Hoarding is exactly what the government is doing right now by filling the SPR, and frankly it's the best thing that could happen. It drives prices up. High prices encourage demand destruction. They also finance new well development. The hoarded oil gives us a buffer to fall back on once shortages become more prevalent. High prices are what we need in order to adapt to what's coming, and the sooner they happen, the better.
Posted: Sat Dec 04, 2004 11:42 am Post subject: Dr. Campbell: First Set of Replies
Phil asked:
“I would like to thank you, Dr. Campbell, for the tremendous service you've done to the world. Your name will go down in history as "one of the good guys." I've learned so much about this subject from you particularly; and your eloquent interviews at Global Public Media are what sold me, in the beginning, to the seriousness of the situation.”
Dr. Colin J. Campbell:
Thank you for your kind words. Depletion is a normal condition: the glass starts full and ends empty and the quicker you drink it the sooner it is gone; we are born, we die, and pass middle age. But somehow people have great difficulty in getting their heads round the obvious truth that oil and gas are subject to depletion too, being finite resources formed in the geological past. Where we are on the depletion curve is less easily answered, because public numbers are so unreliable, but when ExxonMobil using valid industry numbers, with revisions properly backdated, tells us that discovery peaked in the mid 1960s, it should surprise no one that the corresponding peak of production now arrives.
Aaron asked:
“Are ASPO updates on predictive depletion rates for hydrocarbons based on new data from reserves estimates alone, or are other factors included?” If so what are the other factors?
Dr. Colin J. Campbell:
The model considers three groups of country
1) Post midpoint counties (namely those which have produced more than half of their estimated total endowment) where future production is assumed to decline at the current depletion rate ( annual production as a percentage of what is left, namely Reserves + Yet-to-Find)
2) Pre midpoint countries where production is assumed to be flat to midpoint or as local circumstances suggest otherwise (most are close so the assumption is not very critical to the longer term)
3) Five Middle East countries. These are the most difficult (seems they are reporting total discovered not remaining reserves). Presently they are modelled with production flat to midpoint, but it might make more sense to continue the plateau until their depletion rates rise to more normal levels of say 3%. They are assumed to be running at capacity with most efforts directed to offsetting the natural decline of their ageing giant fields.
Pops asked:
“What are you doing personally in preparation for Peak Oil?”
Dr. Colin J. Campbell:
It is difficult to prepare for such a major historical discontinuity : I am too old for it to matter much anyway. But I have the most conservative investments I can find, avoiding the dollar, preferring fixed interest bonds etc, but including a couple of oil service companies. I think it would be good to invest in Russia with its ample energy and low standard of living, but have not figured out how to do so.
Tdrive asked:
“Dr. Campbell:
Assuming you are the CEO of a major integrated oil company, such as Exxon, what would you have done differently? What (would you do differently) now?
Dr. Colin J. Campbell:
If I were CEO of the likes of ExxonMobil I could not have done much different in the past than was done. I under-reported discovery as much as I could while delivering an adequate financial result. In this way I built up a stock of unreported reserves to cover any temporary setback. I would have asked my geologists to tell me the truth and would have concentrated on places having the best prospects not the best deal. I would have fired most of the economists. I would indeed have merged with other companies to acquire their reserves cheaper than looking in the ground.
So far as the future is concerned I would accept that my business is in long term decline, but would try to achieve that profitably and sensibly. I would change the staff culture to make it more horizontal, paying adequate but modest wages, without bonuses or financial promotions, but I would offer secure jobs. I would be honest explaining that I was in decline. I would not go into renewables etc recognising that I lacked the experience and mindset to manage that kind of business having been born with a sugar coated silver spoon in my mouth. I would concentrate on my home country and dispose of marketing and refining affiliates overseas. I would aim to pay a reliable modest dividend to loyal long term shareholders. I would do my best to inform my government and the public of the real situation, discouraging resource wars, but would do my best to make a special long term deal to market oil from a Middle East country overseas, such as Iran, offering them a very fair deal. _________________ "We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time." - TS Eliot*
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