The Death of Peak Oil

unnamed

Only it isn’t happening like that!

For years – for decades – we all assumed that oil was a finite resource, that global supplies were being progressively depleted, that oil would become scarce, and that oil prices (and by association other fossil fuel Prices) would progressively rise.  In 1970, ecologist Kenneth Watt declared “By the year 2000, if present trends continue, we will be using up crude oil at such a rate…that there won’t be any more crude oil. You’ll drive up to the pump and say, “Fill ‘er up, buddy”, and he’ll say, “I am very sorry, there isn’t any.’”

This was the assumption behind the widespread adoption of expensive and intermittent renewables technologies.  People like Chris Huhne  and Ed Davey  former UK Secretaries of State for Energy and Climate Change, knew perfectly well that wind and solar were expensive, but they believed that as fossil fuel prices rose, renewables would become competitive.  It was a great theory, but with one minor snag: fossil fuel prices are going the other way.

Of course it is true that terrestrial fossil fuel reserves are indeed finite, and if we continue to exploit them on the current scale, they will run out.  But the reserves are far greater than we used to think, and “Peak Oil” – if we ever get there – is many decades, and maybe centuries, away.

I have been castigated by some readers for repeating the line that “The Stone Age didn’t end because we ran out of stones: it ended when we found a better technology”.  But I don’t apologise for repeating it here, because it sums up the case perfectly.  I am convinced that we’ll stop burning oil as and when we find better, cheaper technologies.  That may be nuclear fusion, but it may also be some other technology of which our science fiction writers have not yet dreamed.

On Jan 20th I attended a “Kangaroo Lunch” where a spokesman for an oil major (naming no names) made a presentation about low oil prices.  I heard more common sense in half an hour than I normally expect in half a year in the European parliament.  He described the “Peak Oil” theory as “The Old Principle”.

The New Principle is based on a number of developments.  Firstly, for the past 35 years, for every barrel of oil consumed, another two barrels have been added to reserves.  This is not necessarily true of the audited reserves that appear in company balance sheets, but it is true of the reserves which the oil majors know are there.

Secondly, the pace of technological development has been rapid both in both traditional extraction techniques and novel techniques like shale gas/oil.

The Saudis thought they could kill the nascent US shale oil business if they kept the oil price at $50 for a couple of years.  Instead, they drove innovation and development.  The time and cost to drill a new well has fallen dramatically, as has the price of the oil.  New techniques have greatly extended the life of shale oil wells.  Horizontal drilling has cut costs and increased capacity whilst reducing the visual and environmental impact on the ground.

Average production per rig in the US has increased by a factor of twelve or more in the last eight years – an extraordinary result.  The US is now self-sufficient in oil and about to become a net exporter.

The geo-political implications are vast.  Suddenly the price of oil ($28 as I write) is below the Russian production cost.  This will have a massive impact on the Russian economy.  Suddenly the theocracies of the Middle East no longer have a stranglehold (“With one bound, we were free”).  Suddenly ISIS will have great difficulty selling oil on the Black Market, because it’s so cheap and plentiful elsewhere.

I have been arguing for years that renewables were unaffordable.  The renewables industry is desperate to announce “grid parity” (though they seek to ignore the massive costs of intermittency).  But they’re facing not a fixed end-point, but a moving target.  Yes, they’re improving the efficiency of renewables (and about time too), but the cost of conventional energy just keeps going down.

We are left with a vast fleet of wind and solar that could soon be irrelevant – rusting hulks that represent a sunk cost, and a vast mis-allocation of resources.

So why are stock markets reacting so negatively to the positive news of lower oil prices?  Of course there are other factors, like the slow-down in China.  But a key point (which Roger Bootle has often made) is that the negative impact of low oil prices on oil majors is immediate, while the benefits to consumers and to non-oil companies take a little while to work through.  But the reduction in the oil price amounts to a massive transfer of value from oil producing countries to oil consuming countries, which will certainly stimulate Western economies.

One other key point.  Let’s say you buy the whole Climate Change story, as per Michael Mann and Al Gore.  Then by far the most cost-effective way to switch to a lower CO2 economy would be to transition from coal to gas.  We could have done that with little negative economic impact.  But we chose instead the disaster of renewables.

This entry was posted in Uncategorized. Bookmark the permalink.

47 Responses to The Death of Peak Oil

  1. catalanbrian says:

    And we all assumed correctly. Oil is a finite resource, unless there is another meaning of “finite” that I am unaware of.

    • ian wragg says:

      Even if the whole world was made of oil it would be finite but that doesn’t mean it is likely to run out in the next century.
      There is still some controversy about just how oil is produced so it may not be as finite as we think.

      • Andrew Shakespeare says:

        And let people in the next century worry about it! The technology available to them will almost certainly vastly beyond the scope of our comprehension. By the 22nd century, the wind turbines with which we’re carpeting the country will seem as primitive as the Spinning Jenny, beam engines, and Stephenson’s Rocket to us today.

      • catalanbrian says:

        But we needed the Spinning Jenny, beam engines, and Stephenson’s Rocket to get to where we are today!.

    • catweazle666 says:

      Did you miss this bit, Brian?

      “But the reserves are far greater than we used to think, and “Peak Oil” – if we ever get there – is many decades, and maybe centuries, away.”

      Or this bit?

      “I am convinced that we’ll stop burning oil as and when we find better, cheaper technologies. That may be nuclear fusion, but it may also be some other technology of which our science fiction writers have not yet dreamed.”

      You just can’t resist getting a snide little dig in, can you?

      Did Roger run over your dog or something?

      Then you have the damn gall to refer to me as “nasty little people like you”.

      Sad.

      • catalanbrian says:

        Again you have to get in your spiteful little remark. Mr Helmer is generally somewhat pedantic regarding the misuse of language by others, so I was just pointing out to him that he also is capable of making mistakes. Contrary to your assertion I have no dislike for Mr Helmer, but I have to say that I disagree with pretty much everything he says. However I admire him for sticking to his argument in the face of much criticism. At least, he has a strongly held viewpoint unlike a number of others on this blog, who have no ideas of their own and just follow Mr Helmer’s viewpoint blindly with no engagement of their own brains

        It might be good for us all if you were to get back under your stone.

      • Ex-expat Colin says:

        “unlike a number of others on this blog, who have no ideas of their own and just follow Mr Helmer’s viewpoint blindly with no engagement of their own brains”.

        You are a fool. Your words present nothing and lead to nothing. Just go an rub some sticks together somewhere.

      • maltesertoo says:

        catalanbrian, (A bit late in the day, but) I am the first time here and assure you that what Roger Helmer has written is, mostly, if not totally, the opinion I have formed following years of reading, researching and learning the truth about all issues of (anthropogenic and natural) climate change, ‘renewable’ energy, conventional and tight oil and gas extraction, and peak oil and also infinite stupidity.
        So your claim that all who agrees with Roger Helmer have ‘no ideas of their own and just follow Mr Helmer’s viewpoint blindly with no engagement of their own brains” does not hold true.

        Just sayin’

      • catweazle666 says:

        Afternoon M2, how’s it going on your beautiful little island?

        Ma and t’missus will be back again in April, so can you order some decent weather for us?

        It’s bloody awful up here in Yorkshire, never seems to get light and it’s surprising we haven’t grown gills!

    • Andrew Shakespeare says:

      And let people in the next century worry about it! The technology available to them will almost certainly vastly beyond the scope of our comprehension. By the 22nd century, the wind turbines with which we’re carpeting the country will seem as primitive as the Spinning Jenny, beam engines, and Stephenson’s Rocket to us today.

  2. An interesting article Roger. Can anyone explain why the ‘price at the pumps’ isn’t much lower as the price of oil has plummeted? And if it did, what effect would that have on tax revenues? My goodness, John Bercow might have to sack a few servants.

    • Andrew Shakespeare says:

      Without having access to specific figures, duty is a huge addition to th price of petrol, which would be more like 50p a litre without it.

      Also, the barrel price is for crude oil, which isn’t much use to anybody. It then needs to have all its various component fuels and chemicals extracted from it, then transported to the final consumer, the costs of which remains the same regardless of the price of crude.

    • Ex-expat Colin says:

      Long contracts that are always a problem to us. Off the spot market works for the Supermarkets and indepedants

  3. davidbuckingham says:

    Perhaps the 75% tax rate on fuel has something to do with the price at the pumps being sluggish.
    It’s got to make sense to indirectly tax everything that moves if you really want to make a killing – never have worked out why people don’t seem to mind. I don’t think even the TaxPayers Allliance has kicked up much about it. I reckon it’s THE Most Undiscussed Invisible Tax on Everything (MUITE).

  4. Andrew Shakespeare says:

    “fossil fuel prices are going the other way”

    I read the other day that the chancellor has suggested that petrol prices might have to be artificially increased, to meet our green targets (evidently, this same policy is considered a startling success in the Palace of Westminster; especially for the steel industry.).

    Of course, petrol being the cheapest I can remember it since probably the 1980’s has got to be having a catastrophic impact in Boy George’s VAT receipts. Raising the price artificially would help resolve that problem, VAT being a tax on tax where fuel is concerned.

    However, I’m sure this little fringe benefit has never even crossed the holy mind of our most-noble chancellor, whose soul is so pure-as-the-driven-snow, he’s practically a virgin.

  5. davidbuckingham says:

    BTW…. according to the International Energy Agency, World Energy Outlook 2013, the world has 3,050 years at current usage rates of total remaining recoverable reserves of coal. Proven reserves of natural gas have increased 46% in the US since 2005 (World Bank, World Development Indicators), plus the likelihood of methane hydrates, frozen natural gas deposits at the bottom of the ocean, which could run for several centuries at least. It’s reckoned the Earth contains many times more oil than has been consumed in the entire history of civilisation….

  6. Oliver Manuel says:

    Thank you, Roger, for being a voice of sanity in a sea of fear mongering.

  7. davidbuckingham says:

    I looked up the breakdown of fuel costs per litre – 50p is actual product cost, 58p fuel duty, 20-25p vat, retailer’s margin 5p Total at 138p per litre, 83p tax/ 55p product+retail = 60% tax
    Electric cars have zero duty and ignore the fact that hydrocarbons, especially coal, produce a vast majority of electric power. I find it hard to believe but combined wind and solar account for 1% of energy we use, fossil fuels 86%. The other 10% nuclear and hydro. (BP, Statistical Review of World Energy 2013). All these sources are gathered together in Alex Epstein’s ‘The Moral Case for Fossil Fuels’.

  8. David H. Walker says:

    Roger, you’re no doubt correct — oil will continue from hereon as an important economic component.

    The crisis constructors will continue to stamp their reapers and foment doom as we fail to comply with their whims, the earth will continue to rotate, the sun shall rise and fall, the earth shall produce oil, and we shall appreciate just how co-opted the good cause of science has become for the sake of a notorious fraud, the AGW context.

    Not least of all, humanity shall acknowledge the better technologies, fuels and materials as man produces them OUTSIDE the abrogation of fearmongers, corporate goons and governments.

  9. What could save the renewables (which I loathe) is the introduction of decent batteries. Apparently great strides are being made here. With batteries, the whole game changes – especially if solar energy works (as it could in Australia for instance) or if the windmills didn’t cost such enormous prices to maintain.

    • catalanbrian says:

      I agree with that, although I am not sure what there is to loathe about renewables. The only real area for criticism is that of the subsidies given to renewable energy production and I believe that this does need to be dealt with. Renewables for me work very well – my house is totally powered by (unsubsidised) solar energy and 10 years down the line it is still giving me all the power that I need (and i do not live like a cave man). Yes, I do live in Catalunya where we get significant amounts of sunshine so that makes it more viable than, for example, an installation in Aberdeen but that is a simple matter of installing only that which is appropriate. Quite possibly Aberdonians will have to continue using fossil fuels for a few years, until a viable alternative is discovered. As I have repeatedly said on this blog my major concern is the wasting of finite resources when there is a viable alternative. Why do you loathe renewables?

      • Brin Jenkins says:

        Well I don’t loath new technology, but I do hate the promotion of unproven devices wasting resources for dubious political reasons. CO2 is not a valid cause global warming, only a theory.

        Too much has already been squandered on Wind Turbines which are only 12-16% efficient. Solar water heating panels might be very good, but many of the concerns promoting them are dubious providers.

        Energy bills for pensioners are already eating into their meagre old age pensions along with Council taxes. Please just get us out of this evil EU regime before we look like Stalins Russia.

      • catalanbrian says:

        We can differ on the global warming issues and I can thank you for giving a coherent response to my simple question. I am sorry but I have a couple of additionals. Where does the figure of 12-16% efficient for wind turbines come from?. Once the capital costs have been written off surely a wind turbine is 100% efficient as there are no input costs, other perhaps than maintenance, but that also applies to conventional power. My solar panels are electricity generating and as I have stated provide all of my electrical power – I have no grid connection. You are absolutely right about the number of snake oil salesmen who are now operating in the solar energy business.

      • ian wragg says:

        Brian. Wind turbines are sold to us on ………will power x number of houses. If you follow generation figures you will see that they are generating on average 19% of their rated output. Ongoing maintenance costs are high particularly offshore and the projected life is about 20 years with output decreasing with age.
        Mean wind speed over the Northern Hemisphere is slowly dropping in recent years when before output was around 21%.
        I worked for 45 years in the power industry and wind is seen as a joke.

      • catalanbrian says:

        Ah, I understand where you are coming from. Because they wear out a bit and because the wind does not blow all the time they produce less than their rated output. That is of course obvious, but surely not a good reason to damn them to oblivion. There is a relatively new (3 years since commissioning) windfarm of 12 turbines on the mountain at the back of me. All I can say is that they are rarely down for maintenance, although I accept that they are relatively new and there may be more maintenance issues in the future. More importantly they are turning at generating speed pretty much all of the time, although ironically, as I write this they are at a standstill as there is no wind today! I have to confess that I live in a fairly windy part of Catalunya and I suppose that illustrates the importance of locating a good site for the turbines.

        As for the relative costs, it is possible for wind power to be competitive with conventional generation. Electricity from new wind installations in South Africa (the only place I know anything about in this context) is now half the cost of that generated from new coal generators. That cannot be a bad thing.

        But I believe that it is not costs that really should be driving the argument. It is environmental issues and, whilst critics will claim, for example, that rare earth extraction for use in wind generators is not environmentally friendly, (and I agree that it is not) wind is a more sustainable method of generation than that of fossil fuels. I believe that each generation should try and leave the earth in the same, or a better condition, than it was when we took it over from our forebears, and the use of fossil fuels does not support this.

        Anyway fighting over this will not solve it. We all have different viewpoints and there are of course many ways of dealing with the challenges facing us, some being better in the short term than others and some being better long term solutions. The most important issue being that we should waste as little as possible. Only time will tell which is the best route to follow and I suspect that neither of us has enough of that left!

      • Brin Jenkins says:

        Ian seems to have more recent % figures, mine were from a German source who claimed 16% and the UK was less at only 12% of maximum rated output. The life of these devices seems short, and many are replaced after only a few years in Cornwall. Admittedly they seem to be quieter now and revolving slower. The problem remains that one can not run a transport system on these alternative sources, so 100% backup must be kept in commission all the time which adds further to the alternative energy costs.

        Your success off grid will owe much to your own reduced electrical demand, my max demand with immersion heater, oven, kettle, bathroom heaters and general load is more like 16kw, although this is rarely called for. This would require massive batteries and inverter, with 64 250w panels. In the UK with 12% photovoltaic output in Feb against 100% in July to replace the grid would mean 8 times more panels, massively overproducing which the grid buys at low demand time.

        Should wood burning stoves and gas be phased out, as predicted, you may have more difficulties.

        We are being forced to reduce our demand by rising prices and paying the green subsidies. I consider this to be a wealth redistribution political aim with few voters understanding the reasons.

      • catalanbrian says:

        Yes I agree that my reduced demand for electricity may have something to do with it, but perhaps this is a lesson that we could all perhaps learn from. I have 6 solar panels feeding 12 lead acid batteries. My inverter provides for a maximum draw of 3Kw, so obviously any electrical heating is off limits, but this is not a major challenge. I heat my house with a wood burning stove, principally fuelled with wood cut by way of pruning/maintenance from my own almond and olive trees. Perhaps you could advise me as to why wood burning stoves are likely to be phased out. The only other fuel that I use is butane (propane in winter) which I use for water heating and cooking.

        Finally, whether or not the rising prices of energy for the home is a wealth redistribution political act it is still, I believe, a good thing to encourage people to reduce their power consumption. In this respect there is a good argument for changing the way in which power is billed. Perhaps it should be priced so that the first few Kw are at one price and then there would be a number of higher bands priced at higher levels, so that there is a discouragement to excessive power consumption.

      • Ex-expat Colin says:

        “Perhaps it should be priced so that the first few Kw are at one price and then there would be a number of higher bands priced at higher levels, so that there is a discouragement to excessive power consumption”.

        It is the other way around..has been and likely still is within the multiple awkward UK energy rate tariffs.

        There are power distributors in UK who charge the 1st so many Kw at a higher rate than the Kw thereafter. Private business in energy generation encourages to burn more.

        As I remember NPower/SSE did that. And for those in flats and certain crap estates (night rate on meters) its a flat high rate…electricity only. Drying clothes for one is a nightmare in such places…who cares?

        Your words (from Spain?) are useless to us in the higher Lats….as usual!

        BTW…batteries for solar are recommended to be Deep Cycle types…not car batteries. And batteries largely make a nonsense of giving free solar systems to the very poor in Asia/Africa. I wouldn’t hold up S. Africa as an example of anything and am sure a lot of the very poor people will not be thanking the US and friends from blocking builds of coal etc power stations. Humans don’t count …do they?

      • catalanbrian says:

        Yes, you are right in your comment about the current pricing of energy in the UK. Once you have stumbled through the byzantine tariffs set by the energy companies that becomes very clear. But surely that is ridiculous. Power should cost more at higher levels of usage to encourage modest use, rather than the idiotic way in which it is currently priced whereas those who use large amounts of energy are effectively encouraged (or rather not discouraged) to do so. I would mention that there is no reason why the fact that I live in Spain should prevent me from commenting on energy pricing in the UK. Not all places in Spain are warm and sunny paradises all the year. Indeed the area in which I live has winter temperatures that are similar to those in the UK (this winter it has been year cooler here than in the UK), although we do get more sun and winter is marginally shorter.

        I do not run my system on car batteries. I have deep cycle batteries.

        And by the way I am not sure why South Africa cannot be used as an example. There new wind energy is cheaper than new coal energy and there is no reason why that should be substantially different elsewhere. I emphasis that I am referring to onshore installations. The figures for offshore would be different.

      • ian wragg says:

        Brian, you say the wind turbines are running at generation speed. No such thing, they are not synchronous with the grid. This is the main problem in Scotland where they cannot control frequency due to closure of conventional stations.
        many times when there is no wind, the units are spun using power from the network to keep the electronics and oil warm. There is an understanding that the units will be kept rotating so people think they are producing energy when in fact they are consuming energy. The irony is that this is generally at peak times when power is required. During the cold spell this month on one occasion wind was providing less than 0.2%.
        Follow gridwatch/Templar and you will be amazed.

      • catalanbrian says:

        You are wrong, and have clearly bought into the anti wind myths about wind turbines. When there is no wind they will rotate (yes using power from the grid) but at a very slow speed. This is not to keep the oil and electronics warm but to prevent the weight of the blades creating flats on the rotating shaft. As for running them to fool the public into believing that they are generating when they are not that is quite ludicrous and would only be believed by those with severe paranoia.

      • catweazle666 says:

        ian wragg says: “many times when there is no wind, the units are spun using power from the network to keep the electronics and oil warm.”

        The electronics and gearboxes are usually electrically heated.

        On machines above a certain size, the rotors are spun to prevent a particularly unpleasant effect called ‘false brinelling’ which destroys the bearings due to very small oscillations of the blades.

        The bearings are running at the very limits of our knowledge, as a result of the good old square-cube laws, as the linear size of the machine increases, the weight increases to a cube law but the bearing area only increases to a square law, once again demonstrating that you can’t scale nature.

        There is also a problem with ‘chatter’ damaging the gears if they are not kept in continuous motion.

        Current is also required to de-ice the blades if the temperature approaches freezing, an out of balance ice build-up would be catastrophic!

      • ian wragg says:

        Brian, wrong as usual. It’s not the shafts that get flats but the bearings and it’s called Brinelling. I worked in the industry and as I said, they are treated as a joke. As I said they are rotated to keep the oil circulating and the electronics warm.
        They are also suffering from catastrophic gearbox damage especially offshore. Not a good way to run a country.

      • catalanbrian says:

        You really are a quarrelsome creature aren’t you. OK I got it wrong and the turbines are run to prevent flats on the bearings, not the shafts. That is hardly a major error but what is a fact is that they are not run in order to pretend to the public that they are generating, when they aren’t, as you said in your fatuous attempt to pull the wool over people’s eyes Your statement about “catastrophic gearbox damage” is typical of your blinkered viewpoint. You present no evidence for this statement to indicate that this is significant or not. Given the large number of turbines out there it would be very surprising if there were to have been no gearbox failures, but in your biased manner you present this as being a massive negative. Perhaps you do have the data in which case you might like to share it. Or is this just a made up thing, like much else that the anti wind lobby vomits out?

      • catweazle666 says:

        “Your statement about “catastrophic gearbox damage” is typical of your blinkered viewpoint.”

        Oh dear, you just can’t resist abusing anyone who attempts to correct your multifarious errors.

        Once again, you demonstrate that you haven’t a clue what you’re talking about, you have no understanding whatsoever of the engineering problems that beset the things (or, I suspect, any engineering knowledge whatsoever), you just can’t possibly stand not to have the last word.

        As luck would have it, a good friend of mine has just landed a nice lucrative contract reconditioning wind turbine gearboxes – lots and lots of them all failed way short of their specified life, and I can assure you that “catastrophic” barely does justice to the condition they are in. And all paid for by the electricity consumer, naturally.

        As for “You really are a quarrelsome creature aren’t you”, that’s rich, coming from you..

      • catalanbrian says:

        I tend to listen to people who provide facts not distortions of the truth. No I am not an engineer,myself, but my son has a Master’s degree in engineering,and a is member of the Institute of Civil Engineers. He is directly involved in the wind industry, so I would think that my information is probably more accurate than that used by you.

        You know what? I don’t believe your tale about your friend and his reconditioning contract.

      • catweazle666 says:

        “You know what? I don’t believe your tale about your friend and his reconditioning contract.”

        You know what?

        I couldn’t care less.

        And if you want to play silly buggers – something I freely admit you are infinitely more proficient at than I will ever be – I don’t believe your boast about your son either.

        See how easy it is to call somebody a liar on a blog when you aren’t ever going to meet them in the flesh?

        Truly, you are a piece of work.

      • Ex-expat Colin says:

        Freshly photo shopped…LOL:

        if this is what Civil Engineering is responsible for I am glad I stayed with electronics etc.

      • Ex-expat Colin says:

        Bird chopper in action

      • Ex-expat Colin says:

        On the subject of maintenance. I once performed maintenance on large span RAF radar antennas on high exposed positions and at sea level. All very close to the sea. Rotating antenna was a Type 80 and one was on Beachy Head (1954). If you get fools to goto sea and fix similar stuff you maybe lucky(?) but those fixers are seriously mental. There is a cost of life figure and we will be paying it via our energy bills also.

        Norwegian Statoil installing floating windmills for the looney Scottish Govt. (Hywind Scotland). If this anything to do with Civil Engineering am glad I’m out of it all.

      • catweazle666 says:

        Ex-expat Colin says: “If you get fools to goto sea and fix similar stuff you maybe lucky(?) but those fixers are seriously mental.”

        Contacts in the trade tell me that the offshore wind lot are attempting to entice rig engineers from the oil industry to fix their flaky white elephants, but surprisingly they’re not too excited by the prospect of having to try to clamber up onto a 150-200 metre tower in the North Sea in a winter storm and replace thirty or fifty tons of broken alternator, gearbox and rotor assembly.

        Funny that!

      • catweazle666 says:
    • Ex-expat Colin says:

      Didn’t see that turbine fire did we? And of course it don’t happen elsewhere?

      The business of doing stuff at sea bothers me and the UK MoD/RN as part of their safety courses I attended (Det Norse Veritas (DNV)) use this thing as an example of a day or two at sea: (at sea there’s always something to go wrong and badly)

      Mine sweeping/killing made simple…if only?

      Well, they have attained the safety cases for windmills, so we have to wait and see. You can have your funeral and you will quickly be forgotten.

  10. Christopher Browne says:

    Actually we are still using stones even though the stone age has ended, just fewer of them due to newer technologies therefor extending their use.

    What I would like to know though is: what is happening to fracking in this country? I know that the government issued one hundred licences to drill for gas, but it seems to be taking an extremely long time to come on line.

  11. manicbeancounter says:

    Somewhere buried in the archives I have a National Geographic Magazine from 1980 when oil prices were touching $40 a barrel – in real terms equivalent to the $140 record of 2008. The lead article speculated that soon prices could touch $80 per barrel. Peak Oil was upon us. In around 1986 they slumped sharply being one factor in the boom of the late 1980s. History is repeating itself.
    I agree with Roger that the slump in the oil price is generally good for economic growth. The immediate impact in this country will be in pockets, particularly on the fine City of Aberdeen. There will be a dip in tax revenues as well. Politically the Scots Nats will suffer. Wider afield so will many of the Gulf States, Russia and Venezuela. Oil will cease to fund the autocrats, so there could be a political dividend as well.

    • David H. Walker says:

      No doubt the Saudis are attempting to shake off their upstart competitors so that the Gulf States remain relevant. With America pumping more oil and introducing new technologies, it was just a matter of time before consumers were looking for product other than in the Gulf States.

      It’s all about maintaining a dominance in the marketplace. The Saudis were on the cusp of seeing an end of theirs.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s