Since The Barrel blog at Platts does not invite comments to the articles it posts, I’ve decided to post my response here. You can see the original article here. But I’d like to point out this excerpt featuring a quote from Chatham House:

“The world’s largest exporter of oil is consuming so much energy at home that its ability to play a stabilizing role in world oil markets is at stake,” Chatham House warned in the report entitled “Burning Oil to Keep Cool, the Hidden Energy Crisis in Saudi Arabia.

“Saudi Arabia’s demand for its own oil and gas is growing at around 7% per year. At this rate of growth, national consumption will have doubled in a decade,” its authors said.

And my response:

The late Matt Simmons of Simmons International wrote a book entitled “Twilight in the Desert” in which he stated that, once Saudi Arabia oil production peaks, then global oil production will have also peaked. It now appears, especially when you consider the information in this article, that Saudi Arabia has peaked.

When an oil producer such as Saudi Arabia begins to feel the effects from its own oil consumption, it can be presumed that a peak has occurred. So, despite the high price of oil most of the past 5+ years, Saudi Arabia has apparently been unable to increase production to make up for losses from other producers such as Lybia and Iran and from their own consumption. They have inadequate spare capacity. And now what we’re seeing in Saudi Arabia is a phenomenon known as the Export Land Model, developed by Dallas geologist Jeffrey Brown.

The Export Land Model postulates that as an oil producer uses more and more of its own oil they will export less and less. This article lends credence to that model. I don’t have a current graph of Saudi export v. consumption but I think a look at the situation in Mexico comes close to what we’re seeing in KSA. The following graph offers a visualization, showing a growing gap between exports and consumption in Mexico, scale notwithstanding:

As you can see, the black line depicting consumption is now decoupled from the exports, in green, and a growing gap is evident. There is no reason to believe that adding 2011 data will change this picture.

Conclusion:

Saudi Arabia is past their peak in crude oil production. Gaining a wider perspective of global oil production will show that we are indeed on a plateau that has lasted 8 years now. And we will soon know if Matt Simmons had it right regarding the effects of KSA decline on the global production trajectory. But, so far, he seems to be right on the mark.

When it comes to the urgent need to deal with the problem of Peak Oil, there’s no tomorrow. Indeed, we may already be too late to avoid devastating effects from the decline of oil production. This is a world-changing problem that begs for an urgent and cooperative solution.

By Andrew Kreig
DC legal reform advocate and attorney for HuffingtonPost.com

Jim Baldauf, president of a cutting-edge energy group, began its briefing at the National Press Club Oct. 7 by citing the BP Gulf oil disaster, drought in Russia at up to 130 degrees, and massive flood-devastation in Pakistan as evidence that this is the worst year for the environment in recent history.

“I would submit,” he said, “that all of these tragedies are due to Peak Oil. Peak Oil will affect every aspect of our life.”

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Energy analyst Robert Rapier discusses Peak Oil and his strategy for investing in renewable processes that require very limited fossil fuel inputs. Read the blog post about the video here:

Peak Oil Interview: Misconceptions, Replacing Oil, and False Solutions

Peak Oil picks up steam…

We are heartened to see the high-profile financial blog Zerohedge has posted an article submitted by Jim Quinn of The Burning Platform entitled “Peak Denial About Peak Oil” wherein Mr. Quinn describes how we have had our right to prosperity taken from us by the current economic depression and that Peak Oil is largely responsible:

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Fast on the heels of two previous reports on the encroaching Peak Oil crisis, the one from the U.S. military and this one from a UK business leaders group, is a new report from the German military warning about the dangers that lie ahead:

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The topic of Peak Oil is something that is totally alien to most people. And when you attempt to explain it to someone it is likely their eyes will glaze over and they will either back slowly away from you or they will squawk like a crow, either proclaiming you to be insane or breathlessly explaining that even if we are running out of oil the oil companies have purposely stifled other energy sources and will roll them out when needed. Some people simply will not discuss it at all. You can almost bet that these people know deep down inside that you are right about Peak Oil and know exactly what such a scenario means to business-as-usual.

For those who do not want to hear it or accept Peak Oil, don’t waste your time trying to convince them. If it’s someone you love and whom you want to accommodate post-Peak, despite their current disposition, go ahead and plan for their needs if they won’t do it themselves. Do this for everyone you can afford. For the rest, consider them on their own. And I mean now and post-Peak. And be prepared to be strong if they come calling, realizing that you were right all along and that you laid in a supply of food and water.

For those times that you feel the need to ease a Peak Oil newb into the topic, the below video says it all. It’s also whimsical and funny and gets the point across in an easy-to-understand manner that anyone can understand.

British comedian Rob Newman is no stranger to Peak Oil. In fact, he’s done an entire show based on oil and Peak Oil. The History of Oil takes a looks at oil and places the energy-dense substance at the center stage of the cause of all the planet’s commotion. But for now let’s view his commentary on Peak Oil right here:

Matthew Simmons, an icon in the Peak Oil community, reportedly died of a heart attack in his North Haven, Maine, home on Sunday. An autopsy perfomed by the state medical examiner’s office concluded Monday that he died from accidental drowning “with heart disease as a contributing factor.”

Simmons was the subject of considerable controversy of late when he said that the BP Gulf of Mexico oil spill was actually gushing from a location several miles from the charted site. He claimed that the oil that was seen gushing from the BOP was left in the riser after the Deepwater Horizon oil rig sank to the bottom of the Gulf. He claimed that the actual leak was miles away and was caused as a result of the drill bit being shot out of the sea floor and the casing blown out of the hole during the explosion that destroyed the rig and killed 11 men. He also claimed the cleanup would cost BP a trillion dollars and that they would go bankrupt. None of this has happened.

Despite having confused many of his followers in the Peak Oil community with his uncharacteristic rantings the past couple of months, Matt Simmons remains well-respected for his work in the study of Peak Oil, having authored the famous examination of Saudi Arabian oil reserves, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.

“I know Matt took on some controversial positions in his last few months,” Lad Handelman, a longtime friend of Simmons, told the Houston Chronicle. “But that’s Matt. If he believed in something he would not hold back on it.”

Note from Editor: I have been a fan and follower of Matt Simmons for 5 years. I came to respect Matt for his work in awakening people, including myself, to the realities of Peak Oil. My sincerest condolenses to his wife and five daughters and to all those who loved him. I will miss him. Rest in peace, Mr. Simmons.

PetroApocalypse on YouTube

When it comes to Peak Oil there is perhaps no one more omni-present than Tom Whipple of the Post Carbon Institute and Falls Church News Press. He has written dozens of articles over years of tracking the situation with oil and he is not impressed with the Oval Office address by President Obama last night.

In an analysis of the address published today, Mr. Whipple writes:

This was not the speech we were waiting for. The one in which the President goes on national television and says “My fellow citizens – Our nation and indeed the whole industrialized world is about to face one of the greatest challenges to befall mankind for many centuries – the rapid depletion of our supplies of oil and other fossil fuels has begun… very soon you will no longer be able to afford to drive your cars.”

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