ASPO Australia Launch  

ASPO Australia has formalled been launched in Perth - the ABC and Steve Gloor report.

World oil prices surged overnight prompted by forecasts that the northern hemisphere may be in for a harsh winter that would stretch oil supplies. But this may just be a sign of things to come, with some oil analysts predicting that the global supply of oil may be about to peak as early as next year.

The Association for the Study of Peak Oil and Gas is an international organisation of scientists, which is working to determine the timing and effect of the oil peak and subsequent decline in production. The Association has just been launched in Australia by its international President, Swedish physicist Kjell Aleklett. Professor Aleklett has been speaking to our reporter Andrew Geoghegan.

ANDREW GEOGHEGAN: Professor Aleklett, you're talking about a permanent shortfall in global oil supply. Just explain to us the concept of peak oil.

KJELL ALEKLETT: That's the time when the production cannot keep up with what demand is. That means that you will get a lower production some year compared to the year before, even if you like to buy more. And that of course means that it will be harder and harder to get the oil, and the price probably will go up.

ANDREW GEOGHEGAN: So when do you think this is likely to happen?

KJELL ALEKLETT: It will happen some time between now and 2020. And it will probably hit around 2010.

The Australian also reported on the launch with an article entitled "No technological fix for falling oil stocks".

Declining production from the world's major oil fields could not be made up by technological advances or the development of new discoveries, a Swedish energy expert warned yesterday.

In Perth to launch the Australian chapter of the Association for the Study of Peak Oil and Gas, Professor Kjell Aleklett of Uppsala University said four fields the size of the North Sea would have to be found for oil production to meet expected world demand in 2025. "This is just not possible," he told a meeting of transport bureaucrats. "There is no possibility that the 65 current oil-exporting countries can lift output sufficiently to meet demand when production is declining in 54 of them."

He said 75 per cent of known world oil reserves were in Muslim countries, and the rest of the world would have to be conscious of this as supplies of traded oil tightened.

In other news, the SMH reports that two NZ oil projects are about to go ahead (I'm not sure how much gas exploration is being done but presumably it is a high priority given the imminent demise of the Maui field forecast in the stuff I linked to yesterday).

Russia is apparently going to extend the new oil pipeline to China all the way to the Pacific to supply Japan as well. I imagine Putin will have China and Japan each paying the entire cost of this thing by the time he has finished with them. While Russia has been on the ropes for a long time now I think things will be picking up for them over the next decade - enormous natural resources, a sparsely populated country (with a shrinking population), lots of nearby customers who need their resources and a huge nuclear weapons stockpile to guarantee their own security make for quite an interesting combination in an energy hungry world. Its a shame it can't be safely invested in really.

Reports asking if General Motors will go broke are commonplace now. High oil prices (and their own addiciton to profits via SUVs) may well kill of the US car industry entirely - though Toyota looks like doing pretty well in the coming years thanks to their foresight with regards to hybrid cars and fuel efficiency.

The SMH is also reporting that Zimbabwe is planning to set up a nuclear power plant. Somehow I don't see this happening, but the reports of uranium finds in the country are interesting.

Bloomberg notes that "Oil's 2-Month Drop Leaves Traders With Worthless Bets" - although yesterday's bounce may have eased the pain a little.

Crude oil may extend a two-month decline as concern about shortages eases, leaving traders who bet on $100 oil with near-worthless investments.

``People who have put out extreme price scenarios have become very quiet,'' said Craig Pennington, the head energy analyst at Schroders Plc in London, which manages $206 billion in assets.

Exxon Mobil Corp. Chairman Lee Raymond told a U.S. Senate hearing on Nov. 9 that prices have probably peaked. Boone Pickens, a Dallas hedge fund manager who more than a year ago predicted oil would reach $60, says he expects prices to drop toward $50 a barrel as record prices lead to lower demand.

Crude oil for January delivery traded at $57.80 a barrel in New York at 8:21 a.m. London time. That's down 18 percent from a record $70.85 a barrel in August, when Hurricane Katrina struck the U.S. Gulf coast and shut down about a fourth of U.S. oil and gas production. Hurricane Rita in September further damaged rigs and refineries.

Hedge funds, often blamed for soaring prices, have their biggest bet against oil in 2 1/2 years, selling $3.2 billion of futures contracts in New York, according to data from the Commodity Futures Trading Commission. Lower prices are easing pressure on bankrupt airlines such as Delta Air Lines Inc., while signaling an end to surging profits at the oil companies.

Rigzoen, on the other hand, is pontificating on the propects of $100 oil again (I find this article rather unconvincing but I'll throw it in the mix anyway).

Oil prices certainly won't see any significant relief from falling demand or alternative-energy sources.

True, the high price of oil is slowing demand right now, but investors tend to concentrate on U.S. demand -- which accounts for 25% of the world's oil, said Hassey. Global demand is falling, but not as fast as U.S. demand, he said. At the same time, there are questions about whether alternative-energy sources will erode demand.

But "I don't think we're going to have enough alternative energies at a good price that's globally distributed within the next two to five years before [the] next global expansion occurs," said Hassey.

There is "no really new alternative is on the horizon," said veteran commodities trader Kevin Kerr. Given all that, "$100 oil is not that far off" -- in 2 to 30 months without a major terrorist act, and 6 to 12 months with a major terrorist attack, said Kerr, who also edits Global Resources Trader, a service of MarketWatch.

"The bottom line is, the light, sweet, easy-to-get/easy-to-refine oil is much harder to lay your hands on nowadays," he said, and that lack of light, sweet crude to refine "will most certainly drive prices higher overall."

So "for those asking 'are we there yet?' -- be patient. It probably won't happen in 2005, but 2006 or 2007 could be another story," First Enercast's Ameko said.

Crooked Timber has some notes on support for the Iraq war, and asks why do most Americans now "hate America" ? The interesting thing about this is not so much that support is rapidly dwindling for the ill-advised adventure in the middle east, but the almost total hostility from scientists and engineers towards the Republican party now.

I know there are a few engineers reading this and I suspect that if your engineering schools were anything like mine then you were among the most reactionary people to be found on any University campus ( I doubt there is such a thing as a young left wing engineer). So what has turned the techies away from the right as it currently exists ? Primarily their contempt for objective reality and their attacks on science it would seem (I'll presume your average engineer isn't particularly focussed on morality though that may not be entirely true).

In the leadup to the Iraq war, we were repeatedly told that anyone who disagreed with the rush to war, or criticised the Bush Administration, was “anti-American”. It now appears that the majority of Americans are anti-American. A string of polls has shown that most Americans now realise that Bush and his Administration lied to get them into the war and that it was a mistake to go to war. The latest, reported in the NYT is this one from the Pew Research Centre.

It has a lot of interesting statistics on the views of Americans in general, and various elite groups. The truly striking figure is Bush’s approval ranking among leading scientists and engineers, drawn from the National Academy of Sciences and the National Academy of Engineering. In Aug 2001, it was 30 per cent – not strong but not negligible either. In Oct 2005, it’s fallen to 6 per cent, with 87 per cent disapproving. I’d guess that the scientists in the sample are even more hostile than the engineers (though, obviously, the engineers must be pretty hostile).

It would be interesting to know how much of this hostility relates to specific anti-science policies (stem cells, Intelligent Design and so on) and how much to the Administration’s thoroughgoing embrace of the view that reality is socially constructed, and that the most powerful get to do most of the construction.

The other reason people are becoming disenchanted is the outright lying and blatant propaganda we're subjected to - democracy works when there is openness, transparency and something approaching the truth coming out of the mouths of politicians and their henchmen in the media. Neoconservatives unfortunately seem to hate all of these things, and view democracy as just a handy word to use to excuse their actions. Crooked Timber takes The Economist's American correspondent Lexington to task for being part of the spin machine.

The Economist’s Lexington starts an article (behind paywall) on whether Bush lied with a piece of self-justificatory hackishness.

The Democrats risk painting themselves as either opportunists (who turn against a war when it goes badly) or buffoons (too dim to question faulty intelligence when it mattered). They also risk exacerbating their biggest weakness—their reputation for being soft on terrorism and feeble on national security. So who is getting the best of the argument? Mr Bush starts with one big advantage: the charge that he knew all along that Iraq possessed no weapons of mass destruction seems to be a farrago of nonsense. Nobody has yet produced any solid evidence for this. Sure, Mr Bush made mistakes, but they seem to have been honest ones made for defensible reasons. He genuinely believed that Saddam Hussein possessed WMD—as did most of the world’s security services. And he was not alone in thinking that, after September 11th, America should never again err on the side of complacency. More than 100 Democrats in Congress voted to authorise the war. But being right and being seen to be right are different things. Mr Bush may not have consciously lied, but, egged on by Mr Cheney and Donald Rumsfeld, he made dreadful miscalculations.

The issue, as the Economist’s journalists know bloody well, isn’t whether the Bush administration believed at one point that there were weapons of mass destruction in Iraq. It’s whether or not the Bush administration mendaciously manipulated intelligence to make the public case for their beliefs. The critics mentioned in the piece aren’t making “the charge that [Bush] knew all along that Iraq possessed no weapons of mass destruction.” I’m not aware of anyone apart from a few crackpots who are. They’re making the case that the Republican administration deliberately suppressed information that didn’t support its case, and presented highly dubious information as providing a slam-dunk case for imminent war. In other words, the administration stitched up a regime that turned out not actually to have weapons of mass destruction, let alone an active nuclear programme, through spin, lies and use of ‘evidence’ that they knew at the time to be dubious. I’d like to see Lexington explain exactly how the claims of al-Qaeda links, the aluminium tubes presentation, the yellowcake claims and so on were “honest [mistakes] made for defensible reasons.” But of course he does no such thing – instead he attacks his very own, custom designed straw man in an attempt to disassociate the heap of political trouble that Bush is now in from the fact that the Bush administration undoubtedly lied in the run-up to the war. Shoddy, shoddy stuff.