Thursday, June 28, 2012

Gordon Campbell asks has Peak Oil Peaked?

New Zealand journalist Gordon Campbell has just written an interesting feature "Has The Peak Oil Idea Peaked?" in his on-line publication "Werewolf". Campbell's key point is that there are now increasing volumes of unconventional oil and gas production entering the market. And that the old oil barons and the new unconventional oil barons both want to maintain prices that a) make shale oil and tar sands profitable b) don't rise so much as to incentivise renewble energy sources and c) don't cause dropping demand as was the case in 2008.
...both the new and the old oil and gas suppliers have a common interest in the price staying out of the basement, and up in the mid-range. The conventional players within OPEC and the big players outside it can live with Brent prices in the $90-100 price range. Go any higher, and the fear both within and beyond OPEC is that this could cause a re-run of the latter half of 2008, when sky-high oil prices sparked a massive global investment in alternative, cleaner forms of energy. For the industry, the trick will be to keep prices just high enough to protect the profit margins that are required (on top of the higher costs of exploration and extraction) but without throwing renewables a life line. That’s going to be the challenge: let prices rise too high and renewables will get breathing space.
...the frackers and the deepwater oil and gas explorers...need the price to stay relatively high (maybe just south of $100 a barrel) to deliver a return on their relatively expensive activities. Trouble is, the break-even estimates do vary quite widely on this point – with anything from $60-130 a barrel being cited as the break-even point for fracking when conceived as anything more than a hit and run operation.
As the IEA says its not a good outlook for renewable energy to replace fossil fuel energy quickly enough to avert dangerous climate change. Campbell concludes:
the environmental imperatives behind the peak oil concept remain. Thanks to the resilience of the fossil fuel industry though, the political battle has suddenly become a whole lot harder.
Campbell's feature is well worth reading.

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