What is Peak Oil? If it’s a problem, how come I haven’t heard a lot about it?

1. What is Peak Oil?If it’s a problem, how come I haven’t heard a lot about it? By Glen Bradford

2. Introduction • Hi, I’m Glen Bradford. Odds are that if you’re reading this, you know who I am and what I’ve done --- so at least you’ll hear me out as long as I don’t talk ‘crazy talk.’ A lot of the people who talk about things like Peak Oil always have some sort of ‘The Sky is Falling’ perspective. They don’t realize that in order to effectively persuade people, you can’t just yell facts in their face and expect them to listen.

3. In Fact • In fact, if you do so, they likely will avoid you. I am sure you can think of several, wait…, multiple instances in your life where you’ve avoided people who you don’t want to deal with. I do it ALL the time. I’m a self-diagnosed avoider. I avoid future problems and issues like the plague. I’ve found that I can avoid dealing with problems if I can be proactive and simply not have them.

4. What is Black Swan Logic? • Black Swan logic basically argues that you don’t know what you are going to know until you know it. The difference between this and common sense is that Black Swan events happen when the sense is uncommon. If that doesn’t make sense, maybe an example will help.

5. The Thanksgiving Turkey The turkey, for 364 days becomes increasingly confident that each and every day it will be fed. Heck, it was fed the last day, and the day prior. In fact, it was fed every day that it can remember. If it had to take odds on the day before thanksgiving whether it would be fed or not, it most certainly would argue that since it’s always been fed every single day thus far, it will be fed tomorrow. Surprise! And it’s dinner.

6. How Problems Like this Work • If this is a problem, Black Swan Logic might be useful. • With the “If it isn’t broke, don’t fix it” mentality, most people, in fact, I would argue 99.99% of people in this case, don’t have the knowledge to understand what Peak Oil even is. Why? The only people that may have mentioned it to them sounded crazy.

7. What’s the incentive? • The oil system has momentum. Because it’s worked for so long the way it is, people blindly expect it to keep working. • Analysts who run the agencies supposed to put out early warnings for this have been duped. How? Next few slides. • Politicians must be positive. Positive people get re-elected. Who is going to vote for someone that preaches doom?

8. Resources vs. Reserves • · Reserves--engineers' (conservative) opinions of how much oil is known to be producible, within a known time, with known techniques, at known costs, and in known fields. Conservative bankers will loan money on reserves. • · Resources--geologists' (optimistic) opinions of all undiscovered oil theoretically present in an area. Conservative bankers will NOT loan money on resources.

9. Cheating the Reserves? • OPEC nations when they formed the Cartel in the 1980’s to regulate the world oil supply began including their resources in their reserve estimates. They did this overnight without any additional oil findings. Why? The incentive was there to do so. Their agreement among themselves distributed larger production quotas to those with the larger reserve bases. They want to make the most money. The way to do this is pump the most oil. The way to pump the most oil is to cheat the cartel and jack up your reserve estimates, and everyone cheated. • Questions: http://hubbert.mines.edu/news/Ivanhoe_96-1.pdf

10. Implications • Most oil forecasts that assume we are fine thru 2030 assume that OPEC’s reserve numbers are ‘not lies.’ • These forecasts assume that OPEC makes up for the global supply shortages by ramping up production to 2x what they produce today. • Can OPEC ramp up production to 20 million barrels of oil?

11. Key Quotes • "In the past, the world has counted on Saudi Arabia," one senior Saudi oil executive said in 2004. "Now I don't see how long it can be maintained." • But some experts are skeptical. Edward O. Price Jr., a former top Saudi Aramco and Chevron executive and a leading United States government adviser, says he believes that Saudi Arabia can pump up to 12 million barrels a day "for a few years." But "the world should not expect more from the Saudis," he said. He expects global oil markets to be in short supply by 2015. • Sadad al Husseini, Saudi Aramco’s former head of exploration and production, wrote “The information is there. The facts are there. Oil prices did not jump four-fold over a three- or four-year period for any reason other than a shortage of supply.”

12. Saudi Arabia has it’s work cut out?

13. In agreement with last slide 2009 Sadad: I’ve been tracking the number of projects, globally, for a long time both in the Middle East and elsewhere—Russia, Brazil, west coast of Africa, and others. A lot of this information is in the public domain, so there is no mystery there. The International Energy Agency recently reported on the same numbers. The bottom line is that there are not enough projects. There is not enough new capacity coming on line, within say the next five to six years, to make up for global declines. And that’s assuming a very moderate level of declines—6% to 6.5% for non-OPEC, perhaps a 3.5% to 4% decline rate for OPEC.

14. Enough Said APRIL 27 2010 Saudi Arabia global oil exports to wane post-2010 Saudi Arabia’s long-standing status as a swing producer of crude oil could be drawing to a close according to the head of national oil company Saudi Aramco. Global oil exports from Saudi Arabia, the world's largest oil producer alongside Russia, will start to wane in the coming years as domestic demand surges and spare capacity drops, warned Khalid al-Falih, chief executive officer of Saudi Aramco in a speech published on the company's website.