The International Energy Agency (IEA) provides unrealistically high oil forecasts in its new 2012 World Energy Outlook (WEO). It claims, among other things, that the United States will become the world’s largest oil producer by 2020, and will become a net oil exporter by 2030.
Figure 1 (above) shows that this increase comes solely from the expected rise in tight oil production and natural gas liquids. The idea that we will become an exporter in later years occurs despite falling production, because “demand” will drop so much.
The oil price forecasts underlying these and other forecasts in the report are approximately as follows (see Figure 2, above left).
One reason the WEO 2012 estimates are unreasonable is because the oil prices shown are unrealistically low relative to the production amounts forecast in the report. This seems to occur because the IEA misses the problem of diminishing returns. As the easy-to-produce oil becomes more depleted, and we need to move to more difficult reservoirs, the cost of extraction increases. ( Continue… )
The idea for this first came to me in August, but I haven't wanted to tempt fate. Hopefully everyone will be reading this on November 7.
It is in the nature of US politics that the second term is for the legacy thing: The posterity stuff. Barack Obama is still a young man but could he use a second term to burnish his legacy not only to his country, but also to the planet?
A great opportunity presents itself updating the Kyoto Protocol. I won't go into what's wrong with Kyoto. I still have faith in scientists and if the majority of them say climate change is real, that's good enough for me. But for multiple political, economic and scientific reasons, Kyoto simply hasn't delivered any noticeable CO2 reductions. We need to kick start it again and this time around we can start from something absent in 1997: The sudden emergence, and global prevalence of natural gas resources. ( Continue… )
It is the first time in Motor Trend's 64-year history that the award has gone to a vehicle not powered by an internal combustion engine.
"It drives like a sports car, eager and agile and instantly responsive," wrote Angus MacKenzie, editor-at-large of Motor Trend Magazine. "But it's also as smoothly effortless as a Rolls-Royce, can carry almost as much stuff as a Chevy Equinox, and is more efficient than a Toyota Prius."
The announcement is a boost for an EV industry labeled a failure by some analysts and politicians.
Some expressed concern over Tesla as recently as September, when the company announced plans to sell up to 4.9 million new shares of common stock and seek a waiver from certain conditions on its $465 million in federal loans. Tuesday's announcement may put to rest some doubts about the company's viability.
“Our aspiration with the Model S was to show that an electric car truly can be better than any gasoline car, which is a critical step towards the widespread adoption of sustainable transport,” said Elon Musk, co-founder and CEO of Tesla Motors, in a statement. “Nothing illustrates this more clearly than winning Motor Trend’s Car of the Year by unanimous decision against a field of exceptional competitors.”
Motor Trend made waves last year when it awarded the 2011 prize to the Chevy Volt – a plug-in electric vehicle with an on-board gasoline generator. The gas-electric hybrid Toyota Prius won the award in 2004.
Tuesday's announcement also bodes well for an American car industry pockmarked in recent years by bailouts and bankruptcies. Just last week, Suzuki Motor Corp.'s American unit filed for bankruptcy and announced it would stop selling cars in the United States. The Brea, Calif.-based company is the sole distributor of Japanese-owned Suzuki Motor Co. vehicles in the continental US.
"The mere fact the Tesla Model S exists at all is a testament to innovation and entrepreneurship, the very qualities that once made the American automobile industry the largest, richest, and most powerful in the world," MacKenzie wrote. "America can still make things. Great things."
Can Oil Supplies Grow Fast Enough to Keep Prices in Check?
I, along with my editor Sam Avro, recently conducted a broad-ranging interview with John Hofmeister, former President of Shell Oil and currently the head of Citizens for Affordable Energy, a non-profit group whose aim is to promote sound U.S. energy security solutions for the nation. In the first part of this interview Mr. Hofmeister spoke of A Difficult Decade Ahead For Oil Prices and Supplies. In the second, he set forth an Energy Plan for America. In the current installment, he discusses the events responsible for the explosion in the price of oil over the past decade.
Developing Demand and Depleting Supplies
I prefaced my question with my own view that the explosive growth in oil prices mostly boiled down to new demand outstripping new supplies, which resulted in loss of spare capacity. Some have suggested that the real culprit is a massive influx of financial players into the oil markets, so I was curious to get Mr. Hofmeister’s views on the factors behind the escalation in oil prices over the past decade. ( Continue… )
The United States is in the midst of an energy boom that at the end of the decade will make it the world's top oil producer, temporarily displacing Saudi Arabia, and a net exporter of natural gas, according to a new report.
By 2030, America will be nearly energy self-sufficient on net and North America as a whole will become a net oil exporter, says the report released Monday by the International Energy Agency (IEA), a Paris-based research and advocacy group for oil-importing developed nations.
These are huge developments. Not since the fall of the Berlin Wall in 1989 and the prospect of the so-called "peace dividend" of reduced military spending has the US received such an unexpected economic boost. As long as the so-called "fracking" technology proves environmentally safe, the surge in unconventional oil and natural gas production will offer many benefits to the US economy. Among them: ( Continue… )
Other than perhaps providing a warning not to call a particular geographic area “New” anything, what do these storms tell us?
Like Katrina did, Sandy reminds us most poignantly how little most Americans think about the reliability and importance of energy – until it’s not there. And then, they think about it – a lot.
The sight of people lining up for gasoline, and fighting about who gets to the pump first, is evidence of the dependence of our society on commodities over which individuals ultimately have minimal control. ( Continue… )
Does the International Monetary Fund (IMF) believe we have a peak oil problem? The precise answer is that the IMF is currently studying how constraints in world oil supplies might affect economies around the world in two so-called working papers, "The Future of Oil: Geology versus Technology" and "Oil and the World Economy: Some Possible Futures."
We are admonished by the IMF that opinions expressed in working papers are "those of the author(s) and do not necessarily represent those of the IMF or IMF policy." But the fact that the organization has produced two papers on the subject this year gives some indication of how seriously it is taking the issue. One of the co-authors for both papers, Michael Kumhof, a senior researcher and deputy division chief for the fund, hasn't been keeping his concerns secret. In a presentation, he outlined his reasoning for why the price of oil would have to nearly double in real terms in order for oil production to increase the measly 0.9 percent per year projected by the U.S. Energy Information Administration between now and 2020.
Part of the problem is that we have already extracted the easy-to-get oil. Now comes the hard stuff: deepwater drilling, tar sands, arctic oil, and tight oil (often referred to erroneously as shale oil) which is produced by expensive hydraulic fracturing or fracking, something that typically costs millions to perform on a single well. ( Continue… )
A combination of legal threats, growing political opposition and changes to the rules that govern it is seeing California carbon trading at records lows, bringing the very concept of the market into question.
The emissions program, started by state lawmakers following the federal government’s failure to implement a carbon-purchase system of its own in 2010, has suddenly become the second largest in the world, behind only that of the European Union, promising to cover no less than 85 percent of emissions in California that result from the many companies behind its $1.74 trillion per year economy. (Read More: Global Carbon Dioxide Emissions — Facts and Figures)
Unfortunately, political unrest and general disagreement between climate experts and business leaders is threatening to take the program under before it’s really begun. With only one week remaining before the first allowance sale, one CEO has accused the regulations of being completely taken over by academics and extremists who do not have a finger on the pulse of the business world, leading some to threaten to bring lawsuits against the state if they continue to unfairly govern trade. ( Continue… )
An international row over cheap solar panels threatens to escalate into a full-blown trade war, which could undercut an ongoing boom worldwide in solar and call into question nation's strategic investments in the industry.
The problem: a glut of cheap Chinese solar panels that has forced many US and European panelmakers out of business. Even Chinese companies appear uncertain of survival, because competition has driven prices below break-even. Ironically, the cheap panels have spurred a boom in solar installations at the very time that solar manufacturers are losing their shirts.
The glut has also strained trade relations. The United States and European Union have imposed tariffs or are looking to do so. The Chinese are retaliating by investigating polysilicon it imports from the US and EU to make its solar panels.
There are still ways the players can avoid an all-out trade war. But the tit-for-tat escalations are not helping. ( Continue… )
Moving our economy forward (Sponsor content)
With the election now behind us, we are looking for positive next steps to get our country’s economy moving.
Seven EPA regulations will cost the country more than $200 billion and cause at least 700,000 jobs to disappear. If the president is serious about making our country competitive, he will help to overturn these rules. If the president is serious about making our manufacturers more competitive, he will give them more long-term certainty and keep their costs down by overturning these rules. And if the president is serious about helping families, then he will keep their electricity costs down by keeping coal a central part of the American energy mix.
During the campaign, we heard the president tout his support of coal, and we are hopeful that he will work moving forward to let the coal industry once again thrive. But we have reason wary: While the president was talking, cabinet-level agencies were working on onerous regulations that will hurt the coal industry, our economy, and the families and businesses that depend on the both.
We are certain, however, that if regulations continue to harm our economy, our many advocates will continue to help make our need for coal an important topic for the next four years.