oil

Half of oil and gas CFOs say we are peaking

It's amazing enough that the normally staid International Energy Agency recently said we've run out of time. Now Business Wire reports:

According to a new survey by BDO Seidman, LLP, one of the nation's leading accounting and consulting organizations, 48 percent of chief financial officers (CFOs) at U.S. oil and gas exploration and production companies agree that the world has reached its peak petroleum (liquid hydrocarbon) production rate or will reach it within the next few years, while another 52 percent disagree with that statement.

I think the headline is wrong, though:

Energy CFOs Are Split on World's Peak Petroleum Production Rate, According to BDO Seidman, LLP.

Chief Financial Officers at exploration and production companies are arguably the most cautious "show me the money" people in the entire energy business. The news is not that they are split. The news is that half think we are peaking or soon will.

Conservative touts gas tax as cure to all ills, alternative to other climate/energy policies

The Weekly Standard cover story last week was by Charles Krauthammer: "The Case for a Net-Zero Gas Tax." Joe Klein calls it "an absolutely compelling, and completely unexpected, argument" and the tax itself "without doubt, the most elegant way to lower carbon emissions and dependence on foreign oil."

Your honor, I object.

First off, it isn't unexpected -- Krauthammer has argued for a gas tax before. And you'll notice that more and more conservatives are popping up in favor of refunded gas or carbon taxes. (See, e.g., here.)

Second of all, it isn't particularly compelling. In fact, it's full of howlers. More on that later.

Third of all, re: "elegant," I can't speak to its aesthetic appeal, but a gas tax is most certainly not the fastest or cheapest way to lower carbon emissions and dependence on foreign oil.

Fourth of all, if you find yourself agreeing with Charles Krauthammer, one of the most vicious, mendacious soldiers in the right-wing chickenhawk brigade (see, e.g., here for his argument for torture), it's time for some soul searching.

After all, Krauthammer is quite clear that he views a gas tax as an alternative, not a compliment, to government investments or regulations. Indeed, he seems to think a $1 gas tax would single-handedly drop U.S. oil use, cut world oil prices, cripple hostile regimes, and make the U.S. energy independent. And maybe increase your sex appeal. And it could do all this while obviating or eliminating other environmental policies.

On regulation:

Landrieu serves up monologue on oil during DOE confirmation hearing

Louisiana Sen. Mary Landrieu (D) made two of the more aggressively pro-drilling arguments during Tuesday's confirmation hearing for Energy Secretary-nominee Steven Chu. Neither was totally related to Chu's testimony, but both were, er, colorful.

First, Landrieu disputed Chu's citation of the fact that the United States contains only three percent of the world's oil supply, arguing that she believes there is more oil available domestically:

I listened with interest to your comments to Senator Murkowski about the known inventory in the United States of oil and gas and just wanted to point out that the emphasis is on the word known because we believe, many of us, that there are great resources that have yet to be discovered based on the fact that there's never been a comprehensive technology-driven inventory taken of oil and gas resources.

So one of the things that our chairman has been leading the effort and to some degree of success with my support and others, has been to push the United States government on behalf of the taxpayers who might be interested to actually know how much oil and gas they have. And so with so much off limit in the past and with limited access to just look, I would just urge you to be careful about the comment about four percent. It is true. We have four percent of the known reserves, but there is great evidence to suggest that there are lots of reserves that are unknown.

Her second remark pertained to pirates:

Oil giant forecasts continued rise in emissions through 2050

Exxon-Mobil believes the world is doomed to drought, floods, massive refugee crises, disease, and rising sea levels. According to its "outlook for energy: a view to 2030," global CO2 emissions will rise 30 percent by 2030. That will effectively make holding global average temperatures to 2 degrees over pre-industrial levels -- what the IPCC says is necessary to avoid catastrophe -- impossible. To hit that target, global emissions must peak by 2015.

Of course Exxon doesn't put it that way. They just cheerfully chatter on about all the great energy they're going to sell to meet all that demand -- that is, the role they're going to play in rendering the earth hostile to their grandchildren.

Cheap oil: Be careful what you wish for

This guest essay was originally published on TomDispatch and is republished here with Tom's kind permission.

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Only yesterday, it seems, we were bemoaning the high price of oil. Under the headline "Oil's Rapid Rise Stirs Talk of $200 a Barrel This Year," the July 7 issue of the Wall Street Journal warned that prices that high would put "extreme strains on large sectors of the U.S. economy." Today, oil, at over $40 a barrel, costs less than one-third what it did in July, and some economists have predicted that it could fall as low as $25 a barrel in 2009.

Prices that low -- and their equivalents at the gas pump -- will no doubt be viewed as a godsend by many hard-hit American consumers, even if they ensure severe economic hardship in oil-producing countries like Nigeria, Russia, Iran, Kuwait, and Venezuela that depend on energy exports for a large share of their national income. Here, however, is a simple but crucial reality to keep in mind: No matter how much it costs, whether it's rising or falling, oil has a profound impact on the world we inhabit -- and this will be no less true in 2009 than in 2008.

The main reason? In good times and bad, oil will continue to supply the largest share of the world's energy supply. For all the talk of alternatives, petroleum will remain the number one source of energy for at least the next several decades. According to December 2008 projections from the U.S. Department of Energy (DoE), petroleum products will still make up 38 percent of America's total energy supply in 2015; natural gas and coal only 23 percent each. Oil's overall share is expected to decline slightly as biofuels (and other alternatives) take on a larger percentage of the total, but even in 2030 -- the furthest the DoE is currently willing to project -- it will still remain the dominant fuel.

A similar pattern holds for the planet as a whole: Although biofuels and other renewable sources of energy are expected to play a growing role in the global energy equation, don't expect oil to be anything but the world's leading source of fuel for decades to come.

Keep your eye on the politics of oil and you'll always know a lot about what's actually happening on this planet. Low prices, as at present, are bad for producers, and so will hurt a number of countries that the U.S. government considers hostile, including Venezuela, Iran, and even that natural-gas-and-oil giant Russia. All of them have, in recent years, used their soaring oil income to finance political endeavors considered inimical to U.S. interests. However, dwindling prices could also shake the very foundations of oil allies like Mexico, Nigeria, and Saudi Arabia, which could experience internal unrest as oil revenues, and so state expenditures, decline.

No less important, diminished oil prices discourage investment in complex oil ventures like deep-offshore drilling, as well as investment in the development of alternatives to oil like advanced (non-food) biofuels. Perhaps most disastrously, in a cheap oil moment, investment in non-polluting, non-climate-altering alternatives like solar, wind, and tidal energy is also likely to dwindle. In the longer term, what this means is that, once a global economic recovery begins, we can expect a fresh oil price shock as future energy options prove painfully limited.

Clearly, there is no escaping oil's influence. Yet it's hard to know just what forms this influence will take in the year. Nevertheless, here are three provisional observations on oil's fate -- and so ours -- in the year ahead.

They affect consumers the same either way, and upstream is simpler and more transparent

In his post on conservatives and carbon taxes, David said:

First, we have to remember all the places the price signal created by an upstream tax can be diluted or stymied on the way to consumers -- i.e., those who can change their behavior in response to prices. Not every industry or business will pass an increase in operating costs directly on to the next link in the chain. Information failures and split incentives abound. Price signals that begin strong, catholic, and clear become fragmented and faint downstream. For all the hype, an upstream carbon price will deliver fairly little incentive to where the carbon is used.

There are two problems with this: It is overstated, and it places blame in the wrong place, i.e., the fact that the tax is levied upstream.

Tim DeChristopher and Utah stand up to Big Oil

I've never been big on rules.

Neither, apparently, is Tim DeChristopher. He's the young activist who just completely derailed the Bush administration's plans to sell more of our public lands to the oil companies.

He sat in the lease sale in Salt Lake City on Dec. 19 and "bought" 22,500 acres of public lands right out from under the suits from Chevron and Exxon.

One small problem -- Tim doesn't actually have the money. It almost doesn't matter, though, because he's monkeywrenched the process so thoroughly that they won't be able to conduct another sale until after the Obama administration takes over -- and thus hopefully never.

Tim needs to raise $45,000 by this Friday, Jan. 9, in order to avoid fraud charges and put the sale out of reach to the Bush administration and their oily friends. He's already raised almost half.

I, for one, will be supporting Tim DeChristoper, Bidder 70, with a tax-deductible contribution via the Center for Water Advocacy in Moab, Utah.

He deserves thanks for reminding all of us that direct action still gets the goods!

Battery makers come begging to Congress

American lithium-ion battery makers, including giants like 3M, are banding together to try to extract a few billion dollars from Congress so they can build a shiny battery manufacturing plant that, for whatever reason, they aren't willing to spend their own money on. This latest handout request is a fairly dubious idea that is nevertheless likely to appeal to a lot of people on grounds of both economic nationalism and a vague aura of environmental goodness.

Whatever you think of the request, though, let's at least all agree not to put up with this:

"We don't want to go from being dependent on Middle East oil to Asian batteries."

- Jeff Depew, chief executive of Imara, a start-up that makes lithium-ion batteries

Oil is a viscous substance, finite in quantity, concentrated in hard-to-reach pockets in certain corners of the globe. These properties allow a relatively small handful of countries to exert some imperfect control over its supply. Batteries differ from oil in just about every important way.*

Depew has an obvious interest in promoting American battery manufacturers. But surely savvy outsiders understand that a competitive, low-cost industry, whether centered in Asia or anywhere else, is good for everyone who needs batteries?

Recently, Andrew Grove, former chairman of Intel Corp., began urging the chip maker to explore whether it could play a role in battery manufacturing. Mr. Grove and others say U.S. companies must step up efforts to produce advanced batteries for the country's car industry or America will end up trading its dependence on foreign petroleum for dependence on foreign-made batteries.

Oh, well. The industry consortium is organized by Jim Greenberger, a lawyer specializing in clean tech. In case you're not scared enough yet of the Asian battery menace, Greenberger spells it out:

Chevron's history of denial, delay, and defamation in the Ecuadorian Amazon

It has been 15 years since a group of Ecuadorian indigenous people filed a lawsuit against Texaco for oil contamination, resulting from 26 years of substandard oil extraction efforts. In those years, Texaco -- acquired by Chevron in 2001 -- consistently has denied responsibility, delayed justice, and defamed the Ecuadorian people who need help the most. In other words, the oil giant has acted like most people expect Big Oil companies to act -- like bullies -- instead of the good corporate citizens that Chevron's advertising campaigns like to portray.

Meanwhile, the Ecuadorians living in Texaco's former dumping ground suffer every day. Texaco released over 18 billion gallons of oil and toxic water into the rainforest from 1964 to 1990. Experts indicate that over 1,000 people have died from cancer. Spontaneous abortions are two to three times more likely to occur in the concession area than in other parts of Ecuador. It's almost impossible to find a family not touched by the illnesses.

Until you see the extent of the contamination, it is hard to believe. Almost 1,000 pits the size of large swimming pools scar an area the size of Rhode Island. Texaco built the pits to dump the remaining oil and toxic water after drilling. To reduce costs, Texaco violated standard industry practice and never lined the pits. As a result, the toxins have flowed directly into the streams and underground water supply. Texaco eventually covered the pits with dirt -- as if hiding the pollution would make it go away -- but never took any real steps to clean up the area. Some people even built their houses on top of the covered pits, thinking that the pits were safe.