Being interested by the subject of peak oil, I have read many sources on the subject and generally am convinced by the arguments that the peak is coming soon and in some countries (such as Saudi Arabia) may have already arrived. Then I read the business pages and see the huge number of orders for the new Airbus, Boeings etc. And the thing is, most of these orders seem to be coming from airlines in the Middle East.
So my question is: If we really have reached the peak in the Middle East, why are airlines there (mainly state owned and no doubt with access to information on oil supplies) continuing to invest in planes and why are the countries (Such as Dubai) promoting their tourist industry both of which are hugely dependant on cheap oil.
So is there no peak or are these guys completly wide of the mark ?

Perhaps an expert out therecan help me understand ?

Not an expert by any means but i guess it is difficult to have a global workforce if people don't travel.

Look at our own domestic airfares, if the environment/ global warming were really a concern then shouldn't those prices be going up? They aren't - they are going down.

It is easier to sell a european superstate to the massess when we all live in each others countries, work and holdiay in different places.


The free market tends to look short term. People want their rewards today.

The case of the saudi's though is interesting. They may well have lots of oil, nobody seems to know for sure what they have. But as peak starts to bite, will they decide to keep it for themselves? There was an aritcle about this on oildrum recently. http://europe.theoildrum.com/node/2670



If the scenario is that they have lots of oil and are going to be more reluctant to export it, then it may well make perfect sense to buy more aircraft.

F

Aren't these new air-crafts more economical per seat? I.e. more profitable?

Left hand right hand. Have you ever seen UK government discuss saving the planet whilst at the same time increasing airport capacity? One department doesn't look at or listen to another. This will happen everywhere in the world.

Good point although i think that this just demonstrates that the UK Government aren't that bothered about global warming (presumably another government will have to pick up the pieces). If Gordon Brown was really concerned, he would have ring fenced the increase in Air Tax for environmental projects. In fact, his act reflects an intention to discredit the cause IMO. It's clear that nothing will be done to constrain the airline industry - the only factor that will do that will be increasing oil prices.

Going back to the Middle East, would you go for a 5 day long weekend to Dubai if it cost 1000 pounds instead of 500 pounds ? If oil does become scarce, I am not sure that the demand for long haul holidays will keep up. Even if the ME countries keep the scarce oil, the opportunity cost will increase

But maybe there is stacks of oil left after all

I'm craving for peak oil : fewer chavellers abroad. That would be great

Peak oil = more expensive oil


More expensive oil = other energy sources such as nuclear, tidal, dams are viable


More viable energy source = they build that energy source


More expensive energy = less used and less wasted




Peak oil = a problem


But a problem the market shall and will deal with



So don’t worry lil one

Phew, I was worried for a moment there. Thanks for the reassurance.

When oil goes to $200 a barrel I'll just hop in my nuclear powered car down to the shops and buy my vegetables transported from spain on tidal powered trucks. The vegetables will still be plentiful because the growers will using fertiliser made from nuclear power, and not fossil fuels. Oh, and when I want to visit friends and family overseas, there will be a dam powered plane waiting for me at Heathrow.

You've certainly raised some interesting points; I'll try to address them in turn.

Firstly the aviation industry is aware of peak oil - when I attended ASPO-4 (Oil and Gas Depletion Workshop, July 2005) in Lisbon one of the other delegates who I talked to was an analyst for Boeing who'd been sent from Seattle to help Boeing gain awareness of this subject.

The Middle East will be about the last major oil producing region to peak and the ensuing tail of production there will last for many decades allbeit at ever decreasing flowrates. As production starts to decline oil exports can be cutback steadily thus leaving adequate supplies for years for their indigenous population; this would clearly include sufficient supplies of aviation fuel for ME airlines (although refuelling abroad might well become problematic in due course).

I think you have to see many business decisions as taking only a short term view. UK budget airlines, for example, have leased many of their aircraft and the directors are doubtless thinking of this and next year's bonus more than what is likely to happen 5 or 10 years into the future. If the business climate deteriorates substantially many directors (and politicians!) will doubtless 'cut and run' - at least they will have earnings from prior 'good years' as a cushion.

Looking now at actual impact of oil price rises on aviation, should the oil price rise from current $76/bbl to $200/bbl it would add around 78 cents (39p) per litre to price of aviation fuel which is untaxed. I've not researched airline fuel consumption per passenger km but a 'ball park' estimate would be that typical one-way budget airline fare within Europe of £30 - £50 would double to £60 - £100. I doubt such an increase would be enough to destroy substantial demand for budget flights especially as the flight itself (or other means of travel) tends to constitute a relatively low proportion of the cost of an overseas trip. My experience is that one tends to spend a lot more on food, accommodation and leisure activity at the destination than on travel.

While the impact of aviation fuel prices rises will probably have a relatively small impact on demand another factor is going to have a much greater impact namely that of energy price rises on the economy in general and resulting amounts of discretionary funds in consumers' pockets. Let's assume for a moment that UK is moving from oil supply (from UK N Sea) and demand roughly in balance in 2005 to a situation where we need to import 1m bbls/day by around 2015 as a result of N Sea output being in terminal decline. Here's what the import costs could look like:
1m bopd @$76/bbl (current price) - £1.16bn per month
1m bopd @$100/bbl - £1.52bn per month
1m bopd @$200/bbl - £3.04bn per month

N Sea gas ouptut is also in terminal decline and the energy derived from natural gas in UK is slightly higher (in bbls oil equivalent) than from oil; furthermore as gas reservoirs mature we face a 'gas cliff' vs the more gradual declines from liquid reservoirs. On this basis natural gas imports in future will be every bit as significant as oil imports and could cost somewhat more given that expensive LNG shipments or long pipeline runs from Russia are virtually certain to be required. On this basis UK could well be spending between £3bn and £6bn per month on combined oil / gas imports around the middle of the next decade. Interest rates will experience signficant (and lasting) rises if UK is to attract sufficient foreign currency to fund such large scale imports and sterling is likely to depreciate.

Rising energy prices will increase the cost of energy, transport, goods and services and especially food (already world grain prices are rising sharply due to pressure to make biofuels). The combination of such price rises combined with rising interest rates and depreciation of sterling will have far more of an impact on the discretionary side of air travel (i.e. budget airlines) than prices rises in aviation fuel. Less affected will be travel by officials and some business travel and, of course, travel by the very wealthy. On this basis some flagship carriers, and especially Middle Eastern airlines, will probably be able to maintain some sort of service for some decades into the decline phase of oil production.

I'll add some info re Saudi oil production and oil exports in general in a 2nd post. (Edit - now added).

Saudi is indeed the world's most important oil producer due to a combination of vast reserves and relatively low internal consumption thus leaving 75% or so of their output for export. In recent years an increasing number of concerns have been raised as to just how long will Saudi be able to grow (or even maintain) their oil output contrary to conventional wisdom by IEA, EIA, USGS etc which have tended to consider Saudi reserves as 'limitless'. Energy investment banker Matt Simmons has analysed Saudi oilfields in detail in his 2005 book (which I'd highly recommend) 'Twilight In the Desert: the Coming Saudi Oil Shock and the World Economy'. Some of the most serious concerns that Matt (and others) have raised include:

1) Around 90% of Saudi's oil comes (and has always come) from 5 giant fields which are typically between 5 and 6 decades old.
2) Their largest field by far (Ghawar) has seen very extensive use of MRC wells which have replaced traditional vertical wells in recent years reportedly due to rising water cut. The problem here is that once the water reaches the new horizontal wells rapid production declines will ensue.
3) Saudi has had no significant new discoveries for several decades.
4) Saudi's 'sweet spot' is becoming depleted (i.e. North Ghawar etc) - increasingly output is trending toward heavy, sour crude which is unsuitable for many existing refineries and yields less high quality transportation fuel per bbl of feedstock. Such heavy, sour oil is also more difficult to flow at high rates (the earth may well only yield such oil over many decades) and corrosion and environmental issues are much more profound when handling such oil.

Matt Simmons made a number of presentations upon the launch of the above book and clearly stated 'If Saudi has peaked then so has the world': Twilight In the Desert (PDF Download); many more presentations here: Matt Simmons' Speeches. Stuart Staniford from the Oil Drum has analysed Saudi's Ghawar field more recently in what amounts to an excellent thesis. Stuart's report is referenced at the bottom of the paper referenced in Furby's link (post #2), here's the direct link: Depletion Levels in Ghawar (Updated).

Another key component of the future oil supply equation for major oil importers such as US and (soon to be) UK is the net export capacity of the world's key oil exporters, for example Russia, Saudi, Iran, Norway. Jeffrey Brown, a geologist in Texas has produced a series of papers showing how flat or declining oil production in key exporting nations will have a disproportionate impact on supplies for importing nations due to rising indigenous consumption. Recent news items state that foreign car sales in Russia have increased by 50% in 1 year - all will consume fuel and thus lessen Russia's export volumes. In Saudi some 50% of their fast growing population is aged 21 or under; all will rapidly become new energy consumers. Even if the exporter nations' Gov'ts wish to focus on exports at the expense of internal consumption it will be hard to do so and maintain any kind of popularity back home - witness the fuel riots in Iran in the past 3 weeks following introduction of gasoline rationing. References for the Export Land Model: Net Oil Exports Revisited and Russian Car Sales & Net Oil Exports. It's the opinion of many of us that the impact on OECD oil imports as a direct result of fast declining export volumes in the world's key oil exporters is one of the most worrying aspects of the coming oil crisis.

Returning to the subject of aviation raised by OP it's interesting to note that the airlines, airport operators (such as BAA) and, in my area at least, the local chamber of commerce and regional press all welcome rapid aviation growth and describe it as 'a good thing'. Consumers are backing this thinking up by taking ever more flights, all facilitated by UK Gov't which plans to cater for a massive expansion of aviation between now and 2030. A few scientists, however are more in touch with long term reality and have warned repeatedly that 'the world can only stand so many tens of doublings of anything', as per following papers: M King Hubbert and Dr Albert Bartlett. Unfortunately few of influence listened when the warnings were issued or are listening now. Regional airports in UK have reported high year on year passenger growth in the recent past, growth has exceeded 9% pa at some airports. Let's look at what even more modest growth rates mean for activity in 2050 assuming the airport has 10 aircraft movements per hour today and aircraft seating capacity remains static:

5% growth pa - 81 aircraft movements per hour
6% growth pa - 123 aircraft movements per hour
7% growth pa - 183 aircraft movements per hour

Based on the above, even with 5% growth additional runways would be required at many existing airports.

Such growth figures over more than a decade or so are, of course, absurd; basically our philosophy of endless economic growth is placing us on a path for a head on collison with geology where the planet's finite limits in terms of oil supplies will manifest themselves. In ecological terms this scenario is known as 'overshoot' and it's invariably followed by collapse. As we reach this point we must expect directors, politicians etc to 'cut and run' leaving the rest of us to 'carry the ball.' Such a situation will not be pretty, especially for those who are heavily indebted and yet it's the default scenario in the absence of early and massive mitigation measures to reduce consumption of energy.

Boeing just sold 700 of their new 787's ..... http://www.earthtimes.org/articles/show/80536.html

Apparently these new planes are 20% more fuel efficient ..... of course if people just stopped flying far more fuel would be saved .....

your a total sheep, so i dont know what to say to you but


Baaaaaaaaaa







let me guess, you watched a film by al-gore or some such idiot and it makes you an expert in global energy trends and energy infrastructure right?



i can say i have a degree in physics and make my own assessment about peak oil rather than reading a 4 sentence webpage or watching a biased move.
im no expert but id wager your a hell of a lot less informed than me


thanks


BAAAaaaaaaa

sorry double post, see below

Actually I have just though of a simple way to convert you



In it most basics, peak oil means that oil is going to get more expensive.


You surly agree with this?


So tell me, how do you propose to stop oil getting more expensive? And this is the important thing, you cant spend money on this task. Since spending money is what the market would do to take care of the problem as humanly best.



For example you can not say build nuclear plants since the market will build lots when it is more profitable to build nuclear than burn oil.

You can not say build more hydro or wind or …… because when it is more viable the market will do it.


You can not even say advertise for people to be more efficient , because guess what…… the market will do that to lower prices when it is really hurting them.




So now, I think we both agree. That it is a problem that the market can and will deal with




But if you want to be a sheep and have government throw money at it (from your tax , your labour) then be my guest. But if this government decides to tackle global warming by throwing money at it, or tackle peak oil by throwing my money at it (which they get by taxing me) I will try my best to find a country still sane and emigrate!!

A different view on peak oil


WHEN oil/energy gets more expensive, if you truly believe it will hurt our quality of life too much, then you may want to advocate military action to secure those resources now while those countries that are oil rich are poor militarily!


But I don’t hear you green freaks saying we should strike iran and kill off most of their population and secure the oil for ourselves because peak oil will make it expensive!



Dam hypocrites.



As for the ultra sheep FirstTimeBonkers, you don’t need replace oil 100% to make it cheaper you just need to replace the shortfall. And most of our oil use doesn’t go on those things we cant replace oil with, like planes and fertiliser ect


Not to mention, all your points are based on price, cost, what it will cost you ect.
Well don’t be a hypocreit then, write a strong worded letter to your MP telling him of your worries of more expensive oil and that you want him to support a full invasion of oil rich nations that can not compete militarily with us.


If you are unwilling to do this, hang your head in shame, dam HYPOCREIT.

Cells, youre a moron.

hahahahha yeh sure, your now going to point to the 1 hour al-gore video you watched to back up your views right?


every day that passes , i see that fools have inherited the earth.

sans blague

Dear zceb90
Thanks for this - this is so interesting and I am going to sit down & read this with a towel over my head and concentrate until my brain starts to hurt.
I managed to slip this issue into a job interview the other day & have just decided to take a job which depends less on air travel.
By the way, are you sure you should be putting this on a website like this - I am sure you could sell this analysis to someone or other
Simon

Simon, thanks for the comments. I use other sites such as the Oil Drum quite a lot thus it's actually not that much effort to address these issues on this forum when posters ask for info. Most of us who are active in the peak oil movement don't receive any fees (and don't expect any) - I have an oil industry pension to fall back on. I've just booked to attend another depletion workshop - ASPO-6 in Cork in September.

I think you will find this analysis of the UK Gov't aviation plans very interesting, basically the author concludes that the 'headlong rush' towards handling 500m passengers pa by 2030 is unsustainable: Busby Report on Aviation.

Thanks for the link. Will check it out.
Peak Oil is actually becoming quite publicised in France where there are already a number of books published on the issue including "Petrol Apocalypse" by someone called Yves Cochet , a parliamentarian in the French Government and incidentally an excellent speaker. Which helps

You should also look for papers by Jean Laherre who has had a long career in the oil industry and in recent years co-authored papers re reserve statistics with Dr Colin Campbell. I've attended a couple of lectures by Jean Laherre and I understand he is French.

Cheers - will check them out.
What's your view on the coal question - there apparently is lots of the stuff. Could it be easily converted to oil equivalent fuel that would power cars and planes ? Sorry if it's a stupid question - not sure at all about the process of liquifying coal.

There again, given that it's a disaster for the climate, I am rather hoping the answer is "with difficulty"...

Have you joined the dots to the 3 freefall implosions of 911?

That's what I would like to know.....

I've read 'Crossing the Rubicon'; the author was a fellow delegate at a depletion workshop in Edinburgh which I attended in 2005.

books, papers, conferences, consultancy, tv appearances.... $$$

Oil up, Oil Company Stock up ... $$$

Even the water companies are cashing in on fear these days (might find it difficult this year tho)

How are prices on Dodo eggs these days? Hello deluded people, oil finite, our economy built on oil, no oil, no economy. The oil drum and Matt Simmons are two very good sources of info on the coming problem.

Personally, I will be out of a job as I am a pilot, and aeroplanes need kerosene. If anybody knows where to find some could they please let the good people at ExxonMobil know.

Seriously though the industry will go into reverse and eventually it will be the preserve of the rich, the famous, and those in government. Eventually only aviation vehicles that do not require fossil fuels will be airborne, anyone want to hang glide to Sydney from London, thought not.

I say again, how are the markets re dodo eggs, can Bill Gates afford one, er no, because they have ceased to exist. Alternative fuel sources will supply a very small amount of energy relative to today's energy usage. The future is the Cutty Sark...

A typical low cost airline ticket to a short haul destination is £43. Of which 35% goes towards fuel (or thereabout). The cost of the aircraft accounts for a similar sum followed by wages and fees and taxes.

Therefore is oil doubles in price it might add £15 to a ticket. Which is less than half of what the car park space for the weekend will cost you, or the taxi at the other end or the first round of beers.

It'll take a decade or two for oil to double and in that time you might well see a 15% increase in fuel efficiency so the actual percentage cost increase of fuel might be somewhat offset.

Either way its not a showstopper. Large scale shipping could go nuclear. Personal transport could go fuel cell. Electricity production could go nuclear (like France). All of which would free up considerable reserves to keep airliners flying for many decades yet.

Also the military use of Kerosene is dropping rapidly. No longer do they keep vast fleets of bombers and fighter in the air as increasingly precision stand off weapons, drones and in the next decade pilotless fighters become the replacement.

ANDY

Looked at reserves of uranium recently? Oh and where it is mined? No where near the Uk unfortunately, so we will be held to ransom again.

A note to all "low-cost" junkies. These airlines are subsidised heavily by VI's, they also only have a minimal amount of "low-price" tickets for sale on any given flight, and rely on the captive audience [the fare paying punters] to buy over-priced beer.

The biggest cost in commercial aviation is fuel, without cheap fuel there is no commercial aviation. Commercial aviation is a dying industry. If you are planning to see the world, see it now, before it is too late.

Those in charge of commercial aviation are in it for the short haul, they intend to make their money quickly and then bale out. MOL has already stated that he intends to leave within the next 12-18 months. Intelligent bloke, he knows when to take the money and run.

Please also note that commercial aviation has never been and never will be "low-cost". It may be "low-price" in places but in reality the phrase is "subsidised travel".

I find it interesting that aircraft and aero engine technology has not progressed much in the last 60 years. It is not likely to progress in the near future either.

A simple question, why are aircraft now flying slower?

I would add that no only do airlines pay no tax on fuel but the airline manufacturers are heavily subsidised (Boeing and Airbus) - we are talking billions here.
Secondly when peak oil comes - it wont be a question of oil prices doubling and that's it. There will be a process of continual increases but also there will be conflicts over resources - why do you think the Chinese have signed deals with the oil producers in Africa.
Given all this, not sure that those on a cheap weekend to Bratislava will be at the top of the pecking order at this stage.

The only possible alternative talked about is converting coal to oil - can someone enlighten me on whether this is feasible

yes...jerry kept the luftwaffe in the air in ww2 thanks to oil from ruhr coal and the yarpies (SASOL) did it during apartheid era oil blocades.....it'll screw up the ipcc emissions scenarios if we do it large scale mind.

The Fischer-Tropsch process was how the Nazis did it. As WSG points out, it works, but is very environmentally unfriendly. Not sure if today's high bypass turbofans can use kerosene produced this way without modification, though.

As for the question 'Why do today's airliners fly more slowly?' above, my sister (a pilot) tells me that decades of research has established that airframe and engine combinations designed for a cruising speed of mach 0.8 are a lot more efficient, both in terms of fuel consumption and reduced airframe wear, than the previous generation which typically cruised at closer to mach 0.85-0.88: hence the reason today's A330s and 777s typically take 30-60 minutes longer to cross the Atlantic than a 707 or a DC-10 did. This translates into lower costs for passengers and freight shippers, and the longer journey times seem to be a price they are willing to pay.

They're still mucking about with it. In Mongolia, Jo'burg, and possibly Montana.

Looks a right fanny just to squeeze a few buckets of gloop out of nature's miracle fuel, but I suppose there's no room for the stokers on modern combat aircraft.

Looks like the cads will only succeed in pricing me off the road.

As hinted at above, it's certainly possible. If you watch the TV you'd be forgiven for thinking it was something new, but a Prof. Bergius got the Nobel Prize for Chemistry for it in the thirties. It wasn't economical to do it, even then, but security of supply overrode this with WW2 just round the corner and the attendant certainty of a blockade. Think of the States now - the move into biofuels has more to do with having secure domestic supplies than "saving the planet". They don't have too many qualms about using coal for this reason. From what I remember, the cost was around $60 per barrel a couple of years ago. So now, it's a definite proposition.