is oil still oil, page-6

wow - I did not believe that Chris Caton could be a knocker of the Peak Oil hypothesis.

Peak oil is not some greeny or left wing conspiracy theory.

It is a statistical analysis based on the frequency of various sizes of oil field discoveries over time - matched with an analysis of oil field decline over their production cycle. All pretty boring statstical stuff.

Fact is, the frequency of large oil field discoveries has been declining rather rapidly over the last decades. Thats why places like Mauritania and Guyana are important. The first because there is the serious possibility of significant oil, the second because there is the possibility of significant oil.

You can't replace the major fields by lots of small discoveries, there need to be large discoveries, and they are not happening in the required number or required rate to replace production.

The peak oil hypothesis woul say that this is becuase that we have identified most of the large oil fields that are to be discovered in areas where oil is cheap to produce.

Seems quite reasonable - and fits the facts.

Of course reserves have been increasing, ahead of exploration, but thats because technology being used to icnrease reserves in known fields - kind of like what we are trying to do in Chinguetti. The middle eats will get some benefit from this - but they have managfed their field very badly, because they produced so relaibly for so many years. The neglect of the management of these fields wiull affect significantly the amout of oil that can be produced at the end of these fields life. The message - beware - the total reserves of middle eastern oil fields - maybe reduce by 30%. Remember, Saudi and other countries hold their reserves figures as state secrets - and probably for good reason. The numbers we have are inferred.

Where Peak Oil falls down is that there are vast amounts of oil available to extracted - and that we know about - but it is the cost of extraction that alters the economics. This is fields like shale oil and coal tars. EXPENSIVE!!!

Hence - an article in Scientific American a few years ago, discussing the Peak Oiul Hypothesis, was tiled... "The End Of Cheap Oil"

There is no way that OPEC can keep producing at current levels for 80 years. Saudi Arabia is at maximum production. Iraq (with exploration adn great engineering) could maybe add another 2 million barrels a day - and Iran, because it has been stagnant for 27 years after they threw the American's out could maybe increase its production at a stretch by 3 million barrlels a day (but only with American technology and engineering). Within 10 years, Saudia, Iraq and Iran will all be struggling to maintain these levels despite all technological intervention.

Chris Caton is a respected economist - but I suspetc his advice on this is very very poor - or maybe he is talking up his book.