Let's Just Declare the End of Peak Oil/Asininity

Yesterday, Citi commodities analysts Seth Kleinman and Ed Morse declared that "the end was nigh" for oil demand.  They're not alone.

TOKYO — Japan Petroleum Exploration (Japex) is taking a 10% stake in an integrated shale gas development and liquefied natural gas (LNG) project being planned by Malaysia’s Petronas in Canada’s British Columbia province. Japex said on Monday it is considering marketing its LNG offtake from the 12 million tonnes per year (mtpy) Pacific Northwest LNG project, worth 1.2 mtpy, in Japan, the world’s largest importer of LNG, which has been increasingly reliant on LNG since the Fukushima disaster in 2011 knocked out much of its nuclear power capacity.

Crude oil’s supremacy in motor fuels is pricing it out of power and industry, leaving it stuck in low-growth transport and vulnerable to a revolution that could favour natural gas. International oil company BP predicts worldwide oil demand growth of just 0.8 percent a year up to 2030 – slower than for any other energy type and only half the projected total energy demand growth rate over the same period.

Idemitsu Kosan Co, Japan’s third-largest refiner, is interested in acquiring stakes in Canadian gas fields to secure price-competitive LNG imports to Japan, new President-elect Takashi Tsukioka said on Monday. Idemitsu announced in January that it would form a partnership with Canada’s AltaGas Ltd to export liquefied natural gas and liquefied petroleum gas to Asia, starting as early as 2017.

As resource economist Julian Simon taught us years ago, we never have, and never will, run out of scarce resources like oil because as a resource becomes more scarce, its price will rise, which will set in motion a series of actions that will counteract the scarcity.  For example, higher prices for oil will increase the incentives to: a) find more oil, b) conserve on the use of oil, and c) find more substitutes.  And that's exactly what's happened recently in response to higher

Wall of Supertankers Heads For US Brent crude at $125, US Crude at $110, and soaring gasoline prices everywhere have caused quite a stir. See Highest Price Ever of Gasoline in March; State-by-State Gas Price and Gas Tax Comparison for a discussion. In response to high prices, Saudi Arabia has a plan to send a wall of supertankers to the U.S. to knock down prices and Republicans have attacked President Obama for not doing enough.