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Just when iTuliper's thought they had a handle on the scope of "Peak Cheap Oil" along comes Charley Maxwell of WELLING & WEEDEN, arguably the most senior and respected analyst in the oil industry (anyone with doubts or who does not know who this guy is, can ask GRG55 about Mr. Maxwell's credentials, and a reputation for sobriety from fifty years in the business). He is possibly the most senior oilman working today, both by tenure and reputation.
Read this article, and wake up to a whole new level of fear, of the world that is going to be slamming into us in a mere 5-7 years. This is not by any means "the world my children will have to face". It is 100%, "the world I will have to face" - a mere seven years from now.
BTW, for your interest GRG55, Mr. Maxwell disagrees with your assessment of the "Peak" as a decade long process. He describes it in terms of "two years". The article is fascinating. Are we then really to think of the miles and miles of commentary here on the housing bust as more important than this?? Who is even going to remember the housing bust of 2007 when the events below break on us?
iTulip has designated the event described below as the "lesser of the present emergencies", in refers to the present debt and credit crisis as the "larger and more imminent" of the two problems - this seems to me a continuing mis-estimation. The credit crisis may be three or four years earlier in time, but it quite clearly pales into insignificance compared to what Mr. Weeden is describing.
I can't help it if so many people here find the peak energy topic "over-discussed and shop-warn fodder for alarmists". My suggestion to these people is that they really have not yet grasped the size, and proximity of the thing that is approaching us. Don't take my word for it. But please do take Mr. Weeden's, and then look up his bio to get a measure of how often this man has ventured into "over the top" predictions.
___________
CHARLEY MAXWELL - WELLING & WEEDEN - Oil Shortages Start in 201O. Peak Oil Hits 2012-2015
http://www.energybulletin.net/40016.html
‘Dean of Oil Analysts’ Maxwell (Part 1 of 4): Oil Shortages Start in 2010; Peak Oil Hits 2012-2015
Posted: February 4, 2008
Nearly 40 years on Wall Street, plus 12 years before that working for a major oil company, equals a lifetime of experience for Charles T. Maxwell, senior energy analyst at Weeden & Co., known as the “dean of energy analysts.” Now, in an interview that sounded like a preliminary draft of a valedictory address, Princeton and Oxford-educated Maxwell has laid out in stark, uncomplicated terms what might be called the “Nightmare on Main Street” that he sees barreling toward America and the world.
Every investor needs to pay attention to Maxwell’s nightmare scenario, because if the dean’s forecast is correct, it’s going to influence every investment decision made for at least the next 10 to 20 years. As we’ll see in this four-part series, although Maxwell sees much pain being inflicted on consumers and investors, he also sees opportunities to make a lot of money.
It all boils down to this, Maxwell told EnergyTechStocks.com: We live in a world where there is only about 1.2% more oil available each year, not enough to keep up with 1.5% annual demand growth. Between now and 2010, this supply shortfall will be made up through a drawdown in inventories, helped out by a slowdown in demand in 2008 and 2009 due to a recession or near-recession in the U.S.
But in 2010, Maxwell said, the shortfall will become greater than can be made up by what’s still in inventory, and thus will begin a long period of global oil scarcity that will get worse starting in 2012 or 2013, which is when Maxwell foresees a “peak” in conventional oil production. It gets even worse in 2015, which is when he expects a peak in the production of all liquids, a category that includes condensates, tar sands oil and biodiesel.
Maxwell described the period 2010 through 2015 as the “letting down” of production. In 2015, he said, the all-liquids peak arrives, after which production “starts down,” even as demand continues up. He added that production will start down even though new oilfields will go into production, and even if there is only a 4.5% average annual depletion rate from existing fields, which is what Cambridge Energy Research Associates has optimistically concluded. (Others believe the depletion rate is significantly higher.)
As the nightmare worsens, Maxwell sees cities in many countries where people depend on kerosene having to do without this life-sustaining fuel. If this prediction of Maxwell’s turns out to be correct, one can easily imagine a sharp rise in the number of environmental immigrants flooding into the more developed countries in Europe and Asia. This could lead to excruciating social unrest that produces outbreaks of violence, as some experts have already predicted.
When will the nightmare end? Maxwell said that by 2025, “We can create some answers.” He explained that both plug-in electric vehicles and cellulosic biofuel made from garbage are “wonderful ideas”; however, given that it takes 10 to 15 years or longer to turn over the world’s vehicular fleet, such technological breakthroughs won’t happen quickly enough to prevent the nightmare from happening.
Which leaves unanswered the question of greatest importance in most people’s minds: how high is the price of gasoline going to go? We’ll find out what the dean thinks tomorrow in Part 2.
‘Dean of Oil Analysts’ Maxwell (Part 2 of 4): U.S. Pump Prices to Hit $12 to $15 a Gallon
Posted: February 5, 2008
As America enters a world of ever-increasing oil scarcity, there is going to be a “horrific” rise in the price Americans pay for gasoline, Charles T. Maxwell, senior energy analyst at Weeden & Co., told EnergyTechStocks.com.
Think $3 a gallon is high? Get ready for $12 to $15 a gallon within a few years, the “dean” of energy analysts predicted during a discussion about the future of energy that sounded like a preliminary draft of a valedictory address.
Maxwell said it will take $12 to $15 a gallon to get Americans to let go of what he called the “precious freedom of mobility.” As much as Maxwell laments the loss, he sees no other way for the U.S. to impose enough conservation to deal with the growing imbalance between oil demand and supply that he sees developing around 2010 and getting worse in 2012 or 2013, as the world hits a “peak” in conventional oil production.
Because he expects Americans to hang on for dear life to their freedom of mobility, Maxwell says there will have to be a “stomping exercise” to “get them to let go.” Basically, Maxwell said, Americans’ freedom of mobility will have to be stomped on by allowing the supply-constrained price of oil to steadily rise starting in 2010, reaching $180 a barrel in 2015 and $300 a barrel in 2020.
Maxwell doesn’t see how this stomping exercise can be avoided. While he sees great promise in oil demand-reducing technologies such as cellulosic biofuel and plug-in electric vehicles, he says there just isn’t enough time left to displace the upwards of 1 billion oil-consuming cars and trucks that are expected to be on global highways when oil production peaks and starts down early in the next decade. Even if the world were suddenly to find a number of huge new oilfields – an unlikely possibility – it would still take too long to develop them to head off this crisis, he noted.
One can only imagine the anger Americans will feel if and when they are staring at $15 a gallon pump prices. (In Europe, presumably, prices might be even higher, unless European nations decide to remove some of their gasoline taxes, which they financially can ill afford to do.) While Maxwell’s “Nightmare on Main Street” scenario may sound far off, the fact is whoever wins the White House this November will face the voters’ wrath, especially if he or she wins reelection.
As much as Maxwell discussed the scary future he envisions, he also discussed how this future should produce some companies that pay off nicely for investors. More on that tomorrow in Part 3 of this series.
‘Dean of Oil Analysts’ Maxwell (Part 3 of 4): ‘Deep Oil’ Drillers Like Pride Should Do Well
Posted: February 6, 2008
Want to make some money during the period of global oil scarcity that Charles T. Maxwell, “dean” of energy analysts, says is right around the corner? According to Maxwell, there is money to be made in oil drilling companies, especially those with the equipment to tackle the new frontiers of the business, namely deep oil drilling in the bottom of the ocean.
During a lengthy discussion with EnergyTechStocks.com, Maxwell, senior energy analyst at Weeden & Co., said a lot of oil and natural gas is going to be recovered from new fields that lie beneath 4,000 to 8,000 feet of water, plus another 15,000 to 20,000 feet of land below that. While he said that all this new energy won’t be enough to prevent a “peak” in liquids production in 2015, it should do wonders for the bottom lines of several oil drilling companies.
Maxwell said that seismic studies are showing that there should be a lot of oil and/or natural gas fields in deep water off India, China, Australia, Russia, Indonesia, the U.S. Gulf Coast, the North Sea, Brazil and Angola. While these new fields will be extremely expensive to exploit, he said that they should be affordable when, as he predicts, oil is selling at roughly $150 to $160 a barrel (in today’s dollars) in seven or eight years time.
Deep oil drillers may make investors a lot of money in two ways, Maxwell said, reiterating what he first said on the PBS program Consuelo Mack’s Wealthtrack. On that program Maxwell said, “Offshore drilling will continue to be very profitable. The oil companies can finance it quite easily with their cash flows.” He added, “There will be acquisitions as the industry consolidates. There are eight of them. I think there will be four of them in three or four years.”
As he first indicated on Wealthtrack, Maxwell’s top drilling pick is Pride International Inc. He told EnergyTechStocks.com that while Pride is known for its rigs that work in shallower water, 70% of the company’s assets (in terms of value) are tied up in deepwater rigs (three drillships and 11 semi-submersibles), with another couple of rigs on order. Maxwell further expects Pride to be one of the companies that ultimately gets acquired.
For similar reasons, other drilling companies that Maxwell said should do well include: Transocean Inc., Noble Corp. and Diamond Offshore Drilling Inc. They are among a group of 10 or so drilling firms that Maxwell said already are “making a terrible lot of money.” As evidence of that, Maxwell said that two years ago this group collectively had about $32 billion debt, while today it’s only about $2 billion.
‘Dean of Oil Analysts’ Maxwell (Part 4 of 4): Oil Crisis Will Lead to 10-Year Financial & Political Crisis
Posted: February 7, 2008
A growing chorus of voices is screaming for the United States to undertake a Manhattan Project-type program to wean America off its oil dependency. But as Charles T. Maxwell, the “dean” of Wall Street’s energy analysts, looks into the future, he deeply fears that Washington won’t do anything to head off the oil crisis he sees rapidly developing starting in 2010. He says this will make the financial crisis he fears even worse. Also, because Washington will be seen by angry voters (who will be paying $12 to $15 for a gallon a gas) as the cause of their “Nightmare on Main Street,” Maxwell sees the American political system being shaken to its roots.
Princeton and Oxford-educated Maxwell believes that if the Democrats are in power, their core constituencies – farmers, workers and intellectuals – will be ranged against one another, resulting in an impasse. If the Republicans are in power, he expects whatever “solution” they come up with to be politically untenable because it will be premised on people with money continuing to consume as before, with the have-nots expected to do without.
Seeing no chance of a timely political response to America’s looming oil calamity, Maxwell, senior energy analyst at Weeden & Co., expects an oil-induced financial crisis to start somewhere in the 2010 to 2015 timeframe. He said that, unlike the recession the U.S. appears to be in today, “This will not be six months of hell and then we come out of it.” Rather, Maxwell expects this financial crisis to last at least 10 or 12 years, as the world goes through a prolonged period of price-induced rationing (eg, oil up to $300 a barrel and U.S. pump prices up to $15 a gallon), while waiting for new technologies that can wean nations off their oil dependency to take hold in the marketplace. (It will take time to change over the world’s one billion or so oil-consuming cars and trucks.)
As this combined oil and financial crisis worsens, Maxwell would not be surprised if the U.S. government started functioning the way it did in World War II, when the democratic dialogue was often put on hold so that unilateral decisions could be made by people given special powers. He described them as little tyrants who will be able to cut off debate, effectively weakening the democratic process. Not a pleasant prospect, Maxwell emphasized, but one that may be unavoidable in the oil-scarce world that’s coming.
Read this article, and wake up to a whole new level of fear, of the world that is going to be slamming into us in a mere 5-7 years. This is not by any means "the world my children will have to face". It is 100%, "the world I will have to face" - a mere seven years from now.
BTW, for your interest GRG55, Mr. Maxwell disagrees with your assessment of the "Peak" as a decade long process. He describes it in terms of "two years". The article is fascinating. Are we then really to think of the miles and miles of commentary here on the housing bust as more important than this?? Who is even going to remember the housing bust of 2007 when the events below break on us?
iTulip has designated the event described below as the "lesser of the present emergencies", in refers to the present debt and credit crisis as the "larger and more imminent" of the two problems - this seems to me a continuing mis-estimation. The credit crisis may be three or four years earlier in time, but it quite clearly pales into insignificance compared to what Mr. Weeden is describing.
I can't help it if so many people here find the peak energy topic "over-discussed and shop-warn fodder for alarmists". My suggestion to these people is that they really have not yet grasped the size, and proximity of the thing that is approaching us. Don't take my word for it. But please do take Mr. Weeden's, and then look up his bio to get a measure of how often this man has ventured into "over the top" predictions.
___________
CHARLEY MAXWELL - WELLING & WEEDEN - Oil Shortages Start in 201O. Peak Oil Hits 2012-2015
http://www.energybulletin.net/40016.html
‘Dean of Oil Analysts’ Maxwell (Part 1 of 4): Oil Shortages Start in 2010; Peak Oil Hits 2012-2015
Posted: February 4, 2008
Nearly 40 years on Wall Street, plus 12 years before that working for a major oil company, equals a lifetime of experience for Charles T. Maxwell, senior energy analyst at Weeden & Co., known as the “dean of energy analysts.” Now, in an interview that sounded like a preliminary draft of a valedictory address, Princeton and Oxford-educated Maxwell has laid out in stark, uncomplicated terms what might be called the “Nightmare on Main Street” that he sees barreling toward America and the world.
Every investor needs to pay attention to Maxwell’s nightmare scenario, because if the dean’s forecast is correct, it’s going to influence every investment decision made for at least the next 10 to 20 years. As we’ll see in this four-part series, although Maxwell sees much pain being inflicted on consumers and investors, he also sees opportunities to make a lot of money.
It all boils down to this, Maxwell told EnergyTechStocks.com: We live in a world where there is only about 1.2% more oil available each year, not enough to keep up with 1.5% annual demand growth. Between now and 2010, this supply shortfall will be made up through a drawdown in inventories, helped out by a slowdown in demand in 2008 and 2009 due to a recession or near-recession in the U.S.
But in 2010, Maxwell said, the shortfall will become greater than can be made up by what’s still in inventory, and thus will begin a long period of global oil scarcity that will get worse starting in 2012 or 2013, which is when Maxwell foresees a “peak” in conventional oil production. It gets even worse in 2015, which is when he expects a peak in the production of all liquids, a category that includes condensates, tar sands oil and biodiesel.
Maxwell described the period 2010 through 2015 as the “letting down” of production. In 2015, he said, the all-liquids peak arrives, after which production “starts down,” even as demand continues up. He added that production will start down even though new oilfields will go into production, and even if there is only a 4.5% average annual depletion rate from existing fields, which is what Cambridge Energy Research Associates has optimistically concluded. (Others believe the depletion rate is significantly higher.)
As the nightmare worsens, Maxwell sees cities in many countries where people depend on kerosene having to do without this life-sustaining fuel. If this prediction of Maxwell’s turns out to be correct, one can easily imagine a sharp rise in the number of environmental immigrants flooding into the more developed countries in Europe and Asia. This could lead to excruciating social unrest that produces outbreaks of violence, as some experts have already predicted.
When will the nightmare end? Maxwell said that by 2025, “We can create some answers.” He explained that both plug-in electric vehicles and cellulosic biofuel made from garbage are “wonderful ideas”; however, given that it takes 10 to 15 years or longer to turn over the world’s vehicular fleet, such technological breakthroughs won’t happen quickly enough to prevent the nightmare from happening.
Which leaves unanswered the question of greatest importance in most people’s minds: how high is the price of gasoline going to go? We’ll find out what the dean thinks tomorrow in Part 2.
‘Dean of Oil Analysts’ Maxwell (Part 2 of 4): U.S. Pump Prices to Hit $12 to $15 a Gallon
Posted: February 5, 2008
As America enters a world of ever-increasing oil scarcity, there is going to be a “horrific” rise in the price Americans pay for gasoline, Charles T. Maxwell, senior energy analyst at Weeden & Co., told EnergyTechStocks.com.
Think $3 a gallon is high? Get ready for $12 to $15 a gallon within a few years, the “dean” of energy analysts predicted during a discussion about the future of energy that sounded like a preliminary draft of a valedictory address.
Maxwell said it will take $12 to $15 a gallon to get Americans to let go of what he called the “precious freedom of mobility.” As much as Maxwell laments the loss, he sees no other way for the U.S. to impose enough conservation to deal with the growing imbalance between oil demand and supply that he sees developing around 2010 and getting worse in 2012 or 2013, as the world hits a “peak” in conventional oil production.
Because he expects Americans to hang on for dear life to their freedom of mobility, Maxwell says there will have to be a “stomping exercise” to “get them to let go.” Basically, Maxwell said, Americans’ freedom of mobility will have to be stomped on by allowing the supply-constrained price of oil to steadily rise starting in 2010, reaching $180 a barrel in 2015 and $300 a barrel in 2020.
Maxwell doesn’t see how this stomping exercise can be avoided. While he sees great promise in oil demand-reducing technologies such as cellulosic biofuel and plug-in electric vehicles, he says there just isn’t enough time left to displace the upwards of 1 billion oil-consuming cars and trucks that are expected to be on global highways when oil production peaks and starts down early in the next decade. Even if the world were suddenly to find a number of huge new oilfields – an unlikely possibility – it would still take too long to develop them to head off this crisis, he noted.
One can only imagine the anger Americans will feel if and when they are staring at $15 a gallon pump prices. (In Europe, presumably, prices might be even higher, unless European nations decide to remove some of their gasoline taxes, which they financially can ill afford to do.) While Maxwell’s “Nightmare on Main Street” scenario may sound far off, the fact is whoever wins the White House this November will face the voters’ wrath, especially if he or she wins reelection.
As much as Maxwell discussed the scary future he envisions, he also discussed how this future should produce some companies that pay off nicely for investors. More on that tomorrow in Part 3 of this series.
‘Dean of Oil Analysts’ Maxwell (Part 3 of 4): ‘Deep Oil’ Drillers Like Pride Should Do Well
Posted: February 6, 2008
Want to make some money during the period of global oil scarcity that Charles T. Maxwell, “dean” of energy analysts, says is right around the corner? According to Maxwell, there is money to be made in oil drilling companies, especially those with the equipment to tackle the new frontiers of the business, namely deep oil drilling in the bottom of the ocean.
During a lengthy discussion with EnergyTechStocks.com, Maxwell, senior energy analyst at Weeden & Co., said a lot of oil and natural gas is going to be recovered from new fields that lie beneath 4,000 to 8,000 feet of water, plus another 15,000 to 20,000 feet of land below that. While he said that all this new energy won’t be enough to prevent a “peak” in liquids production in 2015, it should do wonders for the bottom lines of several oil drilling companies.
Maxwell said that seismic studies are showing that there should be a lot of oil and/or natural gas fields in deep water off India, China, Australia, Russia, Indonesia, the U.S. Gulf Coast, the North Sea, Brazil and Angola. While these new fields will be extremely expensive to exploit, he said that they should be affordable when, as he predicts, oil is selling at roughly $150 to $160 a barrel (in today’s dollars) in seven or eight years time.
Deep oil drillers may make investors a lot of money in two ways, Maxwell said, reiterating what he first said on the PBS program Consuelo Mack’s Wealthtrack. On that program Maxwell said, “Offshore drilling will continue to be very profitable. The oil companies can finance it quite easily with their cash flows.” He added, “There will be acquisitions as the industry consolidates. There are eight of them. I think there will be four of them in three or four years.”
As he first indicated on Wealthtrack, Maxwell’s top drilling pick is Pride International Inc. He told EnergyTechStocks.com that while Pride is known for its rigs that work in shallower water, 70% of the company’s assets (in terms of value) are tied up in deepwater rigs (three drillships and 11 semi-submersibles), with another couple of rigs on order. Maxwell further expects Pride to be one of the companies that ultimately gets acquired.
For similar reasons, other drilling companies that Maxwell said should do well include: Transocean Inc., Noble Corp. and Diamond Offshore Drilling Inc. They are among a group of 10 or so drilling firms that Maxwell said already are “making a terrible lot of money.” As evidence of that, Maxwell said that two years ago this group collectively had about $32 billion debt, while today it’s only about $2 billion.
‘Dean of Oil Analysts’ Maxwell (Part 4 of 4): Oil Crisis Will Lead to 10-Year Financial & Political Crisis
Posted: February 7, 2008
A growing chorus of voices is screaming for the United States to undertake a Manhattan Project-type program to wean America off its oil dependency. But as Charles T. Maxwell, the “dean” of Wall Street’s energy analysts, looks into the future, he deeply fears that Washington won’t do anything to head off the oil crisis he sees rapidly developing starting in 2010. He says this will make the financial crisis he fears even worse. Also, because Washington will be seen by angry voters (who will be paying $12 to $15 for a gallon a gas) as the cause of their “Nightmare on Main Street,” Maxwell sees the American political system being shaken to its roots.
Princeton and Oxford-educated Maxwell believes that if the Democrats are in power, their core constituencies – farmers, workers and intellectuals – will be ranged against one another, resulting in an impasse. If the Republicans are in power, he expects whatever “solution” they come up with to be politically untenable because it will be premised on people with money continuing to consume as before, with the have-nots expected to do without.
Seeing no chance of a timely political response to America’s looming oil calamity, Maxwell, senior energy analyst at Weeden & Co., expects an oil-induced financial crisis to start somewhere in the 2010 to 2015 timeframe. He said that, unlike the recession the U.S. appears to be in today, “This will not be six months of hell and then we come out of it.” Rather, Maxwell expects this financial crisis to last at least 10 or 12 years, as the world goes through a prolonged period of price-induced rationing (eg, oil up to $300 a barrel and U.S. pump prices up to $15 a gallon), while waiting for new technologies that can wean nations off their oil dependency to take hold in the marketplace. (It will take time to change over the world’s one billion or so oil-consuming cars and trucks.)
As this combined oil and financial crisis worsens, Maxwell would not be surprised if the U.S. government started functioning the way it did in World War II, when the democratic dialogue was often put on hold so that unilateral decisions could be made by people given special powers. He described them as little tyrants who will be able to cut off debate, effectively weakening the democratic process. Not a pleasant prospect, Maxwell emphasized, but one that may be unavoidable in the oil-scarce world that’s coming.
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