Oil economy

[anton pulisov]

Oil economy

There will still be discoveries of new oil, like in Brazil. The question is if more is being discovered every year than is being used every year. The evidence so far this century points to less being discovered than is being used annually. As long as that is the case, the price of oil will continue to rise.

[jefe]

Oil economy

the Big 3 are still shooting themselves in the foot by only offering hybrids on their high-margin gas-guzzlers to prop up their declining sales.

When the first hybrid hit America,the Honda Insight, I was killing time at work one day and read a huge Washington Post article on the coming hybrid wave. In it they had a quote from Detroit very close to: "We have no plans to make hybrid cars because we don't think there will be a demand for them. All we're going to work on is hybrid SUVs." I couldn't believe anyone could be that clueless.

[WOM]

Oil economy

The cluelessness can be staggering at times. Look at how few NA producers have even gone near diesels for small cars (or cars at all). They always concentrate on them for big trucks, strictly for horsepower.

[Anton Gramscescu]

Oil economy

There was a big find off the coast of Brazil announced this week - as big as deposits in Saudi Arabia and Kuwait, apparently.

Yes. Of course, in Saudi and Kuwait, you can basically stick a tent pole in the ground and have sweet crude pop out - not only is it easy to get at, it barely needs much refining. The stuff off the coast of Brazil is much more expensive to get at (being underwater and all).

As for oil being a boon to the Brazilians - not likely. It will look good for a year or two, as it currently does here in the NPS. The currency will appreciate rapidly, thus premitting cheaper imports and a happy combination of economic growth and low inflation. Shortly thereafter, it will dawn on them that all their other exports - which in Brazil's case includes a very good aerospace industry - are going to be screwed by the currency appreciation and there will be massive unemployment in these sectors as a result.

[linus]

Oil economy

At $100+ per barrell, any giant oil deposit, even underwater, is going to be highly lucrative to tap. High fixed costs will be quickly recouped. You're talking about oil inventory estimates as high as three trillion dollars there...

The tar sands in Alberta are just about the most expensive oil to get at out there, at least in terms of the variable costs, and that's still a most lucrative gig.

[Anton Gramscescu]

Oil economy

That's true, Linus. What I should have underlined was the difficulty of getting at new oil, not its expense.

Yes, but it took us 20 years to get at the tar sands profitably. The sheer amount of construction involved in creating offshore platforms capacble of getting at even a fraction of Brazil's offshore oil means it will take deacdes to begin getting at it in a serious way. Someone will make money on this eventually, but not for awhile.

And let's be fair, the tar sands receive heavy subsidies by not being asked to clear up the enormous environmental degradation they cause.

[ursus arctos]

Oil economy

An interesting article from Der Spiegel (in English) about the travails of Sao Tome e Principe, which was being hailed as the new Brunei only a decade ago.

[linus]

Oil economy

Good read, thanks UA.

Looking at the recent rates of the brazilian Real, there hasn't been much of a bump in the currency with the announcement of the discovery, which seems to indicate that the market (and oil analysts) don't believe that the deposits are likely to be that huge.

AG, it didn't take 20 years to develop the tar sands, there wasn't much of an incentive to start explointing them while oil was below the variable costs of production, which was the situation only three years ago.

Most of the delay in getting to the brazilian off-shore oil will be about finding out where that oil is exactly, the exploration phase. Once they know where the deposits are, they can get to it in a couple of years.

[anton pulisov]

Oil economy

The tar sands cost a lot of money to mine, because it costs a lot of energy. The question is whether it's an energy efficient enough process to be worthwhile.

edit: awful dutch sentence structure

[loose cannon]

Oil economy

Richard Douthwaite has raised that issue from time to time, basically raising the issue that whether tar sands are rational on an energy basis. Basically due to the distorting effects of subsidies and cutting out externalities (ie pollution) is it worth putting lots of energy into converting tar sands to oil?

While energy is(was) cheap we should be investing in renewables instead of finite resources.

[linus]

Oil economy

It's not an either or, we have to expand renewables aggressively, but this alone will not even be enough to address the future global increasein energy consumption, let alone the upcoming decline in global oil production.

As opposed to ethanol in North America, the oil sands are definitely rational in terms of net energy gains. From what I've read the energy consumed in the production prcess is about a fifth of the final output. The environmental costs however don't seem to be factored in. They should be, but given where the oil prices are today, those costs can be absorbed by the producers.