The facts on the ground would prove John D. correct. And this has led to the irony that the primary power source for what came to be called The Second Industrial Revolution would never actually conform to the theoretical dreams of the free marketeers. Oil would become a business run by cartels and price-fixing would become routine. Standard Oil would become the target of outraged reformers and trust-busters. Perhaps the ultimate irony is that Rockefeller's little pet project, the University of Chicago, would become a bastion of the free-marketeers.
All the marketeers' preaching cannot change the facts on the ground. Finding oil is still a hideously expensive and risky crap shoot. It takes a long time to materially affect the supply situation—a run-up of oil prices does not automatically mean more producing wells. Cartels still exist to set a price floor above the costs of production. Price changes DO lead to supply changes in some small way but it is a factor that comes in about 12th on a list that includes technological changes, political events, greed and war, and even dumb luck.
The Brits are proving once again that panic over oil supply disruptions can be as bad as the disruption itself. People start to worry about supplies and they begin to top off their tanks more often. The gasoline gets transferred from the filling stations to the fuel tanks of their customers. Suddenly, a potential shortage becomes the real thing as filling stations run out due to increased demand.
An Oil Industry Dream Is Fading Right Before Our EyesGregor MacDonald, Gregor.us | Mar. 30, 2012
EIA Washington recently published data revisions to global oil production, going back at least twenty years. Here, I update annual average oil production for Non-OPEC, which used to account for 60% of total global supply but has had trouble sustaining increases–even in a high-priced oil environment.
As of 2011, Non-OPEC supply fell to 57% of total global share, the difference being made up of course by OPEC.
Readers will be aware of the recent meme, that oil power is shifting back to the West. There is of course no data support whatsoever for such a narrative but the attractiveness of such a story is of course obvious.
After all, it was supposedly the superior technical advantage of the West that would help it significantly boost oil production should the price ever rise. That was the view strongly held back in 2002-2004. The result? Non-OPEC oil production actually went into decline, as price rose.
And it was only Russia–Non-OPEC’s largest single producer–that was able to lift supply. More recently, the uptick in Non-OPEC supply was largely funded by the brief fall in demand created by the 2008-2009 economic crash. This stranded some capacity, and allowed for some development already in process to come on stream. The result is that the hope offered by 2010′s production level of 42.453 mbpd, as it slightly bested the previous production high of 2004, was not built upon in 2011.
What the media and even many industry professionals still find hard to accept, is the following outcome: higher prices, even in the free-market West, are not bringing on net new supply that would actually produce a string of sustained increases. more
And so now we have another reminder that finding oil supplies these days is hideously expensive, difficult, and dangerous. As gas leak nearly a mile below the floor of the North Sea now threatens to blow up a production platform.
Pump panic threatens UK double-dip recession29 March, 2012
The UK's petrol crisis mis-management is in danger of tipping the ocuntry into a double-tip recession.UK Prime Minister David Cameron called on the Unite labor union and employers to hold talks on preventing a strike by fuel-truck drivers as the governmen
Drivers with the Unite union working for fuel-distribution companies whose customers include large grocery chains such as Tesco and Sainsbury’s voted this week to strike in protest at working conditions and changes to their pensions.
“A strike would be completely irresponsible. What needs to happen is for unions and employers to sit down and discuss these issues,” Cameron told reporters. “There is no shortage of fuel at present and forecourts are being replenished”
This is hardly a relief for ordinary drivers and the government’s self-contradictory attempts to prevent industrial action are only fuelling panic on the streets. Petrol and diesel sales are spiking as concerned motorists flock to fill their tanks to the full. more
North Sea Gas Leak
Total Weighs Options As Explosion Fears MountBy Christoph Seidler and Nina Weber 03/29/2012
French energy giant Total is frantically trying to respond to a natural gas leak discovered this week on one of its platforms off the eastern coast of Scotland. As it weighs options for plugging the leak, the threat of a major explosion and environmental catastrophe loom.
The weather over the North Sea was somewhat rough. What's more, the crew of the small, twin-engine plane was determined to keep its distance from the crisis zone. On Wednesday, a small group of environmental activists boarded the plane to inspect the Elgin platform leaking gas. But given their distance from it, they could only see what their zoom lenses allowed.
Kai Britt, an employee for the German branch of Greenpeace, told SPIEGEL ONLINE that people weren't allowed to get any closer than five kilometers (three miles) from the platform, from which 238 workers have already been evacuated. He was one of four environmentalists who flew from the northern German city of Hamburg, over the western Danish port city of Esbjerg and to the spot 240 kilometers (150 miles) off the eastern coast of Scotland where the offshore platform lies. Britt says that even the four supply ships that could be seen near the Elgin from the plane kept out of the exclusion zone. "They're scared that the thing will blow up around them," he said.
The environmentalist didn't bring back any particularly spectacular photographs from their flight. But the group's observations point to the helplessness that has apparently gripped senior officials at Total, the platform's French owner, since the leak was discovered on Sunday. Although the company finally succeeded in pinpointing the source of the high-pressure leak, it is still far from being in a position to plug it in a reliable way. Some experts are worried about the gas flame in the stack above the platform, which usually burns excess gas. Despite Total's statements to the contrary, the flame is still burning. If worse comes to worst, rising gas clouds could spark a gigantic explosion.
Britt, the Greenpeace employee, said that the flame can't be seen with the naked eye, explaining that this also has to do with the fact that the gas is burned at very high temperatures. However, he said that environmentalists on the plane were able to make out the flame using an infrared camera specifically designed to detect gas leaks. And that's not all. Britt also noted that gas vapors could be seen moving away from the platform. If correct, this supports Total's theory that the open flame creates no immediate threat of explosion -- that is, as long as the weather doesn't change.
At first, there was conflicting information regarding the precise location of the gas leak. But on Thursday Total confirmed reports that the leak was 4,000 meters below the sea floor. They also stated that the gas was pouring out at the deck level of the platform -- in other words, above sea level. However, reports from employees who claimed to see gas bubbling up don't fit well with this picture.
Total is weighing at least three options for dealing with the leak: It could wait things out, bore an emergency relief well or used the so-called "well kill" method, which involves pumping enough cement into the well to cap the flow of gas. Although the last option is quicker, it is much riskier than using relief wells, which could take six months and cost up to $3 billion (€2.3 billion), according to news agency Reuters.
Total says that the leaking gas comes from a well that was plugged about a year ago, rather than from a reservoir from which more gas is supposed to be extracted. That would mean that it is possible that the well could run itself dry in the coming weeks, or so the company hopes. more