reached $150 a barrel and then we had the "financial crisis". It will reach those levels again sooner than most people think.
Re:If True, Fascinatingly Bizarre Logic (Score:5, Interesting)
The Perfect Conspiracy Theory (Score:2, Interesting)
We will NEVER run out of OIL! (Score:2, Interesting)
Imagine you're in a big room full of peanuts. And you open the shell, eat the nut, and throw the shell aside. Eventually, it will be harder and harder to find a peanut, because you'll be finding increasingly more peanut shells with no peanut inside.
The same story is with oil. It will just be harder and harder to find the oil, and the price will rise to reflect the increased costs of getting it. But there will always be some oil, somewhere, to be drilled. We will NEVER RUN OUT OF OIL!!!
Re:Bah! (Score:4, Interesting)
Also, the fact that "enviro-nazi" is a meme certainly applies here. The original post could have said "enviro-droids", "envirotards" or "envirobabies [youtube.com]" and the argument would have held all the same. Does replacing one meme with a different one change the Godwin status of a statement?
Speculation (Score:2, Interesting)
Speculation had a major impact on the last fast oil price rise last year. Your points on energy in to get energy out are correct of course, but you need to research on the other topics of the economic costs.
As to published figures, they are *highly* suspect, from anyplace, the saudis for example always seem to have near the same amount in alleged reserves... for the last few decades. And shell got busted over estimating their reserves in order to keep their stock market valuation high.
Spend a few evenings perusing a lot of the back posts at some place like the oildrum, plenty of good info out there on this subject. The consensus is more "we don't really know" about reserves because all the majors lie about it for various reasons, and that is also the point of the article and the leak.
In addition, now we will be contending with the scam/skim carbon market, as various governments will start insisting on additional stealth taxes on carbon emissions to further enrich the too big to fail boys, etc,(the real reason for cap and trade) so we really don't know yet what the costs will be in the future, other than "much higher than now".
Re:If True, Fascinatingly Bizarre Logic (Score:3, Interesting)
Back when oil was $145 a barrel (i.e. last year), I read quite a bit about oil shale. It is thought by many that oil shale is, if you start from scratch with no investment on both sides, easier to extract than tar sands (political/environmental issues aside), or at least they are very close to equal. However, after decades of consistent investment (and, yes, libertarians, even government subsidies), tar sand oil extraction is far ahead of oil shale oil extraction. Oil shale investment has waxed and waned primarily with the price of oil, instead of being upheld by the government during the lean years, like tar sands development was.
I do agree, though, with your point that you can get oil from coal, etc.
The point of all this is that I think that the US government should put resources into developing oil shale (or coal-to-oil, whatever) as the mother-of-all strategic reserves. It should be funded like the national security priority that it is. We should extract a token amount every year (maybe enough to fund maintenance on the infrastructure), with the capability of ramping up production before our Strategic Petroleum Reserve [wikipedia.org] dries up, in case of war or a spike in the price of oil. This should be done while also funding research into other sorts of energy solutions which don't exact as much of an environmental toll (i.e. nuclear power, cheap solar/wind, cheap/energy-dense/resilient batteries, etc.). In fact, if oil shale is profitable enough (currently costs $60 per barrel for oil shale production, but this would decrease with investment), the funds can be directed in that direction. Even if it isn't profitable, though, it should still be there as a strategic reserve.
Although this makes the most sense, it would never happen because of libertarians on one side and environmentalists on the other.
Re:Bah! (Score:3, Interesting)
Re:If True, Fascinatingly Bizarre Logic (Score:3, Interesting)
It's very hard to know what the IEA really thinks. Their own reports are contradictory and confusing, the head of the IEA has said things that don't seem to reflect the agencies official view. Read this interview with the chief of the IEA, Fatih Birol [eurotrib.com]. In it he says
So what's going on here? One obvious explanation is that the IEA is riven with disagreement, or has internal consensus but feels pressure to not reveal it externally. Given the IEAs history of knife-switching its views without warning and its staff apparently holding quite different ideas to those in its official reports, I am inclined to believe crmarvin42s explanation - it's a deeply confused organization that is under a lot of different pressures, and what comes out is not coherent as a result.
Re:If True, Fascinatingly Bizarre Logic (Score:3, Interesting)
Peak oil doesn't mean that we are going to run out of oil, it means that we are going to run out of cheap, high quality, easy to extract oil.
Example: Iraq just sold the rights to develop their oil reserves for $2 per barrel. These contracts will probably go down in history as the best oil extraction deals ever made because Iraqi oil fields are as sizable as those in Saudi Arabia, the oil is high quality: easy to pump easy to drill, the fields have always been underdeveloped and underutilized and all other large developed oil fields are in decline so the price is sure to spike higher even as production ramps up.
Oil shale can be a source of oil, but it is not a source of cheap oil which means that our society will need to change fundamentally as the price we pay for energy increases faster than the rate of inflation.
Re:If True, Fascinatingly Bizarre Logic (Score:5, Interesting)
Re:Bah! (Score:2, Interesting)
The radical fringe of the environmentalists composes 80% of the environmentalists. I deeply care for the environment, but it seems like no-one sensible is allowed to call themselves an environmentalist.
More of us are interested in coal being a problem than nuclear plants.
Now you are. The hot topic/semi-religion now in environmentalism is “global warming”. 20 years ago it was nuclear power. The arguments against nuclear power were mostly scare tactics and fallacies of reasoning. The environmental movement (to me at least) lost all credibility after that.
At least the founder of Greenpeace (Patric Moore - http://www.washingtonpost.com/wp-dyn/content/article/2006/04/14/AR2006041401209.html [washingtonpost.com] ) had the intellectual honesty to admit that he and the organisation was completely wrong about nuclear power.
The problem with nuclear plants are that they don't behave well, and leave nasty poo that doesn't become safe for about 300,000 years. Look it up.
Firstly, coal powerplants spew nasty radioactive waste directly into the atmosphere (on the same order of magnitude as nuclear power plants). Oh, and they spew a lot of other nasty shit in the atmosphere too. This causes a lot of unseen health problems (cancer, lung disease). Millions of people die each year because of the effects of coal power stations (and more than 5000 in coal mining accidents alone).
Secondly, you may never have heard of reprocessing of nuclear fuel or fast breeding reactors. With any of these steps the amount of nuclear waste left is minute, and its half-life is about two centuries. But no, they would rather prefer acid rain and global warming.
Unfortunately it seems as if environmentalists want to destroy the economy in addition to the environment with their coal power plants and unfeasible and extremely expensive “renewable energy” pipedreams. Neither wind nor solar are feasible. Their bio-fuel (ethanol from maize or sugercane) pipe dream destroys the environment at such a rate. But they would rather we chop down rainforest to plant sugarcane than to use oil.
That said, you can scrub anything. It depends on how much it costs as to whether it's practical. Coal burning plants are difficult to scrub.
Carbon-Dioxide recapturing in coal power stations is also something of a pipe dream. I suspect that they are only doing it to try and get money from the government.
Oh, yeah. Why do they hate GM foods? Would they rather see people starve? Nobody forces them to eat GM foods. GM maize may just lessen the wholescale environmental destruction that their bio-fuel pipe dreams create.
--- Sorry for the harsh tone, but environmentalists is really one group that (for me at least) is one of the most harmful hate groups of modern society.
Re:If True, Fascinatingly Bizarre Logic (Score:4, Interesting)
The thing is, while there will be more economic incentive to use alternative energy sources, and even though necessity is the mother of invention, there are technical hurdles to overcome, and we need to set of new infrastructure, and the science and engineering feats that must be accomplished will not just happen because we want them to. Maybe we can overcome the problems given enough time, but depending on how fast the price increases (thanks to increased development in countries like China and India, demand will be increasing even as supply drops), we may not be able to afford to wait.
Yes, the laws of supply and demand will prevent there from being real shortages, but when the economy slows because people can't afford to drive places (like work) or buy things that were shipped (like most food), when people are forced to make hard decisions, when the market for luxury goods disappears because people are spending most of their income on necessities because the next big thing in affordable fuels is still "just around the corner," will it matter that it isn't a shortage in the truest sense of the word?
Re:Bah! (Score:2, Interesting)
Except you're the crazy one here.
Environmental extremists do exist; and the worst thing is that most environmentalists don't have a bloody clue what is actually good for the environment.
The best, cleanest sources for stable energy we have now are hydroelectric and nuclear. Hydroelectric is hard to utilize any further without disrupting the ecosystem badly, and I haven't seen too many people who call themselves environmentalist without having an irrational fear about anything relating to nuclear power.
The only way to satisfy some environmentalists is to wipe the human race off the planet, because they are going to scream about the current pollution levels and any cost-effective measures to control them.
Re:Bah! (Score:3, Interesting)
Well yes, if you take a percentage of every sale, higher prices will lead to higher profits.
As opposed to what? If they have the power you seem to think they do, why do prices ever fall?
Re:On the plus side! (Score:4, Interesting)
But it absolutely is going to run out one day, nobody but a crackpot would argue otherwise. So if you buy some and stockpile it indefinitely until it does, you absolutely are going to make a fortune, unless all demand for oil suddenly and miraculously goes away. So why isn't everybody doing just that? There must be a reason.
Turns out there is, and it's really simple.
The problem with trying to do that is there's nowhere to store it. Buying billions' worth of oil and putting it away for a rainy day just isn't possible unless you're, say, the US government with (allegedly) underground caves you can fill up with the stuff. So you have to just keep buying it as it comes out of the ground.
And because we don't know exactly when the oil's going to run out, thanks in part to the sort of misinformation talked about in this article, the market price can't reflect how things are going to go in future. So people have to assume things are going to carry on as normal until they hear otherwise.
If I knew oil was going to run out to all practical intents and purposes in, say, 50 years, and could store significant quantities of it for that long, then yeah, I'd do it. But I don't know when it'll run out, and I don't know how much I can store, and for how long. So I'll carry on paying the spot price or something not too far in the future, like everybody else.
Re:On the plus side! (Score:3, Interesting)
unless all demand for oil suddenly and miraculously goes away.
That has basically happen before. Consider whale oil. It went from being about a sixth of our GDP to virtually nothing. That was not because whale was banned suddenly either, it was because the black stuff was found bubbling up from the ground in PA and people figured out how to use it for almost everything they were doing with the whale stuff and lots more. It was way easier to get at too.
Sitting on lots of oil could well be an economic mistake, all it would is for someone to find a cheap way to synthesize the stuff from something otherwise abundant or the discovery of another good substitute and all the worlds oil might be virtually worthless.
Personally I am not really worried. Investing in oil (profitably) is pretty difficult unless you are willing to keep your capital tied up so long you could get better returns elsewhere or you're an insider. You can make some money gambling though I suppose. I suspect the industrialized world will find solutions to oil getting expensive and scarce, its the OPEC crew that should be worried because I don't know what they are going to trade with once the oil is gone.
Re:Bah! (Score:3, Interesting)
Except its all tar sand of which there is really no economically viable way to mine (in a significant and quick way). Most experts have dismissed the idea that this will circumvent peak oil as the production would not be enough and the environmental effects are too great. The tar sands also produce twice as much CO2. Its an environmental nightmare and to promote this as a solution when there is concern of global mass extinction due to CO2 is absurd!.
Re:Bah! (Score:3, Interesting)
Whether it will run out in 20 years, or in 100 years, Oil WILL run out eventually.
That actually isn't true, but the likely outcome isn't a lot better. It's all supply and demand: as oil grows scarce its price will increase, and as that happens (gradually, you'd hope) demand will taper off because of the exorbitant price. Of course this assumes a free market in which all consumers have accurate information, and the scary thing about TFA is that it suggests we don't have accurate information about the oil market - this shouldn't surprise anyone who's been paying attention - so we might be buying oil too cheaply given its current supply. That sort of arrangement isn't sustainable, so if it's true then there will eventually be a supply crisis and prices will spike suddenly. (You know, like the month after we dip below 10% unemployment and think everything is getting better.)
Whether we make the investment to retool our entire civilization now or in 100 years, we WILL have to do so.
I've always agreed with this approach, too. Since we know supplies are limited we should incentivise the creation of compatible alternatives, making oil part of a broader energy market. We seem to be doing that, slowly. Electric cars will eliminate the dependence of some drivers on oil specifically, and if enough people buy them we'll put oil alongside coal, solar, wind and old Soviet weapons [slashdot.org] in powering the grid. But it's probably not happening fast enough (if this whistleblower is correct). I recommend keeping lots of canned food in the basement.
Re:Bah! (Score:3, Interesting)
The economic reality is that peak oil is all bullshit. The MARKET says what the price will be. When supplies become truly scarce, oil prices will rise.
The concept of peak oil is based upon the market realities you cite, as well as observations about declining discoveries of oil resources. In a reasonably free market where everyone has good information about supply, this will lead to a gradual price shift as we approach the limits of the supply. We do not have this sort of free market, unfortunately. You're right that this will all become irrelevant once the market for energy has switched to alternatives, but that doesn't mean the price increase won't provoke a major crisis in the short term. And an oil crisis doesn't just affect transportation.
Re:If True, Fascinatingly Bizarre Logic (Score:1, Interesting)
IMHO, Carter was the last president not bought and paid for by the financial industry. He did speak truth, and people hated him for it. Reagan told everyone what they wanted to hear, and they loved it. He did this while doubling the national debt, like every other ass-clown president since.
Re:If True, Fascinatingly Bizarre Logic (Score:2, Interesting)
Re:If True, Fascinatingly Bizarre Logic (Score:3, Interesting)
If the trends are to be believed, they are already back peddling on their estimated barrels per day. Somehow their math seems to be 'fuzzy' already in guestimating they could produce 120m barrels/day by 2030. They've lowered it 3 times already, and we are still producing less than targeted. We're going the wrong way. Production should be going up, not down.
Considering we are producing 83m b/day, one has to question just how accurate their guestimates are.
It would be insane to withhold such information. Without said info, the industries could not prepare with new technologies to replace the old. If we were simply to 'run out' all at once, with no time to prepare, basic infrastructure would break down on a global scale, making recovery many times more difficult than if they were prepared in advance.
I've never understood these 'drill baby drill' folks. The amount of oil is finite. Given our current refining capacity, even a huge motherload would take a lot of years to develop and turn out refined oil in any quantity. Why not wean yourself off of oil while it's still reasonably cheap and viable to do so?
There are already designs for 'safe' nuclear power plants [anl.gov]. Why aren't they investing more time and money into these?
Re:Missing the point (Score:2, Interesting)
Err... I live in Houston, which is primarily not zoned. It's the same awful 30+ mile commute as any other major city.
COST is the reason. If it's $500k for House A only half way in to the city from the suburbs for what's $300k for House B out there... people will choose to buy a larger house in the suburbs and drive the long drive as long as gas is cheap.
When billionaire oilmen invest in wind energy... (Score:2, Interesting)
Its so much worse than people realize (Score:3, Interesting)
Then you have the big players of OPEC demanding that oil must be payed in USA Dollars. This made the dollar the new GOLD in a sense; but in another sense it made OIL into the new GOLD. The USA can get away with crazy shit because its currency is in a position that never existed before. It also means that Saudi Arabia has more than just 6% of the USA economy it also holds the currency a float. Iraq went to the Euro. bad move. Iran was next on the list and if it were not for the CIA leaked report Cheney might have got his way... (anybody remember how the media was ramping up in the same way with some of the same lines just a few years ago? I often wondered how far it would have gone without the CIA leak...)
As the world moves off oil and is forced to move from oil and the dollar gets weaker-- or even if it gets stronger-- it is already undermined and exploited so that it is quite overvalued. This is going to be a bumpy transition that was likely never contemplated when we were screwed into dumping the gold standard for sort term (generational) gains. War doesn't leave any side unharmed, the economic war the USA has conducted for generations does not come without costs and we are experiencing some now and will much more later on. I don't think most the experts know how to deal with this mess; other than the ones who know how to profit from a predictable downfall and could be contributing to a solution (but they don't get to be successful for doing the right thing do they?) I suppose the USA could become an even bigger casino for mega investors and that could keep things going a little longer?
My bet is China takes the lead. They've positioned themselves quite well so far, they even have been economically invading nations like we used to do-- (see Minegolia, watch Guana become unstable in the next decade...) China's money is strong. The EU is better.. I suppose, but its not china...
As far as the next GOLD, I'd aim for WATER since OIL is on its way out. (I totally think Pickens wanted water rights more than wind power.) Water pollution continues; I expect poor management to be encouraged as well.
Peak oil. (Score:4, Interesting)
There's general agreement in the industry that we're near peak oil. The peak may have happened already, in 2006-2008. The most optimistic view is that the peak will be around 2020. That's not far away.
Prices aren't that good an indicator of availability. Because supply and demand are both relatively inelastic and change slowly. So small variations in supply or demand produce big changes in price. The worldwide recession has cut demand a bit, which brought the price way down. Supply did not increase.
All the easy places have already been drilled. US oil production peaked in 1970. Look at this list of countries where production has peaked. [theoildrum.com]
Then there's France. Back in the 1970s, France decided to go nuclear. France has 59 nuclear power plants and exports electricity. It's good to plan ahead.
Re:If True, Fascinatingly Bizarre Logic (Score:4, Interesting)
People *love* to listen to doomsayers, far more than people who tell you that things are going to be fine.
Really? What about the global financial collapse, where the doomsayers were ignored or ridiculed, and everybody wanted to hear about how great things are financially? Or the dot-com bubble, where everybody was listening to the market bulls who said we had a "new economy" that was just going to keep on growing and growing - while the bears and those who predicted a burstijng bubble were ignored?
I think you've got this one backwards. most people want to hear everything's fine, and don't want to hear negatives. That's why there's such a culture of yes-men in business. You tell the boss what s/he wants to hear if you want to keep your job (unless you have a more enlightened boss).
Re:Bah! (Score:3, Interesting)
It has been repeatedly shown that long term economies structurally change to accommodate high oil prices. We live drive less by say living nearer to work. We buy vehicles that are more fuel efficient. Petrol/Gas cost the equivalent of 6.80USD per US gallon at the moment. Much more than it does in the US, but our economy has not ground to a halt because of it.
What is really bad for the economy is changing oil prices. Here the high taxes in Europe cushion us from fluctuating oil prices. The price of petrol today is only 20% higher than it was a decade ago in the UK.
solution: LS9 (Score:3, Interesting)
Over 600 comments in and no one has mentioned LS9 [ls9.com]? These folks have found the solution to peak oil: make more of the stuff. Hopefully they can get up to speed quickly; if they can keep costs reasonable, we could have true energy independence...and a fresh source of tariffs on exported petroleum.