World Will Struggle To Meet Oil Demand

[hatrack]

Source: Financial Times

Output from the world's oilfields is declining faster than previously thought, the first authoritative public study of the biggest fields shows.

Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times.

The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term de-mand. The effort will become even more acute as prices fall and investment decisions are delayed.

The IEA, the oil watchdog, forecasts that China, India and other developing countries' demand will require investments of $360bn (£230bn) each year until 2030. The agency says even with investment, the annual rate of output decline is 6.4 per cent.

EDIT

Read more: http://www.ft.com/cms/s/0/0830883c-a55b-11dd-b4f5-000077b07658.html?nclick_check=1

---

This was a leak from IEA, and in case you're wondering, 9.1%/year is really, really fast. IEA is now backing and filling and saying they've "updated" their projections, blahblahblah.

IOW, don't be fooled by low prices at the pump. The underlying issue has not gone away.

[L. Coyote]

1. Gas Prices Dropping, time to leaks some LIES???

[tama]

7. This is from IEA

The comfy all is allright organization of official optimism. They promptly denied the leaked numbers having validity.

But of course, to any and all smartypant consumers, peak oil must be a conspiracy, otherwise their world would collapse... :)

[Javaman]

10. yeah, funny how finite resources run out, huh?

sucks doesn't it.

[L. Coyote]

12. and when who decides to remind us of that, or not.

[Javaman]

20. The world. it will do what it wants.

and one day it will shrug all off like a bad cold.

[tbredbeck]

2. Other quote from article.

From later in the article:

The watchdog warned that the world needed to make a "significant increase in future investments just to maintain the current level of production".

Why do articles like this ignore the ideas of developing alternatives? The conclusion that we need more investment is true, but clearly it's not just oil we need to invest in.

• Conservation should be #1.
  
• Solar
  
• Wind
  
• Fuel cells
  
• Nuclear Fission/Fusion
  
• and more I can't remember off hand
  

[The2ndWheel]

4. Time and money won't be invested to extract and harness energy

in order to conserve it.

[tbredbeck]

13. can you elaborate?

[The2ndWheel]

15. Why would massive amounts of money and time be invested into something

on a global scale, for the benefit of billions of people, in order to not use what has been developed? Conserving energy would be not using it. The whole point of increasing the efficiency of solar or wind power(or anything) is so that more can be used by a larger number of people. We find ways to use energy, and the cheaper it is, the more ways we find to use it.

So conservation can't be #1 on the list. The only time it might be, is when we reach the point where every single person has everything they will ever need at all times. There can never be another child born after that point, since that would increase demand. We could never want a new product. Economic growth and job creation would have to disappear. The world would have to be a completely unchanging reality for conservation to work.

[tbredbeck]

17. clarification

In that case, by conservation I really mean increase efficiency.

[dysfunctional press]

19. that's why dick cheney pooh-poohed the idea...

after all- real men don't conserve.

[The2ndWheel]

22. I don't own a car

Not that, as an American in 2008, I don't still contribute to the machine. Individually we can conserve, as best as we can. However, in terms of the economy, we won't. We can't. As long as mass produced economic growth is the whole point of existence, conservation isn't on any list. Look at the $700 billion that was sent to Wall Street. Plus, Dick Cheney is irrelevant. He, like the rest of us, is nothing but a cog. He's as easily replaced as the next person. The problems that Cheney has helped along aren't going away next Tuesday, or January 20th, or any other time. They're sort of built in to how we organize society, and some of them are just part of life.

We're just not going to conserve energy by investing billions of dollars and countless hours into trying to extract more energy from the environment. We don't tax people to not use the money for roads, schools, etc. We don't fund R&D to not come up with a cure. We don't buy low so that we can sell low. We expect a return on the investment.

[scipan]

3. peak oil

has come and gone if this is true. I thought it was supposed to be another 10 years or so.

[caraher]

5. I think those estimates could all carry an uncertainty of +/- 10 years

The trouble is that it's very hard to get realistic data on reserves, because oil ministries fiddle with the numbers to match the production they want to maintain. There are strong incentives to exaggerate how much oil you have left, so I'm not surprised we're peaking earlier than many thought.

[jaybeat]

6. Surprise, surprise. Peak Oil IS real.

And all the drilling in the world won't fix it. There may be "plenty" of oil left in the ground, but the RATE at which we can get it out will sink farther and farther below demand. So, even short term, despite the "demand destruction" (Ouch! That's my demand you're destroying there!) we've seen, prices will go nowhere but up. Way up.

And that's the real 300 year question: Will we be able to develop alternatives to fossil fuels (that development, of course, USES fossil fuel-derived energy) fast enough, before the price of fossil fuels gets so high that we can't afford to develop those alternatives?

The answer will determine whether the last 300 years of economic and technological development (made possible by cheap, abundant energy) will be a transition to something more sustainable, or a one-time vacation from a solar/subsistence based system, which can only support a small fraction of our current cheap-energy-enabled population.

Stay tuned...

:popcorn: :hide:

[Javaman]

11. the oil age will end when the energy in far exceeds the energy returned.

we are very close to that point.

[RUMMYisFROSTED]

8. No duh.

[Javaman]

9. Drill baby drill...

LOL for what? LOL ain't gonna be enough to fill a texas tea cup very soon.

[Dogmudgeon]

14. That's about a 50% decline every eight years

The Oil Age, ergo, will be over in about a decade.

The last half of that period -- which would start around 2012 -- should be pretty austere. You can't power a gasoline-powered car with a windmill, and nobody has any plans to manufacture all-electric cars any time soon.

At the 6.4% decline rate, it would take about 11-12 years to drop output to half; give it 15-18 years until we reach a critical point. (For the sake of convenience, I like to use a break point of a 63% output decline. 63% works better with math, at which I incidentally suck.)

An economic crash could give us an extra couple of years on top of that. Look how oil demand has dropped since springtime -- it's technically known as Demand Destruction, and it decimated all non-fossil energy development in the 70s and 80s. I'm not sure there is any way to raise oil production more than 2-5% for a short period, let alone go for a prolonged period of production growth.

Doubling our coal production and turning it into gasoline via the Fischer-Tropsch process would produce an environmental nightmare.

President Obama's going to be drinking a lot of coffee, and even Hillary will be getting 3 AM phone calls.

--p!
Heck, at this rate, Chelsea will be getting 3 AM phone calls.

[GliderGuider]

16. I hate to do this to an already gloomy thread but remember the Net Oil Export Problem

Exporting nations tend to satisfy their own demand first, and export whatever is left over. That means that if an exporting nation's production begins to decline, their net exports can decline faster than their gross production.

As a real-life example, Mexico's production fell about 10% last year. Its exports, however fell 16%. Guess who depends on Mexico as one of its top suppliers?

While gross oil production will probably never go right to zero, the international oil market can in fact go completely dry. For a nation like the USA that depends on imports for two thirds of its oil, that is a catastrophic event.

With a projected aggregate 9% drop in production, the export market could quickly see volume declines on the order of 20% per year, and those declines will accelerate as time goes on. Look for the international oil market to be completely empty before 2030.

Sucks to be addicted to oil, eh?

[cachukis]

18. theoildrum.com

Best reading on the web

www.theoildrum.com

[profgoose]

21. I couldn't agree more...

...thanks for the link! :)
PG

[ohio2007]

23. Iran feels economic pain as oil prices fall

Iran could always start the saber rattling for the next president as the slide continues

TEHRAN, Iran (AP) - Three weeks ago, a hard-line cleric close to Iran's president gloated publicly that the world financial crisis was God's punishment on the United States. The laughter, however, was short-lived.




Iran plunged this week into a bitter storm of political recrimination, largely directed at President Mahmoud Ahmadinejad, as officials and ordinary Iranians realized with shock that the Islamic republic faces a severe economic crisis of its own.

The reason: As oil prices plunge because of the global slowdown, Iran is caught in a classic crunch. Ahmadinejad's government failed to save enough of the billions in oil windfall it earned during the good years to now cushion the bad.

The same crunch afflicts Venezuela and to a lesser extent, Russia, as all three struggle with falling oil prices.

But in Iran, the economic crisis has quickly turned political. Economic woes are the key issue as Ahmadinejad - already deeply unpopular and suffering from exhaustion, he said this week - seeks re-election next summer in a tough vote. And they are shaping up as his weakness.

Critics say he has recklessly squandered Iran's oil windfall on costly, subsidized imports, from fruit and other goods to the gasoline the country must buy overseas because of a refinery shortage, while failing to take any needed reforms.

"The Iranian people got a golden opportunity in history. But it was buried under this government's wrong policies," said Mohsen Safaei Farahani, a former lawmaker and reformist economist.

snip


http://apnews.myway.com/article/20081030/D9452EF00.html

[amandabeech]

24. Thanks for posting this in LBN, Hatrack.

It's easy to become completely immersed in electoral politics this time every four years.

This article is a good reality check.

theoildrum.com is great comes highly recommended. Everyone should go over there and take a look.