If It’s in the Ground, It Can Only Go Down

This article will go down in history as one of the most poorly researched analysis's of the oil markets ever written with regard to supply and demand, population growth and commodity sunstitution.

I'm not sure upon what Mr. Sharma is basing his statement, "This long-term price decline is due mainly to the constant discovery of new fields and greater energy efficiency, making nonsense of the idea that the world is rapidly running out of oil" as all of the evidence I've seen indicates that oil field discovery plateaued back in the 1960's and has been in decline ever since. The following article lays out this case in great detail (http://www.tsl.uu.se/uhdsg/Publications/GOF_decline_Article.pdf) and I would have expected that a Newsweek cover story might have dug a bit deeper into the actual oil field discovery rate prior to misleading readers about our energy predicament. In fact there is a high probability that the sky high gasoline prices experienced by drivers last summer may just be a prelude to a far more serious energy crisis than we've seen thus far. I'm sure that after it has already happened then Newsweek will run the cover story about the world running out of oil and unfortunately it will be too late to rally the public to take the necessary action to come up with a plan B.

The fundamental problem with this analysis is that reserves of oil are actually decreasing - not enough new oil is being discovered to replace the oil that we consume - over the last 10 years some 100bn new barrels compared to 300bn consumed. There is no indication that this scenario will change in a positive way in the future. So, there is no physical possibility that oil production can continue to grow in the longer term. If that is so, then the only mechanism by which oil prices will enter a "long bear market" is if demand steadily drops over the coming years - ie economic decline.

Another article on Peak Oil that doesn't ever mention any oil production rate figures at all. "Peak Oil" means "Peak Oil Production Rates". Price has nothing to do with that.

This is probably the most dangerous and irresponsible article I've ever seen. It borders on ridiculous to anyone familiar with the geological, geopolitical and investment realities facing the oil industry. There is no mention of U.S.the Department of Energy report, "Peaking of World Oil Production: Impacts, Mitigation and Risk Management," by Robert L. Hirsch et. al. or the Department of the Army report, "Energy Trends and Their Implications for U.S. Army Installations ???or the U.S. Government Accountability Office (GAO)"Crude Oil-Uncertainty About Future Oil Supply Makes it Important to Develop a Strategy for Addressing a Peak and Decline in Oil Production" or the November 2008 International Energy Agency World Energy Report. All of these scholarly and well thought out reports by people who know the oil business say the same thing, "The era of cheap oil is over." And here comes Newsweek publishing this junk from a person with no oil industry background as far as I can tell and from a company at the heart of the global financial meltdown. READ THEM. REPORT ON THEM.

I have personally spent a good deal of the last four years trying to educate the nation's supply chain managers about the changes they need to begin now to get ready for the end of the cheap oil that powers all the world's transportation systems. I use facts to make the case that there are no readily available substitutes for cheap oil.

This article has no facts. Consider that according to the above mentioned IEA report the now producing oil fields are declining at the rate of over 6% a year which means the industry must bring on line about 5 million barrels a year just to stay current. That is the equivalent of a new Saudi Arabia roughly every 2 ½ years. Consider the world uses 30 billion barrels a year and has been finding about 10 billion in spite of massive spending on exploration. Consider that the formerly second largest oil field in the world, Cantarell, located in Mexico is now depleting at a rate of about 30% a year and Mexico will probably stop exporting oil in 2012. The United States get 6% of or oil from Mexico. I could go on and on, but almost anyone except the Editors of Newsweek and the guy that wrote this article will get the drift.

Newsweek needs to correct this false sense of security this article gives. Because even if the recession/depression drops demand for a few years, depletion and rust never sleep and with any recovery the world will face a severe oil supply shortage and much higher prices. The 2005 Hirsch Report apparently missed by Newsweek tells it like it is, ??????without timely mitigation, the economic, social, and political costs will be unprecedented.???

This is probably the most dangerous and irresponsible article I've ever seen. It borders on ridiculous to anyone familiar with the geological, geopolitical and investment realities facing the oil industry. There is no mention of U.S.the Department of Energy report, "Peaking of World Oil Production: Impacts, Mitigation and Risk Management," by Robert L. Hirsch et. al. or the Department of the Army report, "Energy Trends and Their Implications for U.S. Army Installations ???or the U.S. Government Accountability Office (GAO)"Crude Oil-Uncertainty About Future Oil Supply Makes it Important to Develop a Strategy for Addressing a Peak and Decline in Oil Production" or the November 2008 International Energy Agency World Energy Report. All of these scholarly and well thought out reports by people who know the oil business say the same thing, "The era of cheap oil is over." And here comes Newsweek publishing this junk from a person with no oil industry background as far as I can tell and from a company at the heart of the global financial meltdown. READ THEM. REPORT ON THEM.

I have personally spent a good deal of the last four years trying to educate the nation's supply chain managers about the changes they need to begin now to get ready for the end of the cheap oil that powers all the world's transportation systems. I use facts to make the case that there are no readily available substitutes for cheap oil.

This article has no facts. Consider that according to the above mentioned IEA report the now producing oil fields are declining at the rate of over 6% a year which means the industry must bring on line about 5 million barrels a year just to stay current. That is the equivalent of a new Saudi Arabia roughly every 2 ½ years. Consider the world uses 30 billion barrels a year and has been finding about 10 billion in spite of massive spending on exploration. Consider that the formerly second largest oil field in the world, Cantarell, located in Mexico is now depleting at a rate of about 30% a year and Mexico will probably stop exporting oil in 2012. The United States get 6% of or oil from Mexico. I could go on and on, but almost anyone except the Editors of Newsweek and the guy that wrote this article will get the drift.

Newsweek needs to correct this false sense of security this article gives. Because even if the recession/depression drops demand for a few years, depletion and rust never sleep and with any recovery the world will face a severe oil supply shortage and much higher prices. The 2005 Hirsch Report apparently missed by Newsweek tells it like it is, ??????without timely mitigation, the economic, social, and political costs will be unprecedented.???

Reuters: US Bankers & European Bankers go for Islamist Finance Jobs

I said a Capitalist is a Capitalist, Politics don't play into the Money Game.

This a Capitalist Society...Money is the Only Thing that Matters.

By Raissa Kasolowsky

MANAMA (Reuters) - A growing number of investment bankers whose jobs have been axed due to the global financial crisis are leaving conventional banking to move into Islamic finance, banking executives say.

Executives from Islamic banks told a Reuters Islamic Banking and Finance Summit this week the number of applications from conventional bankers wanting to enter the industry, seen as having huge growth potential, was rising sharply.

And most agreed the move from conventional to Islamic banking was relatively straightforward.
Earlier this week Japanese brokerage Nomura Holdings Inc (8604.T: Quote, Profile, Research, Stock Buzz) said it would cut another 50 investment banking jobs, while UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz) said it was culling 8,700 posts, almost half in its wealth management division.

With all these bankers out of work, the appetite for jobs in Islamic finance is picking up, executives said.

GFH's Kazerooni, who is based in Bahrain, said jobseekers were also pushing harder than ever to get themselves noticed.

"People buy the ticket and fly out here and say, 'I'm here, please interview me'," he said.

A number of banks are building up their Islamic finance units in the wake of the global credit crisis, tapping into a nascent industry estimated at $700 billion to $1 trillion in asset size and enjoying 15 to 20 percent annual growth.

Most participants at the summit agreed a background in Islamic law was a bonus but not a must. Many banks have in-house scholars who are consulted on whether a structure is sharia-compliant, and know-how of conventional banking is actually highly prized, especially in the Gulf Arab region.

"Today the Islamic element of the transactions is relatively straightforward," Kazerooni said. "You have good scholars who help a lot. You need good lawyers, then you are fine."

"There is a danger of these conventional investment bankers trying to impose their ideas onto Islamic structures. It is very dangerous," said M. Hidayathullah Baig, head of Islamic finance and advisory at Bahrain-based investment bank First Energy Bank. Continued...

Peak oil is a reality. None of your arguments stand up to scrutiny.
1: World oil reserves have been exaggerated. Between 1984 and 1989 the OPEC countries doubled their reported reserves in the "Quota Wars" - since then their reserves have barely changed - despite producing vast amounts of oil in that time.
2: Discovery has been dropping for 40 years. We now find 1 barrel for every 4 we consume.
3. Production is already declining in some of the world's most important regions. The US peaked in 1970 (dropping at 3%), the North Sea in 1999 (dropping at 6%), Mexico's Cantarell field - the world's 3rd largest - peaked in 200 and declined at 10% a year, Indonesia have left OPEC because of their feeble oil production, Russia have come out and said they will not increase production. Overall as much as 60 countries are past peak.
4. The IEA say that taken together all the oil fields currently in production are declining at 7% a year. That means we need to bring on stream the equivalent of 1 Saudi Arabia of new production every 2 years
5. Despite the price of oil tripling between 2005-2008, world conventional oil production did not increase. It took demand destruction to bring the price down.
6. New technology only allows us to get the dregs of an oil field at the endof its life, it does not have much effect on the date ofpeak production.
7. Offshore oil production is only every going to be a fraction of world production (less that 8%) and is incredibly expensive. It has very high decline rates after peak.
8. Oil sands and coal to liquids cannot acheive vey high production rates as it is limited by the ability to extract the oil due to the availablity of water, natural gas and the fact that it is essentially a mining process.
9. Alternatives such as electric cars would require the worldwide replacementof the stock of 800 million cars, Tesla - the largest electric car producer in the US - last year made 300 cars.
10. The ability of the oil exporting countries to increase exports is severly limited by the fact that their own consumption is increasing as much as 6% a year and that this is not effected by high oil prices as they subsidise their gasoline.
11. China and India - One third of the world's population - use 1 barrel per person per year. The US use 25 barrels per person per year.

Peak Oil is here. If you want to have a look at this in depth check out theoildrum website or the film "PetroApocalypse Now?"

"And when demand eventually picks up, there's usually some new alternative (nuclear energy, natural gas, green technologies) waiting to pick up some of the slack."

Usually? That's a very casual argument. He could have gone with 'probably' or 'hopefully' just as well. He doesn't analyze the challenges of replacing the energy from oil with energy from nuclear fission, natural gas, green technologies (or coal for that matter). I remain deeply skeptical of this kind of unwarranted optimism based on business as usual.

"And when demand eventually picks up, there's usually some new alternative (nuclear energy, natural gas, green technologies) waiting to pick up some of the slack."

Usually? That's a very casual argument. He could have gone with 'probably' or 'hopefully' just as well. He doesn't analyze the challenges of replacing the energy from oil with energy from nuclear fission, natural gas, green technologies (or coal for that matter). I remain deeply skeptical of this kind of unwarranted optimism based on business as usual.

Not only the oil should lower the price but everything else need's to lower the value, is no sense to keep raise on everything the consequence is obvious now all we are in trouble !..........

Exxon trolls at work here. Read some experts at http://www.peakoil.net:

A specific article: http://www.peakoil.net/headline-news/total-general-manager-we-have-to-save-save-save

News Flash... Oil is up over 50% from its low!!!! Moron writers...

Alternative Fuels are so far off in actually helping let alone meeting our demands. We need to drill in Anwar and tap into the shale oil in Colorado. There is also a lot of oil off-shore that we can't drill for either because the democrats have determined global warming is a fact. Well it is a fact the earth's avg. temperature went up a 1/2 degree in the 1990's but since 2001 has remained constant. Current forecasts call for the earth to actually cool for the next few decades. Man-made CO2 doesn't even begin to compare to the amount releaed annually by volcanic activity which by the way is the greatest source of greenhouse gases annually. We need to stop volcanic activity. Right!!! What we need is to continue to drill and use oil to meet our needs. We can cut back where we can but until a "GREEN" fuel source can be developed to meet global demands oil is it. We can become more energy independent simply by tapping our own resources. But today bio-fuels, solar, wind power and propane simply cannot meet demands and unless there is a major breakthrough
in technology we will just need to conserve where we can but we must develop and tap into our own resources. It will create jobs here and reduce our dependency on foreign oil.

The U.S. has three times the Saudi oil reserves (1 trillion barrels) in the Utah-Colorado shale oil deposits. Within the last 5 years the technology needed to begin extracting it has been on the shelf. Yet Congress has continued the ban on drilling there. Considering that the burning of oil based petrol products is the most efficient way of generating atmospheric CO2, the best decision now is to continue the ban in order to stave off global warming. Nevertheless the U.S. has an ace up its sleeve which when played will keep oil prices low for far longer than anyone currently imagines.