February 08, 2010
Richard Branson: Oil Crunch In 5 Years

Virgin Group boss and billionaire Richard Branson joins the Peak Oil crowd.

"The next five years will see us face another crunch the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well," Branson will say.

"Our message to government and businesses is clear: act," he says in a foreword to a new report on the crisis. "Don't let the oil crunch catch us out in the way that the credit crunch did."

One wonders what Branson thinks this means for Virgin Air. Is he still buying airplanes? What's he planning to fuel them with?

Other notable British CEOs join Branson in citing the looming threat.

Other British executives who will support the warning include Ian Marchant, chief executive of Scottish and Southern Energy group, and Brian Souter, chief executive of transport operator Stagecoach.

Their call for urgent government action comes amid a wider debate on the issue and follows allegations by insiders at the International Energy Agency that the organisation had deliberately underplayed the threat of so-called "peak oil" to avoid panic on the stock markets.

Branson's an optimist compared to Jose S. Gabrielli de Azevedo, CEO of Brazilian oil company Petrobras. Gabrielli doesn't see how world oil production can be maintained at current levels after 2010. Optimists cite offshore Brazilian fields such as Tupi as reasons not to worry about Peak Oil. But Petrobras's ambition to increase production by a couple million barrels won't replace much larger production declines in existing fields around the world. You might want to take your last long road trip fling this year.

I hope Gabrielli is off by a couple of years. I want to do a road trip up the Alaskan Highway thru Canada before oil prices skyrocket.

Update: Lest you think Gabrielli is an outlier among major oil company CEOs, ConocoPhillips CEO James Mulva said in 2007 that world oil production will never hit 100 million barrels per day. So we are within at most 15% of world peak.

"Demand will be going up, but it will be constrained by supply," Mulva said. " I don't think we are going to see the supply going over 100 million barrels a day and the reason is: Where is all that going to come from?"

Share |      Randall Parker, 2010 February 08 10:19 AM  Energy Fossil Fuels


Comments
question said at February 8, 2010 3:15 PM:

if peak oil is imminent why aren't oil prices going crazy?

Bob Badour said at February 8, 2010 3:23 PM:

World oil prices are not going crazy because the world economy is in the tank, and companies are not consuming as much oil (or labor.) Prior to that massive demand destruction, oil prices did go crazy.

Engineer-Poet said at February 8, 2010 8:14 PM:

World oil prices ARE crazy, for a recession.  During the Asian Flu, oil prices tanked to the $10 range.  Today, with the US economy near bottom, Brent crude is still around $70.

In the early years of the century, the Saudis agreed that oil prices in the $20-$30 range were healthy and good for everyone.  Now they don't (otherwise they'd be scrambling to put every barrel they could onto the market).  They don't have to maintain the pretense that oil supplies will increase forever, because they already have the world right where they want it.  As world supplies shrink, they're sitting in the perfect place to profit from their position on top of the world's biggest remaining supplies of liquid stuff on land; everything else is either solid (bitumen or coal) or underwater, and far more costly to get to.  The only real threat to SA is efforts like Better Place, and they have a well-paid fifth column playing defense.

O'Murphy said at February 8, 2010 9:32 PM:

The US economy is nowhere near bottom. You'd better hope you never see it near bottom, son. What do they teach in schools these days? Apparently how to be shortsighted and hyperbolic.

Gerard said at February 8, 2010 9:43 PM:

Ah, yes. I find this all rather interesting, since I happen to know a gent who has been a rabid peak oiler for over 40 years. No matter what the oil inventories, the prices, the geopolitical situation, peak oil is always right around the corner. Always has been. Always will be. Regular as ex-lax.

He buys all the books and newsletters to keep up on the latest substantiations of his multi-decadal obsession. Heaven help any innocent bystander that happens to suggest that peak oil is a few years off yet. Right between the eyes, bang.

With the US dollar's value so low, it really is a wonder that the price of oil has not gone to $200 by now. I mean where is all this oil coming from anyway? Why haven't we run out yet? We've been running out for over a hundred years.

Peter said at February 8, 2010 10:33 PM:

I wonder if it is possible to have the same thing that has happened with natural gas over the last few years to also happen with oil. The technology (fracking) can be used with both.

Here is an interesting tidbit:

NEW YORK, Nov. 27 /PRNewswire/ -- Platts - United States crude oil production for 2009 is on target to have its biggest one-year jump since 1970, according to a Platts analysis of industry data.

I read that the actual figure was slightly better than this, but can't find the reference.

N.R.Gina said at February 9, 2010 4:39 AM:

If one is prepared to seek it out there is a large body of well-researched and well-documented evidence to support Branson's current stand on Peak Oil. However, one thing missing from all this evidence is an accurate figure for current and projected oil reserves. It is widely accepted that the true figures are being witheld, particularly by the OPEC countries(if indeed said figures are actually known)for a raft of serious economic, political and social reasons. Sadly we are never likely to know the true state of oil reserves until, wherever we live, actually and metaphorically, the lights go out.

What is urgently required is time, money (lots of it) diverted into generating a 'cocktail' of alternative energies to reduce and eventually end our total dependence upon oil. Even more crucial than time or money however is commitment from industry, governments and the public that reveals itself in action. But the public is getting conflicting messages from all sides; politicians are more concerned with re-election in the short term than planning for the long term; financial pundits opt for protectionism not common sense; the military prepares to fight for whatever oil may be left and small bands around the world congregate into self-sufficient (and well-armed) communities in preparation for Armegeddon.

Fortunately there are many local communities that have galvanised rather more peacefully and intelligently into action: the Transition Towns. There are 166 in the UK (I believe Totnes is one of the original towns and one of the most successful.) The questions they set out to answer are:"for all those aspects of life that this community needs in order to sustain itself and thrive, how do we significantly increase resilience (to mitigate the effects of Peak Oil) and drastically reduce carbon emissions (to mitigate the effects of Climate Change)?" [excerpt from Transition Towns Wiki website]. Self-funding is also part of their mission - how refreshing!

Maybe this is the way forward; maybe not. But until the pressure to fundamentally change the way we live to thrive in a future without the benefit of oil and other fossil fuels is too great to ignore, it seems a useful model to me.

Another, possibly more difficult option, is to actively lobby local politicians to act in our interest, not theirs. And to focus on the real needs at hand, not the prospects for re-election. (Yes, I AM cynical. And, yes, the split infinitives are noted and deliberate.)

That's more than enough for now. Any comments/crits welcomed.

LoboSolo said at February 9, 2010 5:22 AM:

A new oilfield was discovered in Dubai. Guess peak oil will have to wait a little longer.

Bob Badour said at February 9, 2010 6:51 AM:
Any comments/crits welcomed.

People tend not to read large blocks of link-free text. If you invest the time to write a longer comment, I suggest you invest the incremental time to dig out suitable references and link to them.

To NRGina said at February 9, 2010 7:18 AM:

You're taking the wrong approach, Gina. Peak oil isn't about reserves in the ground, it's about production keeping up with demand. All that "documentation" you talk about is for sale at a bizarro bazaar 24 hours a day, credit cards accepted. Xtra bonus survival knife for early responders.

Look, folks, Richard Branson wouldn't be s'n around with Virgin Galactic if he truly thought the world is crashing in 5 years from peak oil. Ask yourself what's his angle? He's a shrewd high school dropout. He's got an angle on everything he says in public. Leverage is Branson's game, so what is he leveraging with his public stance on this particular topic? Think beyond the surface headlines.

Bob Badour said at February 9, 2010 10:29 AM:

Branson's motive seems clear to me: Convince everyone who can to switch away from liquid hydrocarbon fuels so he can continue to afford kerosene for his airline fleet.

If everybody is scrambling to pay for the commute to work, they won't be booking much international travel at way higher prices than today. On the other hand, if everyone else switches to coal and nuclear power, the commute to work won't break people, and Branson will be able to offer them travel at more affordable prices.

Branson is in one of the industries most reliant on liquid hydrocarbon fuels. He will remain reliant on them long after everyone else switches to different fuels. He, more than anyone else, needs a smooth transition to other fuels and stands to lose the most from a sudden shock.

not anon or anonymous said at February 9, 2010 11:40 AM:

Bob Badour, I agree that Branson has a vested interest in ensuring a smooth transition path for liquid hydrocarbon fuels. On the other hand, airplane travel is much more oil-intensive than high-speed rail, and a switch away from oil may also favor other modes of transport such as airships and passenger vessels. So an early transition may cause Branson's company to lose more business.

Bob Badour said at February 9, 2010 2:25 PM:

not anon or anonymous,

Branson's comments are unlikely to inspire competitors to knock the airlines out of the sky. If those would-be competitors exist, they would likely have existed anyway.

No, it's the people who won't naturally look very far ahead he has to worry about and try to motivate.

Nick G said at February 9, 2010 3:15 PM:

Anybody have any thoughts about Peter's question about new drilling tech? I'm curious about it's effect on the Bakken. The Bakken has about 400B barrels of oil, but only about 1% are recoverable, per the latest Federal assessment.

So, there's a lot of leverage there for something new...

bane said at February 10, 2010 11:56 AM:

One thing people seem to be missing is that Branson has written the FOREWORD to a more general report; this is not somehting spearheaded by the Virgin group. So it's perfectly possible he's spent an hour looking over the report and thinks its main thrust is not unreasonable (which as I understand it is basically that a lot of the poorer members of society are (naturally) currently dependent on cheap oil than richer members, so there ought to be governmental signals to start changing before dramatic price signals arrive) and has written the introduction and is happy to put his name to it. Given that one of his uses of being "the famous Richard Branson" is to get into the news so that he STAYS the famous Richard Branson, it's not clear taht there is necessarily a deeper motiation. (Might well be, but equally there might well not be.)

Incidentally, I'm not sure believing in Peak Oil (ie, not more than 86mbpd being pumped in the face of increasing numbers of people wanting more oil per head) and Virgin Galactic are in any way mutually exclusive: the "highly affluent" target audience are still likely to exist in high enough numbers to saturate their proposed capacity.

th said at February 10, 2010 3:33 PM:

The oil price rise has been especially dramatic in the US for several reasons, largely because of the idiots at the Fed and we have dimwit leftist poets running energy policy rather than XOM. Since the late nineties, the US dollar has lost 40% of it's value to the pathetic euro, world oil consumption has risen in the same period 10mmbbls/d, right now spare production capacity is probably 4 or 5 mmbbls/d, get back that 40% dollar devaluation and just get back to 8 or 9 mmbbls of spare capacity and a sympathetic operative in OPEC like venezuala's former president Arietta and you've got $10 oil which would destroy the electric car business, wouldn't it leftists?

Mars Tecnica said at February 10, 2010 5:55 PM:

Bakken: 400 B barrels of oil, 1% recoverable . . . . with today's technology.

There are similar stories about Athabasca tar sands 2 T barrels of oil, 10% recoverable . . . . with today's technology.

And so on for oil shales and shale gas and heavy oils and coal and frozen methane clathrates dot dot dot

Today's technology is changing pretty fast.

Much faster than peak oil SFBs can follow.

Paul said at February 12, 2010 10:43 AM:

China is rapidly expanding its coal-derived fuel capabilities. Direct coal liquefaction, indirect coal liquefaction, and methanol/DME production are all expanding.

Nick G said at February 12, 2010 12:19 PM:

Paul,

Do you happen to have numbers, and sources for that?

Here are some data and sources that suggest that CTL growth is pretty stagnant.

simone said at February 14, 2010 11:55 AM:

Nonsense projection.

The amount of hydrocarbon reserves continues to grow and yet we continue to hear people cry that the sky is falling.

Another point to consider is that Markets are more objective processors of information than individuals and super experts.

Randall Parker said at February 14, 2010 3:30 PM:

Simone,

The Markets have decided that oil should cost $75 per barrel in a deep recession with 10% unemployment. You don't find that suggestive?

Bob Badour said at February 14, 2010 3:36 PM:

Not just a recession but a global recession.

cancer_man said at February 15, 2010 6:32 PM:

Randal,

The economy isn't in "deep recession" and hasn't been for over half a year.

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