Features                       Energy body wants brakes on fuel consumption

By Adam Porter in Perpignan, France                http://english.aljazeera.net/NR/exeres/655B03B0-32C2-4BF7-A3E8-F7EFD8144333.htm =

Thursday 24 March 2005, 18:09 Makka Time, 15:09 GMT        Vehicular fuel accounts for a big chunk of global oil consumption

     Related:  US report acknowledges peak-oil threat     Oil prices confound experts    Oil barons set to reap winter windfall    Producers cash in on record-high oil prices

     The International Energy Agency is to propose drastic cutbacks in car use to halt continuing oil-supply problems. Those cutbacks include anything from car-pooling to outright police-enforced driving bans for citizens.    Fuel "emergency supply disruptions and price shocks" - in other words, shortages - could be met by governments. Not only can governments save fuel by implementing some of the measures suggested, but in doing so they can also shortcut market economics.   An advance briefing of the report, titled Saving Oil in a Hurry: Measures for Rapid Demand Restraint in Transport, states this succinctly.         "Why should governments intervene to cut oil demand during a supply disruption or price surge? One obvious reason is to conserve fuel that might be in short supply.    "But perhaps more importantly, a rapid demand response (especially if coordinated across IEA countries) can send a strong market signal."    The report goes on to suggest a whole series of measures that could be used to cut back on fuel consumption. They are cutting public-transport costs by a certain amount to increase its usage while simultaneously dissuading car use.

    Sweeping proposals   Then more radically the idea of going further and cutting public-transport costs by 100%, making them free to use. Car-pooling, telecommuting and even corrections to tyre pressures are also suggested.    But the most hardline emergency proposals come in the form of drastic speed restrictions and compulsory driving bans. Bans could be one day in every 10 (10%) or more stringently on cars with odd or even number plates. They would be banned from the roads on corresponding odd or even days of the month (50%).    The report says public transport should be made free to use    In forming its conclusions the IEA tacitly admits that extra police would be needed in these circumstances to stop citizens breaking the bans. Even the cost of those extra patrols are part of the IEA's study.    "Policing costs are more substantial and may consist of overtime payments for existing police or traffic officers or increases in policing staff. We assume this cost at one officer per 100 000 employed people."    As an example that means that the US workforce, currently around 138 million people, would need an extra 1380 officers to help enforce the bans. It may seem an optimistic figure. But even if this were so, the IEA is not put off.   "If our policing cost estimates are relatively low ... results clearly show that even a doubling of our estimate would make (bans) a cost-effective policy. The more stringent odd/even (day) policy is also more cost-effective than a one-day-in-ten ban, as the costs are the same ... maintaining enforcement is critical."

    Tough love Yet despite these measures, that many citizens would find quite draconian, the IEA concludes that tough love is better than none at all.    "Our main conclusion finds that those policies that are more restrictive tend to be most effective in gaining larger reductions in fuel consumption. In particular, driving restrictions give the largest estimated reductions in fuel consumption."    High oil prices are spurring talk of conservation and cutbacks in use    Here, however, they do strike a word of warning for governments and those in power.    "Restrictive policies such as this can be relatively difficult to implement and thus may come at higher political costs."    According to the IEA's little-known emergency treaty, the Agreement on an International Energy Programme (IEP), "measures to achieve demand restraint fall into three main classes - persuasion and public information, administrative and compulsory measures, and finally, allocation and rationing schemes".    This would mean that countries who signed up to the treaty, including the five biggest economies of the world - US, Japan, Germany, UK and France - would all have to institute cuts.    "In the event of an activation of IEP emergency response measures, each IEA Member country will be expected to immediately implement demand restraint measures sufficient to reduce oil consumption by 7% of normal demand levels. In a more severe disruption, this could be raised to 10%."

    Effective ban?   There are some interesting asides in the report. As Americans have the most cars, the driving bans could be got around by having one car with an odd, and one car with an even number plate. Proportionately it makes the ban less effective than in other countries.

For Opec members, high prices have meant budget surpluses    As well as this older cars may be kept in service longer if they have "useful" number plates which the IEA admits is "counter-productive from an air-pollution reduction perspective, as older vehicles would tend to pollute more".    However, curtailing the working week and home working would be more effective in the US as more people travel to work alone in their cars.    As would correct tyre pressures. In Japan speed reductions are less effective as there are less motorways on which to travel fast.     Families with only one car would also be hit harder than their richer friends as "bans may have some additional costs in terms of reduced accessibility and mobility options particularly for single-vehicle households with limited access to alternative modes".   Without doubt this report signifies that the IEA is searching for new ways to maintain supply security in a volatile oil market. Whether it can achieve its aims with this radical report is another matter.                       Aljazeera


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Features                       US report acknowledges peak-oil threat

By Adam Porter in Perpignan, France

                            http://english.aljazeera.net/NR/exeres/5EF86883-8CDB-49B5-9A07-5759205A9DBE.htm =

Wednesday 09 March 2005, 18:23 Makka Time, 15:23 GMT       Some say global oil production has passed its peak point

     Related:   Oil prices confound experts   Expert: Saudi oil may have peaked   Oil barons set to reap winter windfall   Oil market looks volatile through 2005

      It has long been denied that the US government bases any policy around the idea that global oil production may be in terminal decline.    But a new US government-sponsored report, obtained by Aljazeera.net, does exactly that.    Authored by Robert Hirsch, Roger Bezdek and Robert Wendling and titled The Peaking of World Oil production: Impacts, Mitigation, & Risk Management, the report is an assessment requested by the US Department of Energy (DoE), National Energy Technology Laboratory.    It was prepared by Hirsch, who is a senior energy programme adviser at the private scientific and military company, Science Applications International Corporation (SAIC).    They work extensively on defence and geopolitical issues for clients, including many for the US government.

    Advisory roles     Among current job openings at SAIC are positions at Fort Benning (formerly School of the Americas) and a private military contract to help retrain the Albanian air force in Tirana.   Hirsch has held a wide variety of positions in the US energy hierarchy including senior energy analyst at the Rand Corporation, through to a presidentially appointed assistant administrator for solar, geothermal and advanced energy systems.    Attacks on Iraq's oil network are doing nothing to calm the market    He has also previously worked for the US Department of Energy on numerous advisory committees, including the DoE Energy Research Advisory Board.    This new report follows on from two presentations by Hirsch last year. One on 1 March to the same National Energy Technology Laboratory and another on 14 June last year at the Annapolis Centre for Science Based Public Policy. Here Hirsch laid down his ideas on the peak of oil production.    The Annapolis Centre for Science-based Public Policy is a group which has received $658,000 in funding from Exxon Mobil since 1998. It openly disputes the idea that global warming is the result of burning fossil fuels.    But this brand new senior-level report on "peak oil" is unprecedented in US government circles. It is not just the existence of the report itself that is such a landmark in the current oil debate. Its conclusions also pull no punches.

    Uncertain timing    "World oil peaking is going to happen," the report says. Only the "timing is uncertain".

The effects of any oil peak are similarly not ignored. Specifically, the impact on the economy of the United States. "The development of the US economy and lifestyle has been fundamentally shaped by the availability of abundant, low-cost oil. Oil scarcity and several-fold oil price increases due to world oil production peaking could have dramatic impacts ... the economic loss to the United States could be measured on a trillion-dollar scale," the report says.

    A US expert panel says markets cannot solve peak-oil problems   The authors of the report also dismiss the power of the markets to solve any oil peak. They call for the intervention of governments. But also they rather worryingly point to a need to exclude public debate and environmental concerns from the process. They say this is needed to speed up decision-making.    "Intervention by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic. But the process will not be easy. Expediency may require major changes to ... lengthy environmental reviews and lengthy public involvement."    Hirsch notes, despite arguments from the major oil companies and producer nations, that new finds of oil are not replacing oil consumed each year. Despite the advances in technology, reserves are becoming increasingly difficult to replace.   

     Three scenarios     The report sees "a world moving from a long period in which reserves additions were much greater than consumption, to an era in which annual additions are falling increasingly short of annual consumption. This is but one of a number of trends that suggest the world is fast approaching the inevitable peaking of conventional world oil production".    Critics say Bush has failed to act  to reduce US dependence on oil   The report then takes three possible scenarios and outcomes. Firstly that energy replacement solutions, or "mitigation" as the report states, are started 20 years before any "peak". Secondly that solutions are only enacted 10 years before any peak and, thirdly, that solutions are only put into practice as the peak becomes apparent.    In what some may see as an optimistic assessment, the authors believe 20 years is enough time to limit damage from any peak. However, they point out that "if mitigation were to be too little, too late, world supply/demand balance will be achieved through massive demand destruction".    Demand destruction is a modern way of saying catastrophic recessions and shortages. But as well as these predictions, the report lays out "signals" it believes will be apparent in the run-up to any peak. This is perhaps the most worrying aspect of the report, as it seems to describe the very events that are taking place at the moment.

    Supply insecurity    "As world oil peaking is approached, excess production capacity ... will disappear, so that even minor supply disruptions will cause increased price volatility as traders, speculators, and other market participants react to supply/demand events," the report says.    One scenario says energy prices may become more unpredictable    "Simultaneously, oil storage inventories are likely to decrease, further eroding security of supply, aggravating price volatility, and further stimulating speculation ... oil could become the price setter in the broader energy market, in which case other energy prices could well become increasingly volatile and unpredictable."    The report highlights a series of ways to minimise any impacts. From increased fuel efficiency to technological help in stopping the practice of "oil-left-behind" or non-extractable oil and various forms of new liquid fuels, liquefied coal and gas-to-liquids.    But in its conclusion the report makes troubling reading, noting that "the world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions were gradual and evolutionary. Oil peaking will be abrupt and revolutionary."    This report is the clearest signal yet that the U.S government is taking the subject of "peak oil" seriously. Yet it remains to be seen what actions can be taken to stop this potentially "revolutionary" change.                           Aljazeera


Features                    Oil prices confound experts      By Adam Porter in Perpignan, France                            

Thursday 03 March 2005, 12:06 Makka         http://english.aljazeera.net/NR/exeres/79F8C0DD-E583-4104-AC5F-A2B27E8E0782.htm =

    Opec chief Adnan Shihab-Eldin (R): We face wall of uncertainty

    Related:   Expert: Saudi oil may have peaked   Oil market looks volatile through 2005   The beginning of the end for oil    US economic strength open to doubt   Are Saudis telling fairy tales about oil?

    Latest figures from the oil industry have confounded expert predictions of a price fall in the last two months. As prices have remained above $50 a barrel, Opec's statements in particular have come under close scrutiny.   Prices for the world's most favoured type of oil, light sweet crude, rose to more than $53 on 2 March, within touching distance of record $55 highs set last October.   Opec was so concerned over the possibility of falling prices that it was prepared to institute output cuts at its meeting in Vienna in January.     In the end, it declined to do so. But looking at current data may suggest why.    Demand still rising    The International Energy Agency (IEA) has traditionally been quite conservative on predicting future demand.     Last year it was forced to recalculate its forecasts on a repeated basis. This year it believes that demand growth will be 1.52 million barrels per day (mbpd) annualised over 2005.     "If there is one lesson we have learned from the exceptional oil market conditions of 2004, it is that the world economy has become less sensitive to oil price increases than it was two or three decades ago"

    Adnan Shihab-Eldin, Opec secretary-general                     The bank Societe Generale in Paris, as an example, is working on demand increase of around 2.5 mbpd over the same period.     So already this year to March 1st, global oil demand has risen around 245,699 bpd by the IEA figures or by 404,109 bpd, if you prefer those of Societe Generale.  At the same time the most recent IEA report notes that output around the world has been patchy at best.    "World oil supply fell by 645,000 bpd in January to 83.6 million barrels per day, mainly on declines in Opec supply," said the Paris based organisation. "Non-Opec supply from Canada, Norway and the US Gulf of Mexico remained curtailed and Russian output fell for a fourth month."

    Economy immune?      In other words Opec did not cut it's supply, but the supply simply "declined".   Yet, speaking in Singapore this week, the secretary-general of Opec Adnan Shihab-Eldin, formerly director of research, issued a much more relaxed statement.    Oil prices continue to climb,  confounding experts' forecasts   "We hope the fundamental factors, that supply is adequate and Opec will ensure it has the capacity to maintain adequate supplies, will bring prices to a level more reflective of fundamentals and we believe that is $40 to $50 for US crude."    He then went on to say that "if there is one lesson we have learned from the exceptional oil market conditions of 2004, it is that the world economy has become less sensitive to oil price increases than it was two or three decades ago".     "The strong growth of the global economy last year, in the face of rising oil prices, clearly supports this statement," he added.     Disingenuous    Yet this sentiment, that high oil prices do not harm the global economy, is "clearly" not one shared by the IEA. It is unusual to find these two major world oil bodies at odds with each other, but the IEA is definite in its outlook.     It says "statements from several Opec representatives suggesting that the global economy has become immune to any negative impact from higher crude prices look disingenuous".     "Statements from several Opec representatives suggesting that the global economy has become immune to any negative impact from higher crude prices look disingenuous"

    International Energy Agency     As well as these 'declines' in output from Opec and non-Opec sources comes the stated falls in more mature fields. The IEA noted in August last year that Saudi Arabia has been losing "600,000 to 800,000 bpd" a year.    If one takes the mean figure of 700,000 bpd this year, Saudi fields have already declined by around 113,151 bpd to 1 March.  Prices have also been exacerbated in the very short term by cold winters in the US and especially in the Mediterranean region.  Also, continued supply disruptions in Iraq, including attacks on pipelines in the north and infrastructure problems in the south, have seen Iraqi output fall below pre-war levels.   No indefinite growth    All of these shortfalls, either in increased demand or supply depletion, have to be met by new fields or by increasing current production from existing fields.     Increasing production by pumping harder can also lead to field damage.    But perhaps what is more worrying for ordinary people are the signs that Opec may itself be openly prepared to voice concerns over the short-to-medium future.     "The current exceptional rates of economic growth cannot continue indefinitely. There is increasing concern over growing imbalances"

    Opec's Shihab-Eldin    In his speech in Singapore, Shihab-Eldin continued saying "the current exceptional rates of economic growth cannot continue indefinitely. There is increasing concern over growing imbalances, especially ... the large twin deficits of the United States of America, with the potential associated risks to financial stability".    "We do believe that, if there is [economic] variance, it is more likely to be on the downside, rather than the upside. This would then have a serious impact on the revenue expectations of our member countries."     Wall of uncertainty   The reason that revenues for Opec countries would be hit is shorthand for a recession. Any recession would dampen global oil demand, lower prices and cut revenues for Opec.    There is certainly a difference of opinion between Opec and the IEA in some areas.    There are also seemingly conflicting statements from both organisations.    But perhaps one quote from Shihab-Eldin is the most pertinent for the man in the street in 2005. A quote we may hope does not bare true.   "When we look at the future," he said "we find ourselves facing a wall of uncertainty."    Aljazeera


Features                Expert: Saudi oil may have peaked  By Adam Porter in Perpignan, France

        http://english.aljazeera.net/NR/exeres/80C89E7E-1DE9-42BC-920B-91E5850FB067.htm =

    The Saudi Arabian oilfield al-Qatif east of Riyadh     Sunday 20 February 2005, 10:58 Makka Time, 7:58 GMT      

    Related:   Saudi bid to boost oil output fails   Opec to hike oil output   Saudi ups oil output to curb prices

    As oil prices remain above $45 a barrel, a major market mover has cast a worrying future prediction.    Energy investment banker Matthew Simmons, of Simmons & Co International, has been outspoken in his warnings about peak oil before. His new statement is his strongest yet, "we may have already passed peak oil".   The subject of peak oil, the point at which the world's finite supply of oil begins to decline, is a hot topic in the industry.    Arguments are commonplace over whether it will happen at all, when it will happen or whether it has already happened. Simmons, a Republican adviser to the Bush-Cheney energy plan, believes it "is the world's number one problem, far more serious than global warming".

    Saudi oil peaking?    Speaking exclusively to Aljazeera, Simmons came out with a statement that, if proven true over time, could herald by far the biggest energy crisis mankind has known.   "If Saudi Arabia have damaged their fields, accidentally or not, by overproducing them, then we may have already passed peak oil. Iran has certainly peaked, there is no way on Earth they can ever get back to their production of six million barrels per day (mbpd)."    Simmons believes Iran's oil production has also peaked    The technical term for damaging an oilfield by overproduction is rate sensitivity. In other words, if the oil is pulled out of the ground too fast, it damages the fragile geological structure of the field. This can make as much as 80% of the oil within the field unextractable. Of course, at the moment, virtually every producer is at full tilt. The most important among them is Saudi Arabia; their Gharwar field is the world's biggest.   One of the first hints that Simmons got over possible Saudi Arabian overproduction was from researching an obscure US Senate committee meeting in 1974.

    Field damage   "A whistleblower in Saudi Aramco, Saudi Arabia's oil company, was first reported in The Washington Post. He had claimed that Aramco had been overproducing the giant Gharwar field and that if they did not slow down, they would damage the reservoirs.    "The committee, which swore witnesses in under oath, produced over 1400 pages of documentation on the subject, it included some specialist advice which advised cutting Saudi production to 4mbpd to maintain production levels."   Currently, at near maximum production, Saudi Arabia is producing about 9mbpd, though recently they claimed they could potentially produce 12mbpd or even as much as 20mbpd. A claim Simmons called "pie in the sky".   "The faster you pull a reservoir, the faster you pull out all of the easy-to-produce oil," explains Simmons. "What happens is that you lose massive amounts of what the oil industry calls oil-left-behind still inside the field. These issues, as you can see, have been known about for years."

    Overproduction   "If you look at what Iran is doing, they are actually going to inject natural gas to the tune of 2bcf (billion cubic feet), through a 72in pipe into their Aghajari oilfield. It is a $2bn project. This is in order just to boost production from 200,000bpd to 300,000bpd. In the 1970s Aghajari was producing 1mbpd. It has been overproduced."   In 2004 Shell said it had lost 20% of its reserves.   Simmons also says the same thing happened with the oil company El Paso last year.    "At the same time as the Shell write-off, El Paso realised they had been producing their fields too hard. As a result they had to write off 41% of their reserves." In 2004 Shell first announced it had lost about 20% of its oil reserves.   Another clue came as Simmons discovered a ferocious debate that had been going on inside Saudi Aramco about overproduction.    "The company claimed in the early 1970s that it would be able to produce 20 to 25 mbpd, then by 1978 it was 12mbpd. Now it looks like 9.8mbpd is the maximum," he says.

    Precious resource   "Luckily for them, demand quietened down in the 1980s. People thought when they cut production that they were simply trying to drive up oil prices, but in fact they were resting their fields to limit the damage.    "But then came the first Gulf war and they were forced to crank production up again and they have been fighting the problem ever since.   "In 1981 in their own book, Aramco and its World, something they give out to new employees and such, they openly talked about how maximising production would permanently harm their fields and that maximum production could not continue. They thought demand would fall and the fields would be sustained. Unfortunately that has not been the case."   The reasons for maximising production are not always obvious, they can be technical, but also geo-political.   "There is always a balance for producers. Do you want to conserve your fields and produce slowly? Or do you want to be a statesman? Would you rather be a market leader with all that brings, or a smaller, less powerful producer?"   The idea that Saudi Arabia could force its production up to 12mbpd or higher is met with scorn by Simmons.  "This is dangerous stuff," warns Simmons. "If we say they have not peaked and then they choose to further increase production, they will only hasten their field decline, and waste huge amounts of valuable oil into the bargain. And oil, as we are only now coming to realise, is the world's most precious resource."                Aljazeera


Features                             The beginning of the end for oil

By Adam Porter in Catalunya                               http://english.aljazeera.net/NR/exeres/CCC584E1-15E2-49A1-9AAD-048EC1BFA248.htm =

    Oil supports the post-second world war American dream    Tuesday 11 January 2005, 19:32 Makka Time, 16:32 GMT  

    One of the surprises in the oil world in 2004 was the success of an underground documentary on the perilous state of world energy.

The End of Suburbia has sold more than 10,000 DVDs and has been aired on TV around the world.   Now the documentary maker behind the celluloid hit has announced the follow-up, Escape From Suburbia, exclusively to Aljazeera.   Greg Greene made The End of Suburbia with editor Barry Sliverthorn, about the way the so-called American dream will be affected by an end to cheap energy.   "The whole post-war American way of life ended up being centred on the suburb; the nice house with a nice lawn and the picket fence; a nice car in the drive.    "It stopped being about escaping tyranny or finding democracy. Instead, it became about achieving a way of life that was propped up by cheap energy."

   Death of a dream   Greene believes the world is entering the beginning of the end of the age of oil, a phase that will affect every aspect of human existance.     Energy dependent nations are in for a big shake up   "People who have bought into that American dream of an ever-growing lifestyle with ever cheaper goods and services, are going to be the most affected by the changes that are coming."   Released in the spring of 2004, The End of Suburbia has been on television in Europe and Canada and is now being prepared for dubbing into Spanish.   "We were pleasantly surprised. We beat all our sales targets for the DVDs and they are still flying out," says Greene. "And we have had a lot of TV stations around the world talking to us, except in the US."   The timing of the release of The End of Suburbia could not have been better as oil hit the headlines during the summer of 2004. Spurred on by high prices and very tight demand, oil became a topic dripping its way into the mainstream.

   Global interest   "TV executives who did not understand why we wanted to make a film about oil suddenly realised what was going on. As oil climbed in price, so did the interest around the world."

   "Every time you even see a Hollywood science fiction movie, say AI or I-Robot, the futures predicted are always energy rich"

    Greg Greene, documentary filmmaker   As a result, Greene is now set to start filming his second film, Escape From Suburbia, hitting the same topic from a different angle.    "In Escape I wanted to look at the people who really were trying to make some kind of impact over the energy question. Right now. Who were the people who had a future without cheap oil? Who were the ones who didn't want to waste any time waiting around for it to hit them?    "After all, every time you even see a Hollywood science fiction movie, say AI or I-Robot, the futures predicted are always energy rich. It takes some foresight for people to actually start planning now, for a future in which we all may be energy poor." 

     Tar sands   Greene is going to cover a variety of areas in the new documentary, including recoverable oil from so-called tar sands.    One of Greene's films has sold  more than 10,000 DVDs   "We will start by looking at a guy who is working in the booming area of the Canadian tar sands.    "The desire to extract the energy from the sands in Northern Alberta has meant that there has been a great deal of expansion in these areas.    "We are going to use this guy, who also works in Kuwait, to look at the situation around Opec and how their influence is changing."

    Cuban crucible   As well as the conventional unconventionals such as tar sands, Greene is also going further afield.

   "We are going to take a look at the Cuban situation as regards their urban agriculture programme.    Cuba may provide ideas for other countries seeking change   "When their cheap oil imports stopped coming in from the Soviet Union, they were forced to use land in urban areas to grow food.    "A lot of land was opened up to private Cuban farmers in the cities. This was in order to get around the problem of fuel becoming so much more expensive. We want to see how they managed to do it and what lessons could be taken from their experience."   Not content with this level of global travel Greene has then lined up Iceland as his next stop.   "Because it has one of the world's oldest alternative energy economies with its use of thermal energy. But also because there have been people trying to kick-start the hydrogen economy there. It is important to see what they have achieved and what their plans are for the future."

     Hydrogen skeptics  But even among those people who think oil is starting its decline there is scepticism over these alternatives. Hydrogen especially is often derided as pie-in-the-sky thinking, too energy-expensive to produce on any meaningful level.

    Greene is interested in alternatives to oil    "That is true. Even people who talk about things like peak oil are often sceptics about other forms of energy. We are not so concerned with that. We want to see the people who are actually making attempts."     Greene says his new film will not just be about technical energy questions, it will be about the people who are trying to address them.   "These are people who are anticipating massive social changes based on energy becoming much more expensive. That is what we are going to look at. Their futures, our futures, could be vastly different depending on the success or failure of their projects. Very different indeed."    Aljazeera