ABC Catalyst’s “The Oil Crunch” and commentary resulting from it

Posted on April 30, 2011

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The ABC Catalyst program is very popular in Australia and is also influential. The Sydney Morning Herald is the largest broadsheet newspaper in Australia and they followed up with a story Peak oil: it’s closer than you think. This is the opening statement: “Peak oil is forcing its way to the top of the agenda with stark warnings from the International Energy Agency and others repeated on ABC radio and television this week, after an investigation by the Catalyst program.”

One more segment from the article: “Whereas five years ago the agency expected total production – including oil from deep-sea drilling and unconventional sources such as tar sands – could rise to 120 million barrels a day by 2030, the agency now expects production will reach only 96 million barrels. And Birol reckons there are no guarantees it can be brought out of the ground in a timely fashion. ”Existing fields are declining so sharply that in order to stay where we are in terms of production levels, in the next 25 years we have to find and develop four new Saudi Arabias. That is a huge challenge.” Worse, Catalyst also quoted the Swedish peak oil expert Kjell Aleklett – interviewed in this column last November – who said the agency’s assumptions about future oil flow rates were impossibly optimistic and that total world production passed its peak a year ago.”

At this point I should tell you that when the IEA currently states that the oil production in 2010 was 87.3 million barrels per day they are now also including 1,800,000 barrels of ethanol production. If we exclude this ethanol we find that oil production in 2010 was down to 85.5 million barrels per day. Another thing the IEA includes is “processing gains”, and these include, for example, chemical components added to different products produced in a refinery. Processing gains amount to 2.3 million barrels per day, and are, in part, a case of double counting as these products are generated from natural gas and oil. In other words, world oil production in 2010 was actually around 83.2 million barrels per day. Inclusion of ethanol and processing gains are examples of how the IEA disguises that Peak Oil has arrived.

Another comment on the Catalyst program can be found at the web forum Climate Spectator – a Business Spectator publication: “It seems politicians everywhere are suddenly waking up to the implications of peak oil. When will it arrive? Has it already passed? What does it mean for prices? And what do those prices mean for economic growth, and geopolitical risk? Most are finding that whatever action they are thinking of taking now, they should have been doing decades ago.”

I have now worked with Peak Oil for a decade and what they now are saying is the same thing that I and ASPO have said from the very beginning. In the press release from the first ASPO conference in Uppsala in 2002 we said that oil production should peak in 2010 at 85 million barrels per day, (and that is without processing gains). However, it seems we were optimistic since (as I have explained above) the IEA is actually reporting 2010 production at 83.2 million barrels per day.

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