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Debunking 4 oil industry myths

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Think high oil prices are good for global warming? Think we have reached peak oil, and Opec will have us over a barrel for ever? The U.K.-based Central For Global Energy Studies aims to dispel a few oil industry myths that many industry experts seem to take for granted:

Myth No. 1: Oil Isn’t Renewable
The general consensus is that oil is a finite resource and that it is an ‘increasing cost’ industry, states CGES analysts in a note.

“Also oil may not be finite, if Professor Gold is right and oil results from the transmutation of gas arising deep in the earth’s mantle and not from the decay and compression of organic matter in an anaerobic environment.

Myth No. 2: We Have Reached Peak Oil
That’s the big one. The notion that the oil industry’s best days are behind it and the world is not finding enough oil.

“Is it not odd then that global oil production increased by 71% between 1970 and 2010?” asks CGES.

The reserves-to-production ratio of countries with some of the biggest oil reserves appears to have increased, not decreased:

  • Iran’s reserves to production ratio today is 102 years versus 27 back in 1974
  • Venezuela’s is 214 years compared with a very low 11 years in 1970
  • Libya’s is 77 versus 13 in 1980.
  • Iraq’s 130 versus 24 in 1980.
  • Saudi Arabia’s 87 compared with 45 in 1980.

Myth No. 3: OPEC Is Here To Stay
This is an interesting observation by an energy consulting firm that was founded by Sheikh Zaki Yamani, the Saudi oil minister charged with running the most important energy job in the world from 1962-1986.

“There is the fervently held belief that OPEC will remain as strong as ever and that it is here to stay over the long haul. Many observers of the industry are confident that Saudi Arabia will continue to steer the Organisation towards ever-higher oil prices, because of the Kingdom’s own burgeoning financial needs.

“But will OPEC survive Iraq’s huge planned capacity expansion and will Saudi Arabia gladly continue to carry so much gold-plated spare capacity?”

Myth No. 4: High Oil Prices Are Good For Global Warming
It is generally believed that high oil prices will compel consumers to seek alternative energies and reduce their dependence on the CO2 emitting stuff.

“But surely the curbing of fossil fuel consumption will place a cap on oil price rises, perhaps even causing prices to fall…” argues CGES.

Financial Post

9 Comments on "Debunking 4 oil industry myths"

  1. Cloud9 on Sat, 22nd Oct 2011 1:20 pm 


  2. Analoggod on Sat, 22nd Oct 2011 3:09 pm 

    Iv been on the front lines of peak oil for along time,going on 5 years of everyday growth and preparation…all these articles (yergin ect)it seems as if there only point is to cast doubt,make you question yourself.

    Stand strong we will all be free soon.

  3. Zoli on Sat, 22nd Oct 2011 3:31 pm 

    “High Oil Prices Are Good For Global Warming”

    We will burn all the oil, gas and coal. Some years earlier or later doesn’t matter much for the climate. 🙂

  4. Bob Owens on Sat, 22nd Oct 2011 6:16 pm 

    How can this website publish this garbage?

  5. DC on Sat, 22nd Oct 2011 8:04 pm 

    Myth #1, Yeahs a myth for you,Abiotic oil..omg..what is the FP, a tabloid now?

    Myth#2 We have reached PO, or very close to it…Production had platueaed even when prices were pushing 150 dollars, output barely moved.

    Myth#3 What? Opec? who cares if they stay or go, wont make any diffence how much oil is in the ground. Never heard any POer talk about OpEC going away, or that we should even care if it did.

    Myth#4. Wrong again. High oil prices are making really desructive projects like the Tar-sands, shale, fraking viable. Though high prices do encourage alternatives, they do so because the hope is they can do what oil does, for equal or less money. Clean is almost afterthought. But for the tar-sanders, clean never mattered. High prices are actually going to acelerate GW if the tar-sands are any indication.

  6. cusano on Sun, 23rd Oct 2011 12:05 am 

    Wow. This article makes my head hurt. The author really needs to start researching the subject at hand. After a thorough and in depth course of study, I’m sure we’ll see an apology for this dismal piece.

  7. Btritt on Sun, 23rd Oct 2011 1:35 am 

    Is Peakoil so desperate for articles or is it that they are now part of the problem, not the answer? Has Peakoil been bought by Big Oil to spread propaganda? The shift in direction seems to point that way.

  8. Gale Whitaker on Sun, 23rd Oct 2011 4:11 am 

    I love this article. I demonstrates graphically that there is no hope for the world. Drink up my lads, the republicans are going to win the presidency and drill a stinking hole right thru the earth to the other side. Tomorrow’s children be damned.

  9. Windmills on Sun, 23rd Oct 2011 7:45 pm 

    I enjoy articles like this, the ones that are so easy to shoot full of holes. It’s also handy to know how other people think and how misinformed they are.
    Myth#1: It doesn’t matter if you make a few molecules of oil here and there through obscure methods. It’s global flow rates and costs that matter.
    Myth#2: No one called peak in 1970, dingbat!
    Myth#3: Who cares about your red herring?

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