August 3, 2014
THERE'LL STILL BE AMPLE SUPPLY WHEN WE CRASH INTO THE SUN:
Peak oil proponents still dancing around reality (Robin Mills, August 3, 2014 The National)
A few years ago, "peak oil" advocates were claiming that new oil was poor quality because it was too heavy - now they say it is too light, because of condensates from shales. This lightness does require some rebalancing of refineries, but natural gas liquids are relatively easy substitutes for oil in vehicle engines, petrochemical feedstocks and home heating.It is true that most recent non-Opec growth has come from US shales and Canadian oil sands. The mid-2000s argument that unconventional resources could not be brought on-stream quickly has been quietly forgotten in the face of history's largest production surge.Elsewhere, mature areas such as the North Sea have indeed continued to slump, while major frontier projects such as Kazakhstan's giant Kashagan field have suffered technical delays. Security disruptions the in smaller non-Opec producers Syria, Yemen and South Sudan also contribute.But it is not surprising that capital is flowing to North America. It offers political stability, moderate taxation, a huge resource opportunity and efficient services. North American shales are simply outcompeting oil reserves holders elsewhere, who have not moved fast enough to open up to investment, improve fiscal terms and unlock their own unconventional resources. Exploration and production companies operating elsewhere are short of capital, while successful North American players such as Occidental, Apache, Murphy and Hess are under shareholder pressure to sell their overseas assets.By focusing on the head of the pin - the narrow details of what counts as "oil" - and ignoring the grander factors of geopolitics and Opec, it is indeed possible to make it seem that oil prices can only go up. But this latest peak oil debate is unlikely to be the last.
Which is why you tax it to force the transition.
Posted by Orrin Judd at August 3, 2014 8:07 AM