The Peak Oil Hoax And My Conversion

It wasn't too long ago I actually thought the peak oil theory had merit. Now I realize it is a hoax just like biogenic petroleum origin, "fossil" fuels, and man-made carbon dioxide causing global warming are all hoaxes.

Mexico Will Run Out Of Oil In 9 Years

Analysts watch, wince as Mexico's oil supply dwindles.

"Mexico's oil production is in decline. There's probably no way to stop it," said Mike Rodgers, an expert at one of the top oil industry consulting firms, PFC Energy in Houston.

Mexico is the second largest supplier of oil to the United States (about 1.5-million barrels a day). But output from its major fields is dwindling fast, according to official figures from the state-owned oil giant Petroleos Mexicanos (Pemex). The country's known oil reserves will run out in nine years, the government says, potentially undermining the nation's oil-dependent budget.

Mexico's decline only adds more pressure to prices in a tight global oil market, which hit $83 a barrel Thursday. Worse still, its emptying wells are only a reflection of a global decline in aging oil fields around the world.

With no major oil fields left to discover, analysts say the world is approaching "peak oil," the moment at which oil production hits its maximum capacity and slowly starts to fall.

Mexican output peaked at just over 3.4-million barrels a day in 2004. "I don't believe we'll ever see it that high again, no matter how much is invested," said David Shields, an oil industry consultant in Mexico City.

Daily output at Mexico's biggest oil field, Cantarell, highlights the problem. Production there dropped by a staggering half a million barrels in the last 18 months, to 1.5-million barrels from 2-million. Once the world's second-biggest oil field, it is expected to continue losing production, down to as little as 600,000 barrels a day by 2013.

Keep It Simple

Getting Crude in All the Wrong Places

you may just conclude that our energy situation appears to be far more precarious than you'd previously thought.

As a result, I've repeatedly urged my Foolish friends to make certain that their portfolios contain a reasonable blend of energy names. I don't think you need to get too fancy here, perhaps beginning with the two big enchiladas in the production and oilfield service sectors, ExxonMobil (NYSE: XOM) and Schlumberger (NYSE: SLB). Beyond that, it might make sense to fill in with other solid names in the sector, such as natural gas growth story and Motley Fool Inside Value recommendation Chesapeake (NYSE: CHK) or deepwater drilling king Transocean (NYSE: RIG).

I prefer ConocoPhillips and ChevronTexaco over ExxonMobil just because they are cheaper. For the same reason I prefer Halliburton over Schlumberger. Of course Transocean is my favorite: indeed Transocean is the deepwater drilling king. Merger with GlobalSantaFe approved today.

Pickens: Oil Won't Hit $100 Until After This Year

Oil will hit $100 but probably not in 2007: Pickens

NEW YORK (Reuters) - Oil will continue to trend higher after hitting fresh highs over $82 a barrel but is unlikely to puncture the $100 level this year, Texas oilman and investor T. Boone Pickens said on Wednesday.

"You'll hit $100 -- I don't think you'll hit $100 this year unless you have some kind of geopolitical event that causes that to happen, but you're going to get to $100 at some point," Pickens told Reuters in New York.

Concerns that supplies will struggle to keep up with demand as the Northern Hemisphere gears up for winter pushed U.S. crude oil futures to a record $82.51 a barrel on Wednesday before they settled at $81.93, prompting forecasts prices could rise to $100.

"The trend is up, and if your supplies are 85 million barrels per day (bpd) globally, and you look at what demand is predicted to be for the fourth quarter, it is 88 million bpd," Pickens said.

"It means probably demand is greater than supply and the price goes up further."

Pickens said that while oil will eventually reach triple-digit levels, it was unlikely to spike to $100 this year unless an unforeseen event upsets fundamentals.

Pickens, who heads the BP Capital hedge fund, which was valued at $4 billion earlier this year, said prices could be pressured if demand shows signs of wavering.

"We haven't been at this level, so I don't have a feel for when we start killing demand with price," he said, adding oil could fall back to $78 a barrel before rising further.

In April when prices were around $65 a barrel, the legendary oilman forecast oil prices could tip $80 in late 2007 due to supply constraints.

Goldman Finally Gets It

Goldman Raises Year-End Oil Price Forecast to $85

Sept. 17 (Bloomberg) -- Goldman Sachs Group Inc. raised its yearend oil-price forecast to $85 a barrel and said there was a ``high risk'' of a jump above $90 because supplies will drop to critical levels in the fourth quarter, when heating demand peaks.

Goldman increased its 2007 yearend forecast from a previous prediction of $72 a barrel, analysts at the world's biggest securities firm said in a research note today. Prices are forecast to reach as high as $95 a barrel by the end of 2008, Goldman said.

Surging oil prices threaten to erode the profits at energy consuming companies such as Air France-KLM Group, Europe's biggest airline, whose first-quarter earnings missed analyst estimates because of higher jet fuel costs. Crude oil touched a record $80.50 a barrel in New York today on concern an OPEC production increase starting Nov. 1 won't come soon enough to bolster supplies for the northern hemisphere winter.

``In the current environment, the risk of oil prices spiking to $95 remains very high should inventories continue to draw down to critical levels,'' Jeffrey Currie, a London-based commodity analyst at Goldman, said in a telephone interview today.

The 500,000-barrel-a-day output increase announced by the Organization of Petroleum Exporting Countries last week to assuage fears of a supply shortfall ``will be too little, too late,'' the Goldman report said.

Oil inventories held in Organization for Economic Cooperation and Development nations will shrink at a rate of 1.5 million barrels a day next quarter, compared with the seasonal norm of a 0.5 million-barrel-a-day drop, because demand is that much stronger than supply, Goldman said.

World oil production during the summer was almost 1 million barrels a day lower than a year earlier while demand was 1 million barrels a day higher, the research note said.

This is extremely bullish. Moo.

Oil industry 'sleepwalking into crisis'

Former Shell chairman says that diminishing resources could push price of crude to $150 a barrel

Lord Oxburgh, the former chairman of Shell, has issued a stark warning that the price of oil could hit $150 per barrel, with oil production peaking within the next 20 years.

He accused the industry of having its head "in the sand" about the depletion of supplies, and warned: "We may be sleepwalking into a problem which is actually going to be very serious and it may be too late to do anything about it by the time we are fully aware."

In an interview with The Independent on Sunday ahead of his address to the Association for the Study of Peak Oil in Ireland this week, Lord Oxburgh, one of the most respected names in the energy industry, said a rapid increase in the price of oil was inevitable as demand continued to outstrip supply. He said: "We can probably go on extracting oil from the ground for a very long time, but it is going to get very expensive indeed.

"And once you see oil prices in excess of $100 or $150 a barrel, the alternatives simply become more attractive on price grounds if on no others."

Lord Oxburgh added that oil majors must invest more heavily in developing viable alternatives to oil and gas. "If you look at it from oil companies' point of view, effectively what they're doing at the moment is continuing business as usual, and sticking their toes in the water in a number of areas which might become important in future.

"But at present there is a relatively poor business case for making significantly greater investment in these new areas."

Commenting on whether "peak oil" – the point when global oil production goes into terminal decline – was likely to be reached in the near future, he said: "In a way it scarcely matters; what really matters is the gap between production and demand. I don't know whether there is going to be a peak in world oil production, whether it's going to plateau and then slowly come down.

"It could well plateau within the next 20 years, and I guess I would be surprised if it hadn't."

The price of crude oil closed above $80 a barrel for the first time on Thursday, as a hurricane in Texas raised supply concerns.

US light crude hit $80.20, two cents higher than the price it touched on Wednesday. Oil prices have risen 30 per cent since the start of this year and are four times higher than their 2002 level.

The latest figures from the US Energy Information Administration show that global liquid fuels production in August was almost a million barrels per day lower than the same period in 2006.

The International Energy Agency has forecast what it calls an oil "supply crunch" by 2012, a prediction that Lord Oxburgh said could possibly come to pass.

Oil Closes Above $80 For First Time

Oil Closes Above $80 for First Time.

NEW YORK (AP) -- Oil prices finished above $80 a barrel for the first time Thursday and gasoline prices rose as refiners reported production problems after Hurricane Humberto hit Texas.

Oil first traded over $80 a barrel on Wednesday after the Energy Department reported declines in crude and gasoline inventories and a drop in refinery activity, but ended the day below that psychologically important mark.