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.

Peak Oil Review – 13 Feb 2017

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Peak Oil Review – 13 Feb 2017

Oil prices rebounded last week as the IEA confirmed that the ten OPEC members obligated to cut oil production are making good progress and obtained 91 percent of their goal by the end of January. The agency also reported that OECD crude stocks fell by nearly 800,000 b/d in the 4th quarter of 2016 although stocks continued to grow in China and other emerging economies. If OPEC and the other production cutters can maintain this level of cuts for the next five months, the IEA says that global stockpiles should drop by about 600,000 b/d during the first half of this year. This was the kind of news that many oil speculators wanted to hear. Hedge fund bets on higher oil prices have surged in recent weeks as many markets participants say they are expecting higher oil prices later this year.

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Senior managing mirector at Evercore ISI on labor shortage of oilfield service companies

By on 6 Feb 2017 in quotes with 0 Comments

“Oilfield service companies have pressed fresh (green) blood into service amidst a vigorous ramp up in activity, and failure/HSE rates have already felt the negative impact. Not only is labor a bottleneck, it is shaping up to be the primary bottleneck in the early stages of the [North American] recovery…E&P’s will throw enough money at the North American labor problem to bring the sector back to equilibrium, sacrificing capital efficiency to hit production targets.”

James West, a senior managing director at Evercore ISI

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Peak Oil Review – 6 Feb 2017

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Peak Oil Review – 6 Feb 2017

With the advent of the Trump administration and Republican control of the Congress, the world oil situation seems likely to become more uncertain than usual. In the last two weeks, the new President has signed numerous executive orders that will have an impact on the oil industry in coming years. The President and the Republicans in Congress will soon have done everything they can to launch a new oil boom by reducing environmental and financial regulations; permitting whatever pipelines the oil industry wants to build; and opening federally-controlled property and offshore areas for drilling. Republicans have long held that America would be energy independent were it not for the restrictions unfairly placed on the industry. While these measures may eventually spur more drilling, for the time being, however, oil prices and the demand for oil will still determine investment decisions. Some are questioning whether the Keystone XL will be built in the near future given the relatively low oil prices and the shale oil boom that have become important since the pipeline was planned.

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John Kemp, Reuters energy columnist, on Trump administration’s pipeline approval policies

By on 30 Jan 2017 in quotes with 0 Comments

“The blunt reality for the Trump administration is that there is no way to make pipeline approvals conditional on the use of U.S. steel without undermining the goal of fair market access for U.S. exporters.”

John Kemp, Reuters energy columnist

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Peak Oil Review – 30 Jan 2017

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Peak Oil Review – 30 Jan 2017

Prices moved slightly higher last week as the markets continued to watch the decline in oil production by most OPEC members and a few other exporters interested in seeing oil move higher. The evidence continues to accumulate that progress is being made in achieving OPEC’s 1.8 million b/d cut. In addition to a number of OPEC luminaries who assured the world that the cuts are happening and that the markets would be balanced shortly, tanker-tracker Petro-Logistics said that its information indicates that OPEC will reduce its supply by 900,000 b/d in January. This number does not include 11 non-OPEC members that are also supposed to be cutting production 600,000 b/d. The CEO of Petro-Logistics which has been monitoring tanker movements for 30 years said this suggests “a high level of compliance thus far.”

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Paul Frankel, economist, on the nature of the petroleum industry

By on 23 Jan 2017 in quotes with 0 Comments

“The basic feature of the petroleum industry … that matters most is that it is not self-adjusting.” The industry has “an inherent tendency to extreme crises” and “hectic prosperity is followed all too swiftly by complete collapse.”

Paul Frankel, economist, “Essentials of Petroleum,” 1946 (from energy columnist John Kemp)

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Peak Oil Review – 23 Jan 2017

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Peak Oil Review – 23 Jan 2017

Three themes dominated the oil news last week. 1. Will OPEC with Russian help succeed in cutting production enough to rebalance the oil markets and move prices significantly higher? 2. Will the US oil industry rebound so vigorously as to offset the OPEC cuts? 3. And finally what will the be the impact of all the new energy policies the Trump administration is beginning to implement?

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President of American Petroleum Institute on the regulatory environment impacting the petroleum industry

By on 9 Jan 2017 in quotes with 0 Comments

“We must break from the recent past [and] re-examine the regulatory onslaught of the last few years that has proposed or imposed some 145 regulations and other executive actions on our industry, and instead work to implement smart energy regulations.”

Jack Gerard, President, American Petroleum Institute

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Peak Oil Review – 9 Jan 2017

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Peak Oil Review – 9 Jan 2017

For the last month oil prices have been stuck in a trading range in New York of between $52 and $54 a barrel. In London, oil has been trading two or three dollars higher. After a 30 percent jump in the last six weeks of 2016 in response to the OPEC production freeze, prices have stabilized as the markets wait to see the degree of compliance with the pledged production cuts. It may take several months to establish a clear trend as so many nations are involved in the cut. While a few countries, particularly the US, publish oil production and inventory statistics weekly, others do a poor job of collecting statistics. A few release incorrect production numbers they know to be untrue for a variety of political reasons.

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California Governor Jerry Brown on California’s contribution to mitigating climate change

By on 2 Jan 2017 in quotes with 0 Comments

“California can make a significant contribution to advancing the cause of dealing with climate change, irrespective of what goes on in Washington. I wouldn’t underestimate California’s resolve if everything moves in this extreme climate denial direction. Yes, we will take action.”

California Governor Jerry Brown

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Peak Oil Review – 2 Jan 2017

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Peak Oil Review – 2 Jan 2017

Most of the discussion last week focused on the year just past and what 2017 will bring. Oil prices barely moved during the holiday week closing out the year at $53.72 in New York and $56.82. During 2016, however, US futures closed up about 45 percent for the year and London about 52 percent. It was quite the year for the oil industry with prices ranging from $30 to $55 a barrel; the election of fossil-fuel-friendly Donald Trump to the US presidency; and the OPEC/Russia production cut agreement deemed responsible for the record price rebound during the year.

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Peak Oil Review – 26 Dec 2016

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Peak Oil Review – 26 Dec 2016

For the last two weeks, oil prices have hovered around $53 a barrel in New York, and a couple of dollars higher in London. Optimism that an agreement among the major oil producers will actually lead to a 1.8 million b/d production cut during 2017 is being balanced off by a stronger dollar, the revival of Libyan and Nigerian oil production, and a steady increase in the US shale-oil rig count.

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Angus Rodger, Wood Mackenzie’s research director for upstream oil and gas

By on 26 Dec 2016 in quotes with 0 Comments

“If we stay (at $55 a barrel), the world’s biggest oil companies start to make money again. If we go back down to $50 (or lower) in 2017…then those companies are in the negative territory and they go back into survival mode where they have been in the last two years.”

Angus Rodger, Wood Mackenzie’s research director for upstream oil and gas

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Energy researcher for IHS Markit on incentives for electric vehicle adoption

By on 12 Dec 2016 in quotes with 0 Comments

“Significant advances in battery technology, financial support from governments, regulations and values of Millennials will be key factors leading to increases in electric vehicle adoption.”

Jim Burkhard, energy researcher for IHS Markit

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Peak Oil Review – 12 Dec 2016

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Peak Oil Review – 12 Dec 2016

On Saturday, OPEC and non-OPEC oil exporters agreed to an additional 562,000 b/d non-OPEC production cut in addition to the 1.2 million b/d cut that OPEC agreed on last week. At the meeting, Mexico pledged to cut 100,000 b/d, Azerbaijan 35,000 b/d, Oman 40,000 b/d, and Kazakhstan 20,000 b/d after strong diplomatic pressure was applied. Some analysts expressed doubt as to whether the cuts pledged by Mexico and Azerbaijan are valid reductions as their production was on course to decline by that much anyway next year due to natural depletion. The Kazakh cut, however, was seen as important as the country was due to increase production in 2017 by 160,000 b/d as its giant new oil field came in production.

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Chief Energy Economist and Managing Director, ARC Financial Corp. on the global oil outlook

By on 5 Dec 2016 in quotes with 0 Comments

“The OPEC drama is behind us (for now) with the cartel and its friends agreeing to a peak supply. But the topic that’s talked about behind the scenes in Viennese cafes is that of ‘peak demand.’ Every pundit has an opinion about when peak demand will happen. Articles, podcasts, and snappy videos mostly debate in what year our 150-year addiction to the product will begin to wane. Some think it’s as early as 2020; the authoritative International Energy Agency conjectures 2040.”

Peter Tertzakian, Chief Energy Economist and Managing Director, ARC Financial Corp.

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Peak Oil Review – 5 Dec 2016

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Peak Oil Review – 5 Dec 2016

The agreement between OPEC and Russia came as a surprise for most. Until the Vienna meeting started, there was much pessimism that a deal would be reached and all indications had been that negotiations were deadlocked over the issue of who would cut by how much. The breakthrough seems to have come when Moscow changed its position from “freeze but no production cut” to agreeing to reduce output by 300,000 b/d from the 11.2 million b/d it reached in November. This change, plus the agreement by Baghdad to cut oil production by 210,000 b/d, was enough to convince the Saudis to cut by 486,000 b/d and the other Gulf Arab states would join in for at total Gulf Arab cut of 786,000 b/d. Libya, Nigeria, and Indonesia were left out of the agreement and Tehran was allowed to increase production by 90,000 b/d to 3.8 million – somewhat short of their 4 million b/d goal. Given the bad relations between Riyadh and Tehran, allowing the Iranians to continue increasing production was the toughest part of the deal for the Saudis to swallow.

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Head of exploration research at Wood Mackenzie on conventional oil exploration

By on 28 Nov 2016 in quotes with 0 Comments

“People do tend to look at the total volumes [of conventional oil] being added in recent years and conclude that we are running out of subsurface potential, I find that unlikely. It’s our view that conventional exploration is a perfectly viable growth and renewal option, particularly for those that are good at it. In reality, a lot of exploration’s recent decline is nothing more than the fact that it’s drilling fewer wells in the downturn.”

Andrew Latham, head of exploration research at Wood Mackenzie

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Peak Oil Review – 28 Nov 2016

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Peak Oil Review – 28 Nov 2016

Oil prices were steady in the first part of the week as the markets waited for news about the OPEC meeting this week. When it was announced on Friday that the Saudis would not attend a preliminary meeting with the Russians and other non-OPEC members, prices dropped about $2 a barrel to close circa $46 in New York and $47 in London. Although analysts and market traders remain skeptical that any significant agreement will be reached, the week began with a spate of reports from “insiders” that “progress” was being made.

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An Arctic specialist at Rutgers University commenting on temperature behavior in the Arctic Region

By on 21 Nov 2016 in quotes with 0 Comments

“It’s about 20C [36 degrees Fahrenheit] warmer than normal over most of the Arctic Ocean, along with cold anomalies of about the same magnitude over north-central Asia…. The extreme behavior of the Arctic in 2016 seems to be in no hurry to quit.”

Jennifer Francis, an Arctic specialist at Rutgers University

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Peak Oil Review – 21 Nov 2016

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Peak Oil Review – 21 Nov 2016

Oil prices climbed on Monday but then held steady for the rest of the week as talk of an OPEC agreement balanced against a stronger dollar and increasing global oil surpluses. At week’s end, New York futures settled at $45.69, about $2 above the recent lows touched the week before last, but $7 below the tops of the speculative bubbles set in June and early October.

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Trump’s potential impact on the global oil markets

By on 14 Nov 2016 in quotes with 0 Comments

“I don’t think President Trump will have a big impact on oil demand or output. He’s made statements, but we haven’t seen any thought-out policies. We will have to wait for him to get a team in place and come up with policies.”

Mike Wittner, head of oil-market research at Societe Generale SA in New York

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Peak Oil Review – 14 Nov 2016

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Peak Oil Review – 14 Nov 2016

Last week oil prices suffered their fourth losing week in a row as OPEC continued to argue over a possible production freeze/cut and oil production continued to grow adding to the surplus. At week’s end, futures prices were down to $43.41 in New York and $44.75 in London. The surprising US election results roiled for a few hours on after the results became known, but prices settled on Wednesday with a small gain and were down on Thursday and Friday on new reports of oil production increases and stockpile builds.

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Chief Financial Officer for Royal Dutch Shell & Executive Director of the International Energy Agency on oil markets

By on 7 Nov 2016 in quotes with 0 Comments

“We’ve long been of the opinion that demand will peak before supply. And that peak may be somewhere between 5 and 15 years hence, and it will be driven by efficiency and substitution, more than offsetting the new demand for transport.”

Simon Henry, Chief Financial Officer for Royal Dutch Shell

“The oil demand growth is not coming from cars; it’s from trucks, aviation and the petrochemical industry and we don’t have major alternatives to oil products there. I don’t buy the argument that electric cars alone will cause a peak in oil demand at least in short and medium term.”

Fatih Birol, Executive Director of the International Energy Agency

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Peak Oil Review – 7 Nov 2016

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Peak Oil Review – 7 Nov 2016

Oil prices continued to slide last week with New York futures down by nearly $8 a barrel from the recent highs set in mid-October. The week closed out with NY at $44.07 and London at $45.58. The hype over an OPEC production freeze which has been driving prices up since last spring is no longer moving prices higher. OPEC and Russia have to come up with a significant production cut in the next three weeks or be faced with lower prices until supply and demand come back into balance from economic forces. The final OPEC meeting to approve a cut is only three weeks away (November 30th) and so far no progress has been made at preliminary meetings that were intended to work out details.

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