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.

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

By on 9 May 2016 in Peak Oil Review with 0 Comments

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

By on 2 May 2016 in Peak Oil Review with 0 Comments

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

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

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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OilPrice.com analyst on investment & prices

By on 11 Apr 2016 in quotes with 1 Comment

“Generally, it takes 18 months before the world has a decent picture of supply and demand. This is little consolation to those trying to do real time analysis on the direction of prices. That is why I can say categorically “the fix is in”. In other words, fields are declining, meaning investment is far below levels required just to replace production. The only thing that will change the vector of these declines is more spending, lots more spending, and the only thing will spur lots more spending is higher prices. Significantly higher than $40/bbl.”

Brad Beago, Oilprice.com, in Fortune magazine

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Peak Oil Review – 11 Apr 2016

By on 11 Apr 2016 in Peak Oil Review with 0 Comments

Oil prices surged 8 percent last Friday and are now back at levels seen at the top of the last price surge in mid-March. This time strengthening the US and German economies, a falling dollar, and the OPEC price freeze meeting on April 17th was seen as the trigger behind the rally. Friday’s rally was the 12th time in the last two months that daily prices have surged by 5 percent or more showing that there is a lot of money eager to participate in big price rise that will come someday. However, this rally was mostly based on hopes that things are going to get better rather than any specific news, other than the recent increases in US gasoline consumption which are likely to short-lived as retail prices move higher.

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Consulting firm on Argentina oil

By on 4 Apr 2016 in quotes with 0 Comments

“Most of the fields in Argentina are mature, and they are declining in production. A lot of investment [$20 billion per year] is needed to sustain production. This is having an impact on production curve now [with the rig count down from 112 in 2014 to 64 in February].”

Alejandro Gagliano, a partner at Giga Consulting in Buenos Aires

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Peak Oil Review – 4 Apr 2016

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

The six-week long surge in oil prices which pushed the price of crude up by roughly 50 percent seems to be coming to an end with prices down 6 percent last week. Looming behind the price increase was the notion that the world’s major crude exporters would to get together and sign an agreement to freeze production at current levels. Supporting the price jump was an increase in US gasoline consumption as prices fell to levels not seen in decades and the never ending hope that the US economy was about to get better. Much of the surge was caused by the liquidation of the unprecedented short futures positions that hedge funds and other speculators had built up during the nearly two-year slide of oil prices. When oil fell below $30 a barrel, many speculators figured that the long price slide was over and that oil was unlikely to go much lower. The resulting liquidation of positions which pushed up prices was the largest on record.

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Platts Bentek analyst & Rystad’s head of analysis comments on the oil & gas sector

By on 28 Mar 2016 in quotes with 0 Comments

[Regarding natural gas prices:] “Going into summer, producers know it’s going to be a massacre.”

Sami Yahya, a Platts Bentek analyst.

“Global demand and supply will balance very quickly because we’re seeing an extended decline from producing fields.”

Per Magnus Nysveen, Rystad’s head of analysis, saying the world oil market will re-balance this year.

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Peak Oil Review – 28 Mar 2016

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Oil prices finished a holiday-shortened trading week on Thursday relatively unchanged. Oil had been a bit higher on Monday and Tuesday but then underwent a $2 a barrel decline on Wednesday after the weekly stocks report showed a 9.4-million-barrel increase in the US crude inventory. Prices recovered by a dollar or so on Thursday to close at $39 in New York and $40 in London, partly in response to a 15-unit drop in the US oil rig count. The 50 percent price increase since January still seems to be based mostly on unrealistic expectations that the large oil exporters will cut production enough to bring supply and demand back into balance. So far, however, crude stocks have continued to rise, and production cuts have been minimal.

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Editor of Morningstar Inc.’s DividendInvestor Newsletter on oil downturn

By on 21 Mar 2016 in quotes with 0 Comments

“It could be a lot of years before you see any meaningful rebound in the dividend [of oil companies]. It’s tough to have a really conservative, stable investment in a business that can’t control the price of its own product.”

Josh Peters, editor of Morningstar Inc.’s DividendInvestor newsletter

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Peak Oil Review – 21 Mar 2016

By on 21 Mar 2016 in Peak Oil Review with 0 Comments

The price rally that has been on-going since mid-February continued last week with US futures closing Friday at $39.44 a barrel, up 2.4 percent for the week, and London futures closing at $41.20 up 2 percent. Last week the move came from a combination of what one analyst termed a “brilliant communications strategy” and other developments that normally lead to higher prices. The “brilliant communications strategy,” of course, is the meeting in April during which those countries that either cannot or do not want to increase oil production are supposed to agree not to increase their production. During the week, Moscow even hinted that Iran might join the group after it increases its oil output to 4 million b/d, a goal that might take many months or even years to reach. The producers now are scheduled to meet on 17 April in Qatar; the meeting is being heralded as the first agreement to limit global oil production in 15 years even though it is unlikely to have any real impact on oil production.

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Moody’s analyst on shale downturn

By on 14 Mar 2016 in quotes with 0 Comments

“I’ve covered this industry since the late 70s and I would have to say I haven’t seen a situation like this, of this magnitude. We’ve concluded that this is not a normal cyclical downturn.”

Carol Cowan, a Moody’s senior analyst

“Shale was a hot growth area and companies made the mistake of borrowing too much. It’s amazing that so many people were willing to lend them money. Many are going to file for bankruptcy, and bondholders and equity are going to get wiped out en masse.”

George Schultze, founder and chief investment officer of Schultze Asset Management in New York

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Peak Oil Review – 14 Mar 2016

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Oil prices continued to move higher last week closing at $38.50 in New York and $40.39 in London, up 7.2 and 4.3 percent respectively for the week. The two-month surge which has taken oil prices up some 45 percent started with reports in January that Russia and the Saudis were trying to bring major oil producers together to agree on a production freeze. This idea is now fading as Iran adamantly refuses to freeze production and no other exporters seem willing to cede current customers to Tehran. The impetus for the price increase now is focusing on forecasts that low prices could lead to a decline of some 750,000 b/d in non-OPEC oil production this year – mostly in the US. Some of this could, of course, be offset by increased Iranian exports. Tehran had hoped to increase production and exports by 1 million b/d this year but is having difficulty finding customers and increasing production. A weaker US dollar also contributed to the oil price increase last week.

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Luisa Palacios, head of Latin America at Medley Global Advisors, a risk consultancy

By on 7 Mar 2016 in quotes with 1 Comment

About Latin America: “The 70 percent drop in prices is a major shock. Oil was contributing in some countries from 20 to 50 per cent government revenues and 50 to 96 percent of exports. No wonder we are starting to question the financial viability of some countries and some national oil companies.”

Luisa Palacios, head of Latin America at Medley Global Advisors, a risk consultancy

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Peak Oil Review – 7 Mar 2016

By on 7 Mar 2016 in Peak Oil Review with 1 Comment

Oil prices rose for the third consecutive week with New York futures closing at $35.92 a barrel and London at $38.72. Prices in London are now up 3.9 percent for the year. Behind the price rise is a continuing drop in the number of drilling rigs operating in the US and the announcement by several major shale oil producers that they plan to suspend new drilling until prices recover. Exactly where profitability is these days is in dispute with some drillers contending they can make money from shale oil if prices rise into the mid- $40s as compared to $60-70 two years ago. Some of these claims are for the benefit of the banks who have become very wary of the oil industry in recent months. The downside, of course, is that if shale oil producers start increasing production if prices get into the mid-$40s, they could easily drive them back down again with unsaleable production.

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Total president on investment crunch

By on 29 Feb 2016 in quotes with 0 Comments

“The problem is going to be the money. Where is the money going to come from? A lot of people who have burned their fingers on (U.S. shale) are going to be reluctant to reinvest.”

Arnaud Breuillac, president of exploration and production at French oil giant Total.

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Peak Oil Review – 29 Feb 2016

By on 29 Feb 2016 in Peak Oil Review with 1 Comment

Oil had a good week for a change with New York futures rising 3.2 percent to close at $32.78 and London climbing 6.3 percent to close at $35.10. This time, there was more than just wishful thinking behind the price increase as pipeline outages shut in 600,000 b/d in Kurdistan and 250,000 b/d in Nigeria to cut global exports by 850,000 b/d. In both cases, it is unclear as to just when the pipelines will reopen. In Nigeria, the outage was due to an underwater leak while the situation in Kurdistan likely is related to one of many wars taking place in the region.

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Quote of the week: Miswin Mahesh, an analyst at Barclays Plc in London

By on 22 Feb 2016 in quotes with 0 Comments

About the proposed production freeze announced last week by Russia, Saudi Arabia, Qatar and Venezuela: “The four producers involved are already producing close to their peak. The freeze is the oil-market equivalent of calling for a cease-fire when they’re running out of ammo.”

Miswin Mahesh, an analyst at Barclays Plc in London

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Peak Oil Review – 22 Feb 2016

By on 22 Feb 2016 in Peak Oil Review with 1 Comment

The oil markets climbed through Thursday last week in hopes that the Saudi-Russian “pact” to freeze oil output would lead to lower production and higher prices. After it became clear on Thursday that countries adhering to the pact were already pumping oil as fast as they could and had little to no interest in lowering production unless forced to by geology, the markets began to fall. In New York, where futures had traded close to $26 a barrel the week before last, prices peaked at nearly $32 before falling back to close Friday at $29.64. London followed a similar pattern, climbing from $30 to nearly $36 before falling away to close at $32.91. This was the third mini price spike we have had in the past year based on stories that an agreement was in the offing that might cut production.

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