1. Eni Chair in Competitive Dynamics and Global Strategy
LUISS Guido Carli Masters in General Management Economics and Management of Energy Business Term /12
Professor John A. Mathews
Eni Chair in Competitive Dynamics and Global Strategy
Module 8: Fossil fuels

2. Future for fossil fuels
Peak oil, peak gas, peak coal?
The oil business – and its greening
Carbon capture and storage; tar sands, shale oil etc
 Readings:
Hubbert M.K Nuclear energy and the fossil fuel, Drilling and Production Practice, American Petroleum Institute.
Deffeyes, K.S Hubbert’s peak: The impending world oil shortage, Chapter 1.
Höök, M. et al Validity of the fossil fuel production outlooks in the IPCC emissions scenarios, Natural Resources Research
Höök, M., Hirsch, R. and Aleklett, K Giant oil field decline rates and their influence on world oil production, Energy Policy
Friedrichs, J Global energy crunch: How different parts of the world would react to a peak oil scenario, Energy Policy
 Case: Petrobras

3. Economic Sustainability Challenge: Coal Price Index in $/ton
Source: globalCOAL

4. Where does Peak Oil enter the argument?
The finite character of oil supplies (and gas and coal) could be the single biggest factor limiting cumulative carbon emissions to 1 trillion tonnes
Peak Oil – reaching the 50th percentile – i.e. half way
Point is that the ‘second half’ of the oil extraction process is likely to be a lot more difficult and a lot more expensive than the first half
Widespread agreement that ‘Peak Oil’ is now imminent – or has already happened
(Deffeyes)

5. Did oil peak in 2005 (Deffeyes)?
Mikael Hook PhD thesis Uppsala University 2010

6. Has oil reached a plateau 2005-2010?
Mikael Hook PhD thesis Uppsala University 2010

7. Influence of giant oil fields: Discovery peaked in 1960-69
Mikael Hook PhD thesis Uppsala University 2010

8. Peak Oil (2)
Major reports from Military think tanks (e.g. US and Germany in Sep 2010)
s e p t e m b e r
Fueling the Future Force
Preparing the Department of Defense for a Post-Petroleum Era
By Christine Parthemore and John Nagl

9. è sempre più difficile e costoso
Estrarre petrolio
è sempre più difficile e costoso

10. Resource intensity of industrial era
Advertising campaign waged by Canadian govt: Athabasca tar sands

11. Peak Oil Discoverer: Dr. King Hubbert 1903-1989
Shell Oil Geologist/ Petroleum Scientist
1949 – projected short historical oil period
Triggered by 1930 U.S. discovery peak
1956 – predicted 1970 as U.S. Peak Oil year
Came as predicted
1969 – predicted World Peak Oil year 2000
demand decline delayed it

12. Hubbert’s peak (US, Norway)

13. The facts: ASPO

15. The peaking of oil supplies – by country

16. Example: Decline of Norwegian North Sea oilfields
Mikael Hook PhD thesis Uppsala University 2010

17. First mention of ‘peak oil’ in international press: May 24, 2002
Oil Experts Draw Fire for Warning Fri May 24, 6:38 PM ET By BRUCE STANLEY, AP Business Writer
Global supplies of crude oil will peak as early as 2010 and then start to decline, ushering in an era of soaring energy prices and economic upheaval — or so said an international group of petroleum specialists meeting Friday.
They hope to persuade oil-dependent countries like the United States to stop what they view as a squandering the planet's finite bounty of fossil fuels.
"There is no factual data to support the general sense that the world will be awash in cheap oil forever," said Matthew Simmons, an investment banker who helped advise President Bush (news - web sites)'s campaign on energy policy. "We desperately need to find a new form of energy."
Matt Simmons, died Sep 2010

18. What about coal?
Mikael Hook PhD thesis Uppsala University 2010

19. Peaking of coal: UK, Germany, Japan
Mikael Hook PhD thesis Uppsala University 2010

20. Coal: logistic peaking projections
Mikael Hook PhD thesis Uppsala University 2010

21. Peak coal in 2020-25: Standard logistic projection
Mikael Hook PhD thesis Uppsala University 2010

22. Peak coal: Optimistic logistic projection (2040)
Mikael Hook PhD thesis Uppsala University 2010

23. Resource intensity of industrial era

24. Summary
The finite character of oil supplies (and gas and coal) could be the single biggest factor limiting cumulative carbon emissions to 1 trillion tonnes
Peak Oil – reaching the 50th percentile – i.e. half way
Point is that the ‘second half’ of the oil extraction process is likely to be a lot more difficult and a lot more expensive than the first half
Widespread agreement that ‘Peak Oil’ is now imminent – or has already happened
(Deffeyes)
‘Downside’ of peak oil curve will see dirtier, more costly fossil fuel alternatives emerge
A dangerous time for a society hooked on fossil fuels

25. Professor John A. Mathews
LUISS Guido Carli Masters in General Management Economics and Management of Energy Business Term /12
Professor John A. Mathews
Eni Chair in Competitive Dynamics and Global Strategy
Module 8A: Oil and the Economy 25

26. Oil and its influence on the wider economy
Significance of oil price on the wider economy
Fluctuations in oil prices and triggering of recessions
Energy as a factor of production in economic analysis
Readings:
Jeff Rubin, Just how big is Cleveland? ICBC World Markets, Oct
Jeff Rubin and Peter Buchanan, What’s the real cause of the global recession? ICBC World Markets, Oct
Jeff Rubin, Why your world is about to get a whole lot smaller: Oil and the end of globalization. NY: Random House.

27. Economic recessions and oil price
What’s the real cause of the global recession?
Jeff Rubin and Peter Buchanan, ICBC World Markets, StrategEcon, Oct

28. Recessions 2009/10 – Wall St-induced global recession
1990/91 Gulf War recession
1981/82 Iran crisis recession
1979/80 Second OPEC oil price shock recession
1973/75 OPEC oil spike recession

29. Recent oil spike vs. previous spikes: Bigger impact expected in 2009
What’s the real cause of the global recession?
Jeff Rubin and Peter Buchanan, ICBC World Markets, StrategEcon, Oct

30. Economic recessions and oil price (2)
Why hasn’t the jump in oil prices led to a recession?
Federal Reserve Board San Francisco Economic Letter, Nov 18, 2005