My vacation is over, so it’s back to work. I am still working on the followup to the MixAlco story, but there is a lot of material to digest. I am exchanging e-mails with Professor Holtzapple just now, trying to get answers to questions around the energy balance and overall conversion efficiency. As soon as those are resolved, I will publish the story.
One of the things I try to offer readers is an objective, timely analysis of happenings in the world of energy. For example, take the recent stories I wrote on BP. Shortly after the accident in the Gulf of Mexico, I wrote The Wake Up Call on the BP Drilling Disaster in which I predicted huge political fallout and big negative ramifications on the future of offshore oil production. I followed up with The Demise of BP? and suggested that BP would be very hard-pressed to survive this incident with their brand intact. In fact, I closed that essay:
And although BP has long been a source of pride with many Brits, I can only wonder now if in the future we will refer to them as “BP, a subsidiary of ExxonMobil.”
Today there are two stories in the news related to what I wrote about in those earlier essays:
Exxon’s Alan Jeffers had no comment on the report today in the London-based Times newspaper. Max McGahan, a spokesman for London-based BP, also said he wouldn’t comment.
You heard it here first, readers. 🙂 The other major theme of the BP essays was also covered in the news today:
U.S. Issues Revised Offshore Drilling Ban
The revised moratorium would allow some drilling rigs to resume operating under certain conditions. To qualify, the rig’s owners must prove that they have adequate plans in place to quickly shut down an out-of-control well, that the blowout preventers atop the wells it drills have passed rigorous new tests, and that sufficient cleanup resources are on hand in case of a spill. Industry officials said it would be difficult to meet those conditions quickly and that the restrictions would threaten the jobs of thousands of rig workers.
This is playing out exactly as I thought it would. The BP brand is horribly damaged, and while I believe their assets will continue to produce, most if not all will eventually be under a name other than BP. Second, the political fallout was bound to slow the pace of drilling, which I think ultimately translates into even higher prices for oil as supply struggles to keep up.
Speaking of which, another story came out today that endorsed my views on Peak Lite:
Lloyd’s adds its voice to dire ‘peak oil’ warnings
One of the City’s most respected institutions has warned of “catastrophic consequences” for businesses that fail to prepare for a world of increasing oil scarcity and a lower carbon economy.
The Lloyd’s insurance market and the highly regarded Institute of Strategic Studies (ISS, known as Chatham House) says Britain needs to be ready for “peak oil” and disrupted energy supplies at a time of soaring fuel demand in China and India, constraints on production caused by the BP oil spill and political moves to cut CO2 to halt global warming.
If you recall, I proposed the concept of peak lite because I thought we wouldn’t have to wait around for peak oil before we began to see peak oil symptoms. In a 2007 story, I provided some graphics to illustrate what I felt was happening. I forecast $100 oil, but about a year later than we actually saw it.
But I first wrote about the concept in 2006:
It’s like we are worried about starving to death (Peak Oil) in a few years, but we didn’t consider that the food we are consuming may already be insufficient to sustain us. If population grows faster than food production, people will starve even though food production may be growing. That’s the situation I see with petroleum right now. We don’t have to forecast a supply/demand imbalance. It is here. Strong demand growth in China and India ensures that this problem will not be going away anytime soon, and will probably be the reality right up until production actually does peak.
Lots of organizations have come around to this point of view. The latest appears to be Lloyd’s:
“Even before we reach peak oil,” says the Lloyd’s report, “we could witness an oil supply crunch because of increased Asian demand. Major new investment in energy takes 10-15 years from the initial investment to first production, and to date we have not seen the amount of new projects that would supply the projected increase in demand.”
That’s peak lite in a nutshell. Remember, you heard it here first.