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Jeremy Warner’s Green Tinted Glasses

February 9, 2017
tags: ,

By Paul Homewood

 

It was only last week that Jeremy Warner was announcing the death of fossil fuels at the hands of irresistable green energy!

 

With the publication of the BP Energy Outlook, confirming that oil, coal and gas will still be playing a dominant global role in twenty years time with consumption continuing to grow, he has taken a slightly different tack in his Sunday column:

 

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Few chief executives are ever willingly prepared to put their companies into run-off. To do so seems an admission of failure. Yet is this not the best strategy for the oil giants BP, Shell, ExxonMobil et al? I ask this question not just for its shock value, but because it is the logical conclusion to draw from BP’s latest “Energy Outlook”.

This highlights an increasingly self-evident fact; that despite one time predictions of “peak oil” and other such nonsense, the world is in fact overflowing with oil and other fossil fuel reserves. Today’s known resources dwarf likely consumption out to 2050 and beyond.

As a commodity product, oil has to date been quite unusual in that it accommodates both low and high-cost producers. This is largely because supply is deliberately constrained by OPEC and others with an interest in eking out the resource’s income stream for as long as possible. A barrel of oil, it has long been thought, is worth more left in the ground than extracted.

The now exponential growth of renewables threatens to challenge this established orthodoxy. Indeed, BP admits in its analysis that quite a bit of today’s known reserves will end up never extracted – music to the ears of the green lobby. The implications are clear: oil producers should make hay while they still can, even at the cost of a resulting glut that depresses prices. In any case, there may be little point in developing new sources of supply, particularly at high cost.

Rather, oil companies should be slashing their investment to virtually zero and handing the cash back to shareholders – either that or using their superior credit ratings to invest in renewables.

http://www.telegraph.co.uk/business/2017/02/04/end-road-approaching-big-oil-investors-think/

 

He is actually totally wrong – BP have not said that quite a bit of today’s known reserves will end up never extracted , simply that they won’t be extracted before 2050.

And he totally glosses over the fact that oil consumption is projected to grow by 16% up to 2035, when it will still be more than triple the energy provided by renewables.

I never cease to be surprised how supposedly knowledgeable business journalists get away with writing such utter rubbish.

 

But, back to his main point, I have no idea whether it would be a sensible business decision for oil companies to stop investing and pay the money back to shareholders. You could, in any event, use exactly the same analogy with Apple or Google; who knows whether they will still have a profitable business model in thirty years time.

But what I do know is that as soon as oil companies stop investing in new oilfields, supply will tighten, prices spike (with all of the damage to the global economy that would entail), and with new profits beckoning investment will pick back up again.

It does not take a genius to work that one out. It is after all exactly what has been happening in the oil and mining sectors for decades.

 

In fact, ample reserves of oil will ensure that the world retains access to a cheap and reliable source of energy, which will make it even harder for renewable alternatives to make headway without subsidies and carbon taxes.

Which is rather the polar opposite of what Jeremy Warner has been arguing.

 

But let’s finish with this chart from the BP Energy Outlook, which Warner bases his assertions on. This is their guesstimate of what might happen after 2035.

They acknowledge that future energy trends are very uncertain, and therefore include wide uncertainty bands, principally concerning GDP growth and road vehicle efficiency.

The base case suggests that oil demand will peak in the mid 2040s. But most significantly, it will still be well above current levels by 2050, even under the lowest scenario.

Given the oil reserves we already know about, there is no reason why oil will not continue to play a key role in global energy for many decades yet.

 

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https://notalotofpeopleknowthat.wordpress.com/2017/02/07/bp-energy-outlook-2017/

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18 Comments
  1. Jack Broughton permalink
    February 9, 2017 2:35 pm

    Debating forecasts beyond 2035 is the realm of those whose beliefs exceed their common sense. BP effectively accept that with their curve. Crazed reporters will find any excuse for an attempt at a sensational headline – they do not appear to be answerable to anyone for their untruths.

  2. February 9, 2017 2:51 pm

    It’s no wonder the DT is losing readers. They have hardly any sensible journalists left. Most of them like, Jeremy Warner, just make it up. Fake predictions anyone.

    • Harry Passfield permalink
      February 9, 2017 5:06 pm

      Fake predilections?

  3. February 9, 2017 3:21 pm

    ‘Global oil demand will rise to 98.09 million barrels a day this year, compared with production of 98.03 million.’
    http://www.thegwpf.com/u-s-oil-output-heads-to-48-year-high-as-shale-boom-resumes/

    Does JW or anyone else really imagine something is going to take the place of all that any time soon?

  4. Dave Ward permalink
    February 9, 2017 3:22 pm

    “Who knows whether Apple or Google will still have a profitable business model in thirty years time”

    That depends on whether they can obtain reliable supplies of electricity to power the server farms. Based on current (sic) events, it’s a pretty good assumption they won’t be conducting much business in South Australia!

  5. Bitter&twisted permalink
    February 9, 2017 3:28 pm

    Jeremy Warner- Just another brain-damaged “green” having a rant.
    Regrettably these pathetic droolings are taken seriously and get printed in the “Legacy Media”.

  6. February 9, 2017 3:39 pm

    Meanwhile, in Germany, with massively more wind and solar capacity than the UK (49.6GW/14.5GW installed wind, and 40.3GW/11.1GW installed solar, Q3 2016 figures), where they claim they will banish coal by 2025:

    “* January average coal output at 17.3 GW, highest since Feb 2012

    * Coal, gas ramped up to offset nuclear outages, low wind, demand gains

    * Day-ahead power average at 59-month high, spot spikes to 2008-high”

    (‘German coal, gas plant output at 5-year high in January’, Platts, 3 February 2017).

    http://www.platts.com/latest-news/coal/london/german-coal-gas-plant-output-at-5-year-high-in-26654502

  7. 1saveenergy permalink
    February 9, 2017 3:46 pm

    “irresistible green energy!”

    Like wot South Australia got..init

  8. Gerry, England permalink
    February 9, 2017 4:01 pm

    I think the problem is Paul that you have made an incorrect assumption. You assume that Jeremy Warner is a ‘supposedly knowledgeable business journalist’ when he isn’t. No wonder Trump’s sidelining of the legacy media is a good and popular move.

  9. February 9, 2017 4:23 pm

    http://www.viewzone.com/abioticoilx.html

    John Doran.

  10. AlecM permalink
    February 9, 2017 4:54 pm

    These DT writers have been bought by the carbon traders.

  11. February 9, 2017 4:56 pm

    Dellers says it all, with a good reference to our host. http://www.breitbart.com/big-government/2017/02/09/delingpole-renewables-doomed-fossil-fuels-future/

  12. martinbrumby permalink
    February 9, 2017 8:25 pm

    As Phillip points out, Dellers is well worth a read here.

    But it is rare, even in these columns, for commenters to ponder much on the behaviour of Big Oil & their CEOs.

    Most of us have commented on the demise of the British Coal Industry (and coal powered thermal generators.) Although the lunacy of Scargill and his card carrying comrades, the spite of Thatcher and Coal Industry management incompetence all played a part, there is no doubt that Miliband / Huhne / Davey / Rudd and all their enthusiastic supporters at Westminster are most to blame. Despite all the crocodile tears, our ‘elite’ planned the covert destruction of coal and successfully pulled it off.

    But the fact remains that anyone with half a brain in the Oil Industry should have been aware that, once their main competitor had been destroyed, they would be next in line. Exxon used to pay quite trivial amounts of money to some think tanks and a trivial proportion of that found its way to a few sceptical scientists. But that was now quite a long time ago and the amounts in question were like the small change down the back of the sofa, compared to the money hosed to the activist scaremongers, especially in academia.

    Instead of any serious discussion, let alone debate, all we got from the British Oil Industry was GreenWash. Remember “Beyond Petroleum”? Remember Shell? Remember Lord Browne, aka Baron Browne of Madingley? Worryingly Browne was at one time Chairman of Cuadrilla but has is executive chairman of L1 Energy—an oil and gas firm backed by Russian billionaire Mikhail Fridman. They are welcome to him.

    Even now, it is worrying that the new US Secretary of State, Rex Tillerson (ex Exxon) suggests “… oil, gas, and coal combustion contribute not only most of the ongoing global warming but also all of the ongoing ocean acidification.”
    https://www.theatlantic.com/science/archive/2017/01/rex-tillerson-climate-change/512843/

    This is a man who apparently hasn’t done his homework. One can only hope that The Donald has a word with him.

    Of course, in reality, the Big Oil men calculate, probably correctly, that Oil is way too big to fail. But I really think it is long overdue that Oil (& Gas!) got their heads together and challenged at least some of the Greenie drivel. A good start would be to sue the Greenie lie manufacturers for the never ending nonsense thay spout about Fracking. It not only costs the ‘fossil fuel’ industry treasure and reputational damage but causes immense damage to the wider economy and the poor & vulnerable.

    Eventually, all the Greenie nonsense will have to come to an end. Surely the Oil Industry could position themselves to not be tarred with the same brush as the politicos, the academics, the ruinable industry and the failing MSM?

  13. Athelstan permalink
    February 9, 2017 11:27 pm

    ” Despite all the crocodile tears, our ‘elite’ planned the covert destruction of coal and successfully pulled it off”

    One of the many excuses relentlessly trotted out by Hezza and his tory gimps, was to do with ‘subsidy.

    Wherein, the British public were according to the narrative “paying excessively high prices” to be able to burn UK mined coal in generating plant. Furthermore, that, because world market prices were lower thus the British consumers were having to subsidise an inefficient industryand to a certain extent it was true.

    On another tack, also remember that, the UK coal industry had the best safety record and one of the highest productivity levels in the whole of what was then known as the EEC. I cannot help but think there were many enemies of UK coal but not just in London.

    An interesting thought, by how much were the UK consumer paying relative to world prices of coal and in comparison presently correspondingly to, the vast subsidy bonanza now being coughed up to the ‘ruinables’ troughers?

    You know what, I think by comparison……………..

    The “subsidies” which held together the UK coal mining industry were a pittance by todays subsidy free for all green…… or bust idiocy. Plus not least, back in those days – it not only provided a living for a lot of families and multiplier effect in employment in the small pit towns. Not only money to feed mouths, it provided plentiful base load electricity for the nation.
    True enough, notwithstanding that for the pitmen it was dangerous and dirty work [surely an pro argument for mine safety subsidy?] and some coal areas, miners were Bolshie bastards (they went on strike during the both WWs] and that, many mines in Kent, Wales and Scotland were very inefficient…………….BUT.

    What happened to the UK coal industry was a perfidy that still leaves towns across the midlands, Yorks, Derbyshire, Notts, Lancs as areas of severe deprivation – 30 odd years later.

    What an almighty cock up and unnecessary hasty, viciously prosecuted destruction – it all was.

    • mikewaite permalink
      February 10, 2017 11:10 am

      Athelstan: You say :
      “Not only money to feed mouths, it provided plentiful base load electricity for the nation”

      30 years later it is still providing plentiful base load. As I write , 11.00am Feb10th , it is providing 20% of the 48GW demand , whilst the much vaunted solar and (metered) wind green providers can muster less than 5%..
      But it is presumably not UK coal and whilst it is keeping us warm and our factories and offices running it is feeding mouths elsewhere. Yet it was , I think, Ernest Bevin who said : Britain will always survive because it is basically a huge chunk of coal.

  14. Malcolm permalink
    February 10, 2017 8:50 am

    Another brilliant, meticulous article; but unless we can bring such insight and refutation to the general public we are just a group of anoraks with an interesting hobby.

  15. Martin Brumby permalink
    February 10, 2017 5:10 pm

    Of course, the ‘uncompetitiveness’ of British mined coal has long been a juicy coughdrop for the enemies of the industry to suck on whilst pontificating.

    Like all the very best lies, there is enough truth in this to go a long way. It is true, for example, that the production costs of some of the old mines still operating before the 1984/85 strike were very high. But often this was as much a reflection of the many years of neglect that they had been subjected to, as to anything else.

    I well remember reports in the Telegraph & Express, at the time of the strike, comparing “the price of British coal” to the “price of imported coal”. And very often the harumphing of the then ‘experts’ curiously ignored the facts that:-

    (a) the price given for imported coal was the spot market price for a ship load of off-standard coal (usually very high sulphur, so useless for UK Generators – having been stuffed with the costs of “acid rain” – subsequently proved to be little to do with UK power stations). And the price quoted also often ‘ex Rotterdam’, at a time when Immingham had yet been developed to permit importation of large quantities of coal to the UK and it would have thus been impossible to import much more foreign coal.

    and (b) the cost given for British coal by the ‘experts’ was not infrequently that for special high value grades of coal for the Steel Industry.

    Of course, there were very many British mines that would have been closed years before if it had not been for management ineptitude on one hand, union intransigence on another and lastly the fact that Maggie Thatcher was carefully preparing the ground (including the coal stocks, of course) in preparation for a major confrontation with Scargill & the NUM, when closing an obvious basket-case (Cortonwood Colliery) would be the trigger for all the subsequent pantomime.

    Nowhere is it pointed out that British Opencast coal was competitive with coal from anywhere and would have been cheaper still if it hadn’t been for the absurd problems of gaining planning consents to work the coal.

    Seldom is it pointed out that the Selby mines, despite a number of problems, had exceeded their design output and could have carried on doing so, had not one of the mines (Whitemoor) been stymied by a completely unreasonable refusal of planning permission to work in seams lying to the East of the River Derwent in East Yorkshire, leading to the demise of that mine and subsequent increases in the costs of all the other units, rendering them less competitive.

    There is a great deal more to it than these few crumbs of facts. I just want to make the point that there is a lot more to the history of all these events than just the crude and tendentious ‘imported coal is/was cheaper’ arguments.

    And, in any case. What has been the cost to the British economy of importing enormous amounts of electricity through the Continental Interconnectors? Running at maximum capacity for much of the last couple of years! Let alone the costs of ruinables….

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