Helping America Navigate a New Energy Reality

Tom Whipple

About Tom

Tom Whipple is the editor of ASPO-USA’s two flagship publications, Peak Oil News and Peak Oil Review. Tom is a former senior analyst for the Central Intelligence Agency (CIA). Since retiring from the CIA, Tom has become a well-known researcher and writer on energy and oil issues. Tom writes a weekly column on peak oil for the Falls Church News, a daily newspaper based in northern Virginia. Tom holds degrees from Rice University and the London School of Economics.

The ensuing labor shortage in the oil industry

By on 18 Jul 2016 in quotes with 0 Comments

“When oil prices crashed in the 1980s, the same thing that is happening today occurred in the industry then: companies went out of business and workers were laid off. And because there were few job openings, very few young people between the mid-1980s and 2000 went into oil and gas. As a result, much of the workforce that stuck around is now aging and moving closer to retirement, setting up the industry for a labor crunch, or the ‘Great Crew Change,’ as some dub it. There are too few experienced professionals to replace retiring workers.”

Nick Cunningham, Oilprice.com

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Peak Oil Review – 18 Jul 2016

By on 18 Jul 2016 in Peak Oil Review with 0 Comments

Concerns are rising that the predictions of the oil markets coming back into balance later this year are wrong and that lower oil prices are ahead. Oil production is not falling as fast as predicted. Some outages are coming to a close and the growing glut of oil products could be as bad as last year’s crude glut. Many analysts now are talking about prices falling below $40 in the next few months and a few are even talking about a return to the $30 level. Although US crude stocks have been falling of late, the growth in the inventories of refined products continues to grow. Europe is running out of storage space for refined products which would force a cut in refining and result in lower demand for crude. Increased refining to support the summer driving season in the US has only another few weeks to run before the increased demand for gasoline comes to an end. The US oil rig count was up for the 6th time in 7 weeks and North Dakota reported that its oil production increased slightly in May.

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India’s growing demand for fuel and its impact on excess capacity

By on 11 Jul 2016 in quotes with 0 Comments

“[India’s] fuel demand is rising, and India’s excess capacity is very small. We all need to expand if demand sustains.”

Sanjiv Singh, director of refineries at India’s biggest processor

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Peak Oil Review – 11 Jul 2016

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Futures fell about $4 a barrel during the holiday-shortened US trading week closing at $45.41 in New York and $46.44 in London. Prices edged down early in the week, recovered a bit on Wednesday, and the plunged after the EIA reported that the US crude inventory had dropped by only 2.2 million barrels as opposed to the 6.7-million-barrel drop that the API came up with after their weekly survey. The weekly decline for Brent was the largest since January.

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The connection between electricity generation and water

By on 4 Jul 2016 in quotes with 0 Comments

“Electricity generation is a significant consumer of water: it consumes more than five times as much water globally as domestic uses (drinking, preparing food, bathing, washing clothes and dishes, flushing toilets and the rest) and more than five times as much water globally as industrial production…If policymakers fail to take into account the links between energy and water, we may come to a point in many parts of the world where it is water availability that is the main determinant of the energy sources available for use.”

Gary Bilotta, University of Brighton

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Peak Oil Review – 4 Jul 2016

By on 4 Jul 2016 in Peak Oil Review with 0 Comments

The oil markets remained volatile last week, trading around $48-50 a barrel, amidst much uncertainty about the future of crude prices. In the wake of the Brexit vote, analysts are all over the board as to where prices will be by the end of the year. Some are talking about $85 a barrel while others are looking for a retreat to less than $30 again. Nearly all agree that the markets will “rebalance” with supply and demand coming together as demand increases and the supply continues to drop as the impact of the much lower investment levels during the last two years reduces supply. For the next six months, however, there is uncertainty especially concerning the spate of unplanned outages that have taken place in the past few months. Oil worker strikes such as in France and Norway likely will be settled quickly, and Alberta tar sands production will soon be back to normal by the end of the summer. The outages in Libya, Nigeria, and Venezuela, however, are more uncertain and seem to be getting worse rather than better in the immediate future.

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Consulting geologist’s outlook on the future of oil markets

By on 27 Jun 2016 in quotes with 0 Comments

“The disturbing truth is that the real cost of oil production has doubled since the 1990s. That is very bad news for the global economy. Those who believe that technology is always the answer need to think about that…Tight oil may have bought us a few years of abundance but the resulting over-supply, debt and prolonged period of prices below the cost of production have exacted a terrible cost. Under-investment, a damaged service sector, weak oil company balance sheets and a decimated work force practically ensure cripplingly higher prices a few years in the future.”

Art Berman, consulting geologist

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Peak Oil Review – 27 Jun 2016

By on 27 Jun 2016 in Peak Oil Review with 0 Comments

The vote in Britain to pull out of the EU came as a surprise as most observers were expecting the referendum would fail. Oil prices fell immediately and after some gyrations settled down about $2.50 a barrel at $47.64 in New York and $47.54 in London.

The ramifications of the British vote for the oil markets will take years to work out, and many believe it will lead to a series of international realignments with other countries pulling out of the EU and possibly even the secession of Scotland and Northern Ireland from the UK. Conventional wisdom currently holds that Britain’s withdrawal from the EU will lead to lower economic growth in the EU, UK, and possibly other countries.

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The BOE Report on the current state of the global oil & gas industry

By on 20 Jun 2016 in quotes with 0 Comments

“The embattled crude oil and natural gas industry worldwide has slashed capital spending to a point below the minimum required levels to replace reserves — replacement of proved reserves in the past constituted about 80 percent of the industry’s spending; however, the industry has slashed its capital spending by a total of about 50 percent in 2015 and 2016. According to Deloitte’s new study, “Short of Capital? Risk of underinvestment in Oil and Gas is amplified by competing cash priorities,” this underinvestment will quickly deplete the future availability of reserves and production.”

The BOE Report

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Peak Oil Review – 20 Jun 2016

By on 20 Jun 2016 in Peak Oil Review with 0 Comments

Oil prices dropped for six straight trading sessions before rebounding on Friday to close at $47.98 in New York and $49.17 in London but both markets were down for the week. Trading was dominated by polls showing that Britain may vote to leave the EU this week sparking financial turmoil and slower economic growth. These fears resulted in a stronger US dollar which in turn drove oil prices lower. Running counter to these pressures were an IEA forecast that the global supply/demand would be back in balance by the end of the year; production outages in Libya, Canada, and Nigeria; and concerns that the deteriorating situation in Venezuela could soon limit oil production and exports.

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CEO of Stephenson & Co. on the future of Canadian Oil Sands

By on 13 Jun 2016 in quotes with 0 Comments

On the Canadian oil sands: “It is not a growth sector, and one of the issues particularly for the oil sands is, if you’re sitting in London or New York or Hong Kong or Tokyo and you’re running institutional money, are you really going to think about being a shareholder in something that’s going to cost billions, take 10 to 15 to 20 years to realize a return and be in the high-cost production when price is under pressure and global growth is slow? I don’t think so…. In general, we’re the [world’s] high-cost producer…. And in a US$50 [oil market] … we’re just not competitive.”

John Stephenson, CEO of Stephenson & Co.

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Peak Oil Review – 13 Jun 2016

By on 13 Jun 2016 in Peak Oil Review with 0 Comments

Oil prices remained firm last week amidst continuing reports concerning actual or impending supply disruptions. US futures dipped below $50 a barrel on Friday, to close at $49.83, but analysts are expecting further gains as the impact of more disruptions are felt. Higher oil prices have encouraged a small revival of drilling activity with the US rig count up slightly for the second week in a row.

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Fate of expanding Canada’s oil and gas production

By on 6 Jun 2016 in quotes with 0 Comments

“The widely recited rhetoric that Canada must continue its de facto energy strategy of liquidating its remaining non-renewable resources as fast as possible to maintain the economy has no credibility.”

David Hughes, researcher and geologist, in a recent report “Can Canada Expand Oil and Gas Production, Build Pipelines and Keep Its Climate Change Commitments?”

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Peak Oil Review – 6 Jun 2016

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Oil prices hovered just below the $50 level last week with Brent closing just above $50 on Thursday before settling at $49.46 on Friday. As has been the case lately, there were numerous factors pressuring oil prices one way or another. The week opened with much enthusiasm that OPEC would agree to a production freeze, but this went away when the OPEC meeting failed to take any action. The major factor pushing prices higher last week was the unplanned production outages in Alberta, Nigeria, and Venezuela. Although the fires are now well past the Alberta tar sands, it will be several weeks before the 1 million b/d of production that had to be shut down during the firestorms can return fully to production. In the meantime, the Alberta outage and the one in Nigeria have likely removed much or all of the production surplus that has overhung the markets and for now, there may be a rough balance of supply and demand.

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Director of IHS Energy on the outlook of upstream oil discovery

By on 30 May 2016 in quotes with 0 Comments

“The fall in discovered volumes for conventional oil outside North America [to just 2.8 billion barrels, the lowest level since 1952] has been steady and dramatic during the last few years. We’ve seen four consecutive years of declining oil volumes, which has never happened before. The bottom has completely fallen out for conventional exploration, and the result portends a supply gap in the future that is going to be challenging to overcome. In the current cost-cutting environment, the outlook for 2016 discovery volumes is not likely to be better, either.”

Leta Smith, director, IHS Energy, upstream industry future service

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Peak Oil Review – 30 May 2016

By on 30 May 2016 in Peak Oil Review with 0 Comments

Oil briefly traded above $50 a barrel last week but quickly fell back to close at $49.33 in NY and $49.32 in London on profit taking and uncertainties about the status of the global oil glut. For the past two months, oil prices have been driven higher by a series of unplanned production outages in Kuwait, Libya, Canada, Nigeria, and concerns about the political stability of Venezuela. Currently, about 3.5 million b/d of normal production is offline. While some of these outages, such as the 1 million b/d fire-caused drop in tar sands production, will be short-lived, other situations such as in Nigeria, Libya, and Nigeria could last indefinitely.

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European oil trader on idle oil tankers in Singapore

By on 23 May 2016 in quotes with 0 Comments

“I’ve been coming to Singapore once a year for the last 15 years, and flying in I have never seen the waters so full of idle tankers,’ said a senior European oil trader a day after arriving in the city-state.”

Keith Wallis and Roslan Khasawneh, for Reuters

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Peak Oil Review – 23 May 2016

By on 23 May 2016 in Peak Oil Review with 0 Comments

Last week began on a bullish tone with oil prices climbing to a seven-month high, Goldman Sachs talking about the end of the oil glut, and columnists predicting a new spike in prices. All this optimism was based on solid Chinese oil imports, strong US gasoline demand, and production outages in Alberta, Nigeria, Libya and Venezuela. As the week moved on, however, the market became less optimistic as US, European, and Asian crude stocks continued to rise, and prices failed to break through the $50 a barrel barrier.

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Head of Russia’s biggest oil firm Rosneft on OPEC

By on 16 May 2016 in quotes with 0 Comments

“At the moment, a number of objective factors exclude the possibility for any cartels to dictate their will to the market. … As for OPEC, it has practically stopped existing as a united organization.”

Igor Sechin, head of Russia’s biggest oil firm Rosneft

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Peak Oil Review – 16 May 2016

By on 16 May 2016 in Peak Oil Review with 0 Comments

Oil prices continued to climb last week with New York futures closing up 3.5 percent, the tenth weekly increase in the past 13 and closing Friday at $46.21. Similarly, London prices were up 5.4 percent to close at $47.83. Forces that move the oil markets keep coming in and out of existence. Hopes that the major exporters would agree to freeze production have now faded, to be replaced by unexpected production outages in several countries as the principal force driving prices higher.

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New Zealand’s Energy and Transport Minister on electric vehicles

By on 9 May 2016 in quotes with 0 Comments

“It’s clear that electric vehicles are the future. A move from petrol and diesel to low-emission transport is a natural evolution, and it is our aim to encourage that switch sooner, rather than later.”

Simon Bridges, New Zealand’s Energy and Transport Minister

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Peak Oil Review – 9 May 2016

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Last week saw volatile oil prices and unexpected developments that could have major consequences for the oil industry. The week started on a bearish tone with prices pulling back from weeks of steady increases. As the week wore on several unanticipated oil production outages occurred sending prices higher. At week’s end, however, both US and Brent crude were lower, the first weekly loss after four straight weeks of gains with New York futures at $44.66 a barrel and London at $43.37.

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President and chief economist at Prestige Economics on oil prices

By on 2 May 2016 in quotes with 0 Comments

“Oil prices simply aren’t going to rise fast enough to keep oil and energy companies from defaulting. Then there is a real contagion risk to financial companies and from there to the rest of the economy.”

Jason Schenker, president and chief economist at Prestige Economics

“Put bluntly, the standard claim that the world has proved conventional oil reserves of nearly 1.7 trillion barrels is overstated by about 875 billion barrels. Thus, despite the fall in crude oil prices from a new peak in June 2014, after that of July 2008, the ‘peak oil’ issue remains with us.”

Professor Michael Jefferson of the ESCP Europe Business School, a former chief economist at oil major Royal Dutch/Shell Group, former Deputy Secretary-General of the World Energy Council

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Peak Oil Review – 2 May 2016

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Analysts are starting to wonder as whether 2016 could turn out to be similar to 2015 when oil prices rose sharply in the first five months of the year on hopes that the oil surplus would soon be over, and then collapsed in May when it became apparent that there was going to be more oil around than necessary. Last week the price surge which began in February continued throughThursday and then slowed on Friday leaving London futures at $48.13 at the close and New York at $45.92. The impetus for the surge is that that hedge funds and other speculators are convinced that the two-year price slump is over and that higher prices are ahead. This forecast is supported by the steady decline in the US rig count, which continued last week; a continuing drop in US crude production which the EIA projects will continue into next year; a weaker dollar due to the Federal Reserve’s failure to increase interest rates; increased consumption of gasoline in the US due to low prices; market technical analysis showing prices breaking various “ceilings;” and news of a string of production outages across the globe due to insurgencies and unsettled economic conditions.

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Peak Oil Review – 18 Apr 2016

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Oil prices climbed to recent highs early last week on hopes that the Doha meeting would eventually lead to some sort of production cut, a weaker dollar, and scattered production problems. Later in the week prices fell as the US crude glut continued to grow and expectations that something meaningful would come from the Doha meeting subsided. At week’s end, New York oil was at $40.36 and London at $43.10 up 2.8 percent for the week.

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