The Real Cause Of Low Oil Prices: Interview With Arthur Berman

[KoKo]

The Real Cause Of Low Oil Prices: Interview With Arthur Berman
By James Stafford | Sun, 04 January 2015 00:00?

With all the conspiracy theories surrounding OPEC’s November decision not cut production, is it really not just a case of simple economics? The U.S. shale boom has seen huge hype but the numbers speak for themselves and such overflowing optimism may have been unwarranted. When discussing harsh truths in energy, no sector is in greater need of a reality check than renewable energy.
In a third exclusive interview with James Stafford of Oilprice.com, energy expert Arthur Berman explores:

• How the oil price situation came about and what was really behind OPEC’s decision
• What the future really holds in store for U.S. shale
• Why the U.S. oil exports debate is nonsensical for many reasons
• What lessons can be learnt from the U.S. shale boom
• Why technology doesn’t have as much of an influence on oil prices as you might think
• How the global energy mix is likely to change but not in the way many might have hoped

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http://oilprice.com/Interviews/The-Real-Cause-Of-Low-Oil-Prices-Interview-With-Arthur-Berman.html

[RKP5637]

1. Especially this paragraph IMO!

http://oilprice.com/Interviews/The-Real-Cause-Of-Low-Oil-Prices-Interview-With-Arthur-Berman.html

We’ve read a lot of silly articles since oil prices started falling about how U.S. shale plays can break-even at whatever the latest, lowest price of oil happens to be. Doesn’t anyone realize that the investment banks that do the research behind these articles have a vested interest in making people believe that the companies they’ve put billions of dollars into won’t go broke because prices have fallen? This is total propaganda.

[FBaggins]

15. Let's not forget though that this opposing view is from Arthur Berman

He's got something of a vested interest of his own here and is hardly above propaganda.

[RKP5637]

19. Yep! n/t

[NYC_SKP]

2. Recommended.

Thanks!

[NYC_SKP]

3. This:

Many don't understand.

Time is rarely considered adequately. Renewable energy accounts for a little more than 2% of U.S. total energy consumption. No matter how much people want to replace fossil fuel with renewable energy, we cannot go from 2% to 20% or 30% in less than a decade no matter how aggressively we support or even mandate its use. In order to get to 50% or more of primary energy supply from renewable sources it will take decades.

I appreciate the urgency felt by those concerned with climate change. I think, however, that those who advocate a more-or-less immediate abandonment of fossil fuels fail to understand how a rapid transition might affect the quality of life and the global economy. Much of the climate change debate has centered on who is to blame for the problem. Little attention has been given to what comes next namely, how will we make that change without extreme economic and social dislocation?

I am not a climate scientist and, therefore, do not get involved in the technical debate. I suggest, however, that those who advocate decisive action in the near term think seriously about how natural gas and nuclear power can make the change they seek more palatable.

The great opportunity for renewable energy lies in electricity storage technology. At present, we are stuck with intermittent power and little effort has gone into figuring out ways to store the energy that wind and solar sources produce when conditions are right. If we put enough capital into storage capability, that can change everything.

By James Stafford of Oilprice.com

[Madmiddle]

5. Renewable energy has been around for decades.

Oil is the main cause of global weather conditions worsening, yet oil magnates still don't understand that there won't be anyone around to buy anything if conditions get worse, as of course they are predicted to if oil consumption doesn't slow. So what your filling the DUers with is pure propaganda.

[NYC_SKP]

6. Please tell me where the excerpt is in error.

I'm a realist and a professional in renewable energy.

If you're going to say such things as you have, you should be able to back them up.

Please proceed.

[griloco]

7. What "technical debate"?

"I am not a climate scientist and, therefore, do not get involved in the technical debate."
Sounds like the "debate" on nicotine addictiveness or the "flat earth" debate.

[NYC_SKP]

8. Beware binary positions. He doesn't deny AGW, he just doesn't pretend to be an expert.

Also, his numbers are WAY off.

The US presently gets 9.26 of all energy needs from renewables, slightly more for electricity generation only.

"Time is rarely considered adequately. Renewable energy accounts for a little more than 2% of U.S. total energy consumption" is WAY wrong.

Anyway, he is correct about any how long it will take to change over to very high renewable mix, decades.

And he is correct that energy storage is the key to more rapidly getting there with the grid.

And he is pretty much right that natural gas is allowing us to move to more renewables more rapidly than if we were stuck on coal as we have been for so long.

[griloco]

9. What's he selling?

The "I am not a climate scientist" is the new dodge to renewable energy replacing "No global warming/it's cyclical/it's not man-made." Any thing he asserts therefore is suspect. Particularly his estimates on how quickly things can change as he has no way of predicting advancements in technology.

[NYC_SKP]

10. Look, griloco. Unless you have read the piece and have something substantive to say, we are done.

I'm not him, I don't speak for him, I didn't write the OP, and I only posted the excerpt I posted to make a couple of specific points.

I don't have time to squabble over what he means or what he's selling.

If you have some specific energy solutions or ideas to suggest or discuss, have at it.

[griloco]

13. With all due respect

I read the "interview". It reads like an informercial. Short questions followed by lengthy statements. As you pointed out he is inaccurate in easily verifiable numbers.

Why believe anything he says? (rhetorical)

[NYC_SKP]

14. Because it's rare to see anyone state those particular facts in any publication.

That we need to do it but that it can't be done overnight, there are forces of inertia on both sides that prevent rapid change, and there are technical hurdles to clear even once consensus is reached to take action.

That's what I'm saying needs to be heard.

Even if the source is crooked, the facts are still there.

[brett_jv]

16. Apparently, despite your prodigious post count ... you're forgetting 'where you are' ...

Allow me to remind you that, on the DU (for the most part, the consensus seems to be) that if it weren't for the evil oil companies (and the evil politicians ... 99% of which are Republicans), we could easily be running our entire world economy ... not just our autos, but all our 18-wheelers, all our jumbo jets, all the tractors in our fields, all our trains, all our bulldozers ... everything ... on 'solar', 'wind' and 'biofuels' within few short years... of course, with 0 loss in terms of anyone's standard of living (although we may all need to go vegan, from what I've gathered).

There are no technological hurdles, no infrastructure issues, no problems with low EROEI, no energy storage/portability problems, no loss of food supplies ... none of that really exists. There simply are no 'physical' or 'chemical' realities involved here, it's ALL political.

I.E. ... it's pretty much entirely 'the bad guys fault' that the world just hasn't done it yet.

In my many years here I've determined that you pretty much either accept these as axiomatic facts, or ... be accused of being one of the bad guys yourself.

[Bill USA]

11. "Much of the climate change debate has centered on who is to blame for the problem."..??

there is no debate about climate change among rational people and their certainly is no disagreement - among climate scientists and other rational people - as to what is the major cause is: burning fossil fuels.


he says: " I think, however, that those who advocate a more-or-less immediate abandonment of fossil fuels fail to understand how a rapid transition might affect the quality of life and the global economy"

.... there is nobody who I am aware of who proposes an "immediate abandonment of fossil fuels". This would be impossible anyway and everybody knows that. What those who want to see fossil fuel consumption phased out are saying is that we have to begin phasing out NOW - because it does take decades to achieve.

[NYC_SKP]

12. No need for alarm here. We are phasing it out, slowly as it seems.

Not everybody knows that it will take time.

On this very board people say we should just get on with putting solar on every roof and "boom" we're good.

They don't understand time of use, grid capacity, infrastructure limits, net metering, regulatory resistance, demand response, load leveling, tier pricing, the energy market, etc.

If they don't understand these things, then they think it can be done right away, more quickly than it can be even if everyone was on the same page about doing it.

The very best thing we could do to expedite the shift would be to educate as many people as possible.

[bemildred]

18. "Time is rarely considered adequately."

Boy is that the truth. Most of the time it is not considered at all, or at best it is considered adequate to imagine what things might look like one or two steps ahead. If you can imagine how something like a car engine works, you are doing well. And yet a car engine is very simple compared to any living thing. And complex dynamic systems are very unpredictable even in principle. But we are very fond of that feeling that we know what we are doing, so we cling to our mechanical metaphors.

[NYC_SKP]

20. Excellent point. An interesting and apt term that's coming in to use: "Urban Metabolism"

In urban planning, the design of homes and cities, (and even of automobiles), it's possible to think of all of these as analogous to living creatures or living systems.

All have energy and matter ins and outs, waste products, etc., and interactions with other entities.

Thanks for the reply!

[Initech]

4. So reckless speculation after hours trading wasn't the culprit? Interesting.

[brett_jv]

17. Based on what I've been investigating rather thoroughly for 10+ years ...

The fact that historic world global conventional crude production peaked somewhere between 2005 and 2008 had a heck of a lot to do with the price spikes we saw in 2008.

We've now (as a world) entered the 'undulating plateau' phase, where prices spike, hence demand lowers in response, hence prices then lower, hence demand again rises, hence prices again spike ... etc, etc, etc ...

And during this time ... we, i.e. 'the world population' ... will be continually lied to by opportunistic jerks (who will appear on all sides of the debate) where it concerns 'the true causes' of what's going on.

Eventually people all over the world will begin to notice ... the 'highs' in terms of 'price' ... will keep getting higher. And those high prices will always last LONGER than they did ... the last time they got high. And the 'lows'? They'd be 'less low' and those lows will last 'less long' than they did the time before.

Once this happens a few more times, once people are brought along to truly SEE what's happening ... they will come to realize that the one group of people who's been 'telling the truth' are the ones who've been (for years) shouting from teh rooftops that 'global production has peaked', and that this means that ... as a world ... we're officially beginning to run out of oil ... and that it started a few years ago ...

And with that recognition will also hopefully come the realization that we damn sure better start SERIOUSLY looking to other solutions, before they become so expensive that we can't possibly implement them.

Some say that the more pressing issue facing this world is 'climate change' (as opposed to peak oil) and while I'm the first to say this is a HUGELY pressing issue, I personally don't believe it's the 'more pressing' of the two. Sounds odd to say at a time when gas is suddenly (almost magically) at only $2.10 a gallon, but ... remember this only reflects supply and demand ... it doesn't represent COST of production. And that is a hugely important part of the global energy equation. Production costs have really NOT fallen, only PRICE has. What do you think that is going to do to production in the immediate future?

I know nobody HERE would be so dumb, but to any lurkers who may be reading this, if you're thinking 'happy days are here again, time to buy that SUV!', lemme just urge you think twice. Climate Change impacts aside (which should concern you regardless), this little 'low price oil-boom' we're experiencing ATM is going to be VERY short-lived. Don't be surprised to see US$4/gal again for gasoline no later than this time next year.

We are effectively BEING LIED TO when it comes to the true relation between current PRICES ... and actual 'global production capacity' ... we only having a TINY uptick in global production, driven by the US ... but our US producers can NOT keep producing the tight shale plays at these current low global crude prices ... the numbers simply do not work ... ergo ... something has GOT to give.

And when it comes down to THAT ... you KNOW ... it's going to be you and me.