Saudi Arabia

Replace the “Saudi Arabia of wind/solar/etc power” trope

How many times have you heard that Place X is the “Saudi Arabia of solar power” or “Saudi Arabia of wind power” or “Saudi Arabia of geothermal”?  Kate Galbraith of The New York Times‘ Green Inc. blog has heard it one too many times, so she’s launched a contest for a new phrase to describe […]

Hilarious headline of the day

“Saudi Arabia Warns on Rapid Shift to Renewable Energy“

Moving away from oil could affect investment in oil, warns oil

"While the push for alternatives is important, we must also be mindful that efforts to rapidly promote alternatives could have a chilling effect on investment in the oil sector."

-- Saudi Arabian oil minister Ali Ibrahim Al-Naimi

Non-OPEC production has likely peaked, oil output could fall by 30 million bpd by 2015

You might think that the recent collapse in oil demand would put off the peak. But the price collapse and global credit crunch mean the reverse is true:

Non-OPEC crude oil production may have already peaked and international oil companies faced the prospect of both younger and older oil fields declining steeply, the firm said in the report released on Wednesday.

Merrill said "the cumulative decline of global oil production from today could amount to 30 million barrels per day by 2015." What does world need to do going forward?

Steep falls in oil production means the world now needed to replace an amount of oil output equivalent to Saudi Arabia's production every two years, Merrill Lynch said in a research report.

This matches what the normally conservative and staid International Energy Agency has been saying in recent months (see "Science/IEA: World oil crunch looming? Not if we can find six Saudi Arabias!" and "IEA says oil will peak in 2020").

The global economic recession has cut funding for investment in oil production around the globe. Ironically -- or tragically -- the only thing that can save the world from a return to soaring oil prices by 2010 or 2011 is if economic slowdown turns into "a multi-year event where global oil demand was pushed down structurally for the next five years."

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.

Science/IEA: World oil crunch looming?

Science magazine has a major “news focus” piece ($ub. req’d) arguing the peak is nigh: Even those who believe there’s plenty of oil left in the ground to meet rising demand are warning that the final crisis could come uncomfortably soon. Although price spikes and drops may recur for years, says [IEA] economist Fatih Birol, […]

The oil market can’t save us from climate change

Oil prices have plunged by a third since June. What happened? Damned if I know. This is an extremely murky market. Information about supply is notoriously patchy. As for demand, people are writing dissertations about the mentality of mega-fund managers who plunge into securities like oil futures one day, only to bail en masse another. […]

Offshore drilling has an ‘insignificant’ effect on oil prices

I am glad that so many in the energy debate have picked up on one of the two messages from my previous post (see "EIA to McCain: Drop offshore [drilling]").

But in listening to the radio and TV debates, I realize that some people have the impression that U.S. Energy Information Administration said offshore drilling might eventually lower oil prices. It did not. It found that allowing offshore drilling would have no significant effect on prices as far out into the future as the analysis projected.

Saudi Arabia to host summit on high gas prices

Since when do we deal with our addiction by going to summits hosted by drug suppliers? Yet here is the Washington Post:

"Saudi Arabian Oil Summit Hopes to Isolate Cause of Price Rise"

JIDDAH, Saudi Arabia, June 21 -- Leaders from oil-producing and oil-consuming nations will meet here Sunday to try to pinpoint the reasons behind the rise in oil prices, which have doubled over the past year, and to find ways to bring them down.