Tuesday, June 22, 2010

The Peak Oil Crisis: A Speech to the Nation

WEDNESDAY, JUNE 16 2010 : This was not the speech we were waiting for. The one in which the President goes on national television and says "My fellow citizens - Our nation and indeed the  whole industrialized world is about to face one of the greatest challenges to befall mankind for many centuries - the rapid depletion of our supplies of oil and other fossil fuels has begun... very soon you will no longer be able to afford to drive your cars."

Of course, the President can't say that. The reaction would be totally unpredictable. Equity markets could collapse, there could be a run on gas stations, banks, food stores, or who knows what else. There would be calls for impeachment. It is far safer to break the bad news to us gradually and let people figure out what is about to happen themselves.

The President's speech on Tuesday night had two objectives - quell the firestorm of criticism over what the federal government should or should not be doing to stop and mitigate the effects of the great Gulf oil spill and, the long term issues, of U.S. energy policy. More >>>

Tuesday, June 15, 2010

Gulf spill may lead to higher oil prices

The BP oil spill in the Gulf is all over the news these days. It is tough to not turn on the television and flick through stations that depict the ecological devastation and destruction. 
Sadly it is likely to take years for this unmitigated disaster to be cleaned up. The long term social, ecological and economic effects will be horrendous.

Behind the surface of this fiasco lurk other issues and opportunities.

The US moratorium on offshore drilling may set the stage for a much higher oil prices in a few years time. The Gulf of Mexico (GOM) makes up approximately 25 percent of the world's deep/ultra deep offshore oil. In fact, more new oil was produced last year from fields in the US GOM than any other region in the world.

By placing a moratorium on deepwater drilling the naturally steep decline rates of deepwater oil wells will result in much lower production by 2011. Morgan Stanley estimates that if GOM drilling is permanently banned, production from the GOM would be virtually zero in a four- to five-year period. More >>>