page-loading-spinner
Home Energy

Energy

by Gregor Macdonald

Now that oil’s price revolution – a process that took ten years to complete – is self-evident, it is possible once again to start anew and ask: When will the next re-pricing phase begin?

Most of the structural changes that carried oil from the old equilibrium price of $25 to the new equilibrium price of $100 (average of Brent and WTIC) unfolded in the 2002-2008 period. During that time, both the difficult realities of geology and a paradigm shift in awareness worked their way into the market, as a new tranche of oil resources, entirely different in cost and structure than the old oil resources, came online. The mismatch between the old price and the emergent price was resolved incrementally at first, and finally by a super-spike in 2008.

However, once the dust settled on the ensuing global recession and financial crisis, oil then found its way to its new range between $90 and $110. Here, supply from a new set of resources and the continuance of less-elastic demand from the developing world have created moderate price stability. Prices above $90 are enough to bring on new supply, thus keeping production levels slightly flat. And yet those same prices roughly balance the continued decline of oil consumption in the OECD, which offsets the continued advance of consumption in the non-OECD.

If oil prices can’t fall that much because of the cost of marginal supply and overall flat global production, and if oil prices can’t rise that much because of restrained Western economies, what set of factors will take the oil price outside of its current envelope?

The Repricing of Oil
by Gregor Macdonald

Now that oil’s price revolution – a process that took ten years to complete – is self-evident, it is possible once again to start anew and ask: When will the next re-pricing phase begin?

Most of the structural changes that carried oil from the old equilibrium price of $25 to the new equilibrium price of $100 (average of Brent and WTIC) unfolded in the 2002-2008 period. During that time, both the difficult realities of geology and a paradigm shift in awareness worked their way into the market, as a new tranche of oil resources, entirely different in cost and structure than the old oil resources, came online. The mismatch between the old price and the emergent price was resolved incrementally at first, and finally by a super-spike in 2008.

However, once the dust settled on the ensuing global recession and financial crisis, oil then found its way to its new range between $90 and $110. Here, supply from a new set of resources and the continuance of less-elastic demand from the developing world have created moderate price stability. Prices above $90 are enough to bring on new supply, thus keeping production levels slightly flat. And yet those same prices roughly balance the continued decline of oil consumption in the OECD, which offsets the continued advance of consumption in the non-OECD.

If oil prices can’t fall that much because of the cost of marginal supply and overall flat global production, and if oil prices can’t rise that much because of restrained Western economies, what set of factors will take the oil price outside of its current envelope?

by Gregor Macdonald

India’s recent series of power blackouts, in which 600 million people lost electricity for several days, reminds us of the torrid pace at which populations in the developing world have moved onto the powergrid. Unfortunately, this great transition has been so rapid that infrastructure has mostly been unable to meet demand. India itself has failed to meets its own power capacity addition targets every year since 1951. This has left roughly one quarter of the country’s population without any (legal) access to electricity. That’s 300 million people out of a population of 1.2 billion. Indeed, it is the daily attempt of the underserved to access power that may have led to India’s recent grid crash.

But the story of India’s inadequate infrastructure is only one part of the difficult, global transition away from liquid fossil fuels. Over the past decade, the majority of new energy demand has been met not through global oil, but through growth in electrical power.

Frankly, this should be no surprise. After all, global production of oil started to flatten more than seven years ago, in 2005. And the developing world, which garners headlines for its increased demand for oil, is running mainly on coal-fired electrical power. There is no question that the non-OECD countries are leading the way as liquid-based transport – automobiles and airlines – have entered longterm decline.

Why, therefore, do policy makers in both the developing and developed world continue to invest in automobile infrastructure?

The Demise of the Car
by Gregor Macdonald

India’s recent series of power blackouts, in which 600 million people lost electricity for several days, reminds us of the torrid pace at which populations in the developing world have moved onto the powergrid. Unfortunately, this great transition has been so rapid that infrastructure has mostly been unable to meet demand. India itself has failed to meets its own power capacity addition targets every year since 1951. This has left roughly one quarter of the country’s population without any (legal) access to electricity. That’s 300 million people out of a population of 1.2 billion. Indeed, it is the daily attempt of the underserved to access power that may have led to India’s recent grid crash.

But the story of India’s inadequate infrastructure is only one part of the difficult, global transition away from liquid fossil fuels. Over the past decade, the majority of new energy demand has been met not through global oil, but through growth in electrical power.

Frankly, this should be no surprise. After all, global production of oil started to flatten more than seven years ago, in 2005. And the developing world, which garners headlines for its increased demand for oil, is running mainly on coal-fired electrical power. There is no question that the non-OECD countries are leading the way as liquid-based transport – automobiles and airlines – have entered longterm decline.

Why, therefore, do policy makers in both the developing and developed world continue to invest in automobile infrastructure?

by Chris Martenson

With a new site and a number of new irons in the fire, Adam and I thought it a good time to revisit and renew the mission behind this movement.

Simply put, our mission is to create a world worth inheriting.  By this we mean a clean, healthy living environment, a durable economy, and prosperous opportunities for all who participate with us. That's our big, lofty aim. 

At heart, our view is that our policies, uses, and practices in all of the Three “E”s are unsustainable.  One cannot forever grow non-renewable resource use in a finite world.  The exponential nature of that growth just hastens things along.

Because of hard constraints, our exponential money and debt systems are on a collision course with reality.  We will first and most immediately — and personally — experience the deleterious effects of this in what we call 'the economy' in the form of stagnant growth, rising unemployment, and various ills and maladies within the financial markets. 

This is just another way of saying that very big changes are coming our way.  In fact, they are here already.

The simple conclusion is that we must either change our habits and ways on our own terms — or on Nature's.  We face a future that will be shaped either by disaster or design.

Here at Peak Prosperity, we are solidly behind the idea of positive change made on our own terms and that we are each responsible for whatever future is created. 

There are a number of things that we absolutely have to do in order to achieve our mission. And at the top of the list is reaching and influencing a lot of people (millions upon millions) and doing so effectively.

Creating a World Worth Inheriting
by Chris Martenson

With a new site and a number of new irons in the fire, Adam and I thought it a good time to revisit and renew the mission behind this movement.

Simply put, our mission is to create a world worth inheriting.  By this we mean a clean, healthy living environment, a durable economy, and prosperous opportunities for all who participate with us. That's our big, lofty aim. 

At heart, our view is that our policies, uses, and practices in all of the Three “E”s are unsustainable.  One cannot forever grow non-renewable resource use in a finite world.  The exponential nature of that growth just hastens things along.

Because of hard constraints, our exponential money and debt systems are on a collision course with reality.  We will first and most immediately — and personally — experience the deleterious effects of this in what we call 'the economy' in the form of stagnant growth, rising unemployment, and various ills and maladies within the financial markets. 

This is just another way of saying that very big changes are coming our way.  In fact, they are here already.

The simple conclusion is that we must either change our habits and ways on our own terms — or on Nature's.  We face a future that will be shaped either by disaster or design.

Here at Peak Prosperity, we are solidly behind the idea of positive change made on our own terms and that we are each responsible for whatever future is created. 

There are a number of things that we absolutely have to do in order to achieve our mission. And at the top of the list is reaching and influencing a lot of people (millions upon millions) and doing so effectively.

Total 626 items