[Graeme]

World running out of oil, says ex-CEO

Consumers shouldn't get too comfortable with cheap gasoline, because the planet is running out of oil and prices will go "sky high" --as high as $20 per litre--as petroleum reserves dwindle in the coming years.

That's the view of Jim Buckee, the British oilman who was CEO of Calgary-based Talisman Energy Inc., one of Canada's largest energy producers, from 1993 to 2007.

He calls the current recession a mere "hiccup"on the road to much higher energy prices.

Once it's over, in 18 months or so, he says the pressure on oil supply and demand will "snap back higher, and stronger than before."

Buckee says it's difficult for executives of the world's biggest oil companies to speak plainly and honestly about the future. For one thing, he says companies such as BP PLC and Exxon- Mobil Corp. are guided by the views of in-house economists, who preach"commodity prices always go down and that ingenuity always beats scarcity--none of which is true."

Discussing peak oil is also just bad for business.

calgaryherald

[cipi604]

smart man

[timmac]

So this is maybe the calm just before the storm or the eye of the storm.
What really shocks me is how high oil got in 2008 and how low it is today??

[TreebeardsUncle]

So what if it is?

There is plenty of electricity and bio-fuels to take its place so there is nothing to worry about.

Peak oil and depletion will be no big deal.

g

[JustaGirl]

So what if it is?

There is plenty of electricity and bio-fuels to take its place so there is nothing to worry about.

Peak oil and depletion will be no big deal.

g

Do you always say stupid things like this? Or is it a joke?

Nice ad hominem!

[Jotapay]

I agree, Treebeard's assessment was dumb as a bag of hammers. The EROEI doesn't work.

[Newfie]

Somewhere recently I read a 10 or 15 year old US Government report about commodities. They said that, as a rule of thumb, to achieve a 10% in a commodity you needed [s]a 50% price rise[/s] to double the price. It takes that much additional incentive to drive the capital to upgrade the plants, research, etc.

Then postulate that this could work downward as well as upward.

So, assume for a minute that $70 is the "natural" price for oil. If the demand goes up 10% then that could easily explain oil going from $70 to $140. Then if demand falls by 10% from its natural level you could easily go to $35.

So this "rule of thumb" and its consequent $35 to $140 price swing would seem to be quite within the "normal" boundaries of price fluctuation based on a 10% variance in demand.

The 10% increase came because China was expanding like mad. The 10% decrease because the US and Western World economy has been effected by events.

Now think, if the resource becomes more scares (due to depletion) then every 10% decrease in production will create a doubling in price.

It looks like we can sustain a 10% fuel usage cut without too much trouble. That takes us to $35.

But the supply will shrink, lets say 3% per year. Then in about 3-years we will be back to $70. Then in 6 - $140, then in 9 - $280 not counting on inflation or renewed conservation attempts.

Just some off the cuff thoughts.

Edited to fix 50% rise vs. doubling.

[ZombieMalthus]

Somewhere recently I read a 10 or 15 year old US Government report about commodities. They said that, as a rule of thumb, to achieve a 10% in a commodity you needed a 50% price rise. It takes that much additional incentive to drive the capital to upgrade the plants, research, etc.

Then postulate that this could work downward as well as upward.

So, assume for a minute that $70 is the "natural" price for oil. If the demand goes up 10% then that could easily explain oil going from $70 to $140. Then if demand falls by 10% from its natural level you could easily go to $35.

1.5 * $70 = $105 not $140

[Newfie]

Somewhere recently I read a 10 or 15 year old US Government report about commodities. They said that, as a rule of thumb, to achieve a 10% in a commodity you needed a 50% price rise. It takes that much additional incentive to drive the capital to upgrade the plants, research, etc.

Then postulate that this could work downward as well as upward.

So, assume for a minute that $70 is the "natural" price for oil. If the demand goes up 10% then that could easily explain oil going from $70 to $140. Then if demand falls by 10% from its natural level you could easily go to $35.

1.5 * $70 = $105 not $140

Smart A##

Signed - Dumb A##

I went back and edited the post to make the correct reference which was to DOUBLE the price, no increase by 50%.

Thanks for noting the error (he said with a faint blush.)

[rockdoc123]

smart man

Indeed...Ph.D. from Oxford in particle physics. Built an oil company from scratch to a market cap of around $23 billion at it's peak.

I might also point out he is one of the most vocal advocates against what he refers to as the bogus science of AGW!

[Graeme]

Interesting comment, Rocdoc. Most members here would agree with Buckee's assessment of PO and they would likely think that this is old hat. It was curious to me that an ex-oilman should publish such an assessment.

But now you say that he is also a vocal advocate against AGW. You very well know my view on this and of course I think I am correct. Logically then, I would have to cast doubt on his assessment of PO particularly since his background is in particle physics and not petroleum geology or engineering. Why did he pursue a career in business rather than physics? Is he really that smart?

[rockdoc123]

But now you say that he is also a vocal advocate against AGW. You very well know my view on this and of course I think I am correct. Logically then, I would have to cast doubt on his assessment of PO particularly since his background is in particle physics and not petroleum geology or engineering. Why did he pursue a career in business rather than physics? Is he really that smart?

he's an acquaintance of mine and likely the smartest man I have ever had the opportunity to argue with at elevated voice over my lifetime. While at BP he was one of the top management and in -succession line to John Brown. He learned his petroleum engineering on the job at BP (they do a lot of training of this kind)

[Graeme]

Sorry, I meant no offence. Of course he is smart because he has a PhD in Physics from Oxford. And I agree with his assessment of PO. However, I also understand that he would be against AGW like you because cutting back on burning fossil fuels is not in his business interest.

[rockdoc123]

I also understand that he would be against AGW like you because cutting back on burning fossil fuels is not in his business interest.

as I've said on numerous occasions I am so close to retirement the impact of any sort of carbon tax has no impact on me whatsoever. That being said as I scientist I still disagree with the AGW camp.

Jim is retired, has been for about a year now is massively wealthy and would not have to worry about any sort of carbon tax. After he retired he donated $100K of his own money to the University of Saskatchewan for climate research, it wasn't for "please go and disprove such and such" but rather please go and do some proper science. He has spent much of the last year flying around and lecturing on both peak oil and climate change subjects he is passionate about.
As an aside the main reason his company did so well was he predicted high oil prices due to peak oil back in 1998 when we were in the $10/bbl doldrums. He subsequently went out and bought up every oil company he could get his hands on.

He walks the talk both in his views on peak oil and his views on climate change.

BTW he doesn't say the theory is dumb, what he says is the science and arguments are incorrect. I've yet to meet someone who can argue chemistry, astrophysics, fluid flow or financial derivatives with him and come out with a smile on their face.

[Graeme]

It took me a while to find an article by Dr Buckee criticising global warming theory. I found one and posted it in the environment forum. Those interested can read the entire article here.

[strider3700]

What I found most amazing about this story is my local newspaper carried it on the front page right beside the story about a house fire that killed 5. Our paper is normally useless for anything outside of local news. Maybe the $15-$20/liter thing made it too tasty to not publish.