[CrashList] RE: Politics not economics drive the oil price
jones118 at lineone.net
Wed Sep 20 04:41:52 MDT 2000
Peter Odell's article in the Financial Times of September 19 is a
particularly upbeat and optimistic assessment of oil reserves. According to
Odell, the world is running into oil, not running out of it: "world oil
production can go on expanding at 2 per cent per annum until after 2050,"
Odell says. "Claims that current high prices indicate a world running out of
oil have no credibility."
How much credibility does Odell have?
Peter Odell is an eminent oil and energy economist. His credentials seem
impeccable. He was even hired by Greenpeace to prepare a survery of world
oil. In that 1997 report [archived at
<http://www.greenpeace.org/~climate/arctic99//index.html> ] Odell took the
same optimistic view: there is no shortage of oil. Any shortages which do
appear are the result of political machinations or the notorious 'short-term
market fluctuation' so beloved by Doug Henwood and other economists.
In the same report, made for Greenpeace, Odell took issue with those who
argue that oil production will peak sooner rather than later. In particular,
he denounced PetroConsultants (for whom both Colin Campbell and Jean
Laherrere, the oil industry's most famous doomsayers, worked as analysts).
Petroconsultants higly pessimistic take (they think world oil production
will peak any time now) was dimissed by Odell, who said their "data is an
'outlier' from th[e general] concensus for reasons which are impossible to
evaluate, given the private and inaccessible nature of the study and,
indeed, of the organisation itself."
But Odell's own approach has its critics, including Colin Campbell himself,
who told the energyresources elist on 24 Jone 200 that "It is ironic that
Green Peace in its legitimate concern for the environment uses flawed data
to suggest that the world has such an abundance of oil that the industry has
no need to explore offshore areas. The Climate Lobby too tends to fear that
an imminent peak of oil production might take the wind out of its sails."
Thus Campbell argued that Greenpeace had allied itself with the devil for
its own purposes.
Another commentator, Murray Duffin, later criticised Odell's findings
thusly, saying Odell:
- Assumes that reserves growth in the future will be at least as high as in
1973-96, (very unlikely-see 3.5) but doesn't say how quickly. (It would have
to bequicker than in the reference 23 years to do much good.)
- Takes the USGS number for yet-to-be-discovered, the most optimistic
number,and ignores discovery rate.
- Assumes 35 Gb/yr production by 2020, but gives no detail on how we get
there from here.
- Doesn't discuss who controls the oil wells.
- Simply invents numbers for total non-conventional oil reserves with
noreference to credible sources & no consideration of costs or rate of
- Assumes fairly explicitly that technology will take care of the details,
with no mention of what technology, or how quickly, or reference to past
progress. With this set of assumptions he concludes that there is no problem
in the foreseeable future.
[energyresources elist, 16 July 2000].
I'll post Duffin's paper separately.
The USGS [United States Geological Service] has produced highly-optimistic
assessments of remaining oil, which have also been widely criticised.
Interestingly, the USGS itself now seems to have come round to the
Petroconsultant/Colin Campbell view that the Peak is imminent, to judge from
one of their own recent publications:
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