Showing posts with label Saudi Arabia. Show all posts
Showing posts with label Saudi Arabia. Show all posts
Saudi budget breakeven now >$100/bbl
Via The Oil and the Glory (which I've started to read, but really needs to get an RSS feed, because my tolerance for random e-mails that disrupt my carefully metered information diet is limited), the Institute of International Finance has calculated that after taking into account the $130 billion in "largesse" that Saudi King Abdullah has announced to preempt potential unrest, the oil price at which the Saudi budget breaks even has risen from $68 to $88/bbl. That is a scarily high number, and I don't know to what extent that factors in the volume volatility that comes from being OPEC's (and the world's) swing producer. There is clearly embedded risk and uncertainty, even to that threshold.
Turning Oil Into Salt (3): Intellectual consistency
The authors more than once deride other points of view as lacking intellectual consistency. Sadly, I cannot give them high marks for intellectual consistency themselves. While there is much to like in both their thesis and how they defend it, there are numerous examples where they take both sides of an approach in different parts of the book to suit their persuasive goals.
(I differentiate this from couching arguments in politically/emotionally charged terms, such as referring to Obama bowing to King Abdullah as a “symbolic act of self-denigration.” This is also rampant, and I find it quite irritating for a book aspiring to be a clear-headed policy brief, but I don’t feel dissecting this is worth much further effort.)
One major inconsistency is their selective thinking on fungibility – to them oil is fungible, but corn and other agricultural commodities (and the resources used to grow them) are not.
Second, they dismiss some energy sources up front, only to subtly return to them later. They reject the Pickens Plan to build wind power and run vehicles on displaced natural gas since, despite currently producing 98% of its natural gas consumption, the U.S. only has 3% of world gas reserves and a reserve-to-production ratio of less than 10 years. And yet, in plugging methanol two chapters later, they cite natural gas as one likely feedstock (specifically the 5 tcf of natural gas that is flared each year, especially in Nigeria).
Similarly, they demolish the argument for hydrogen cars based on the energy intensity of producing elemental hydrogen, but later propose a plan to produce methanol from CO2. It sounds win-win, but aside from the energy intensity of splitting CO2 into CO and oxygen, the process then requires… you guessed it… the resulting CO to be reacted with… hydrogen.
Finally, while they generally acknowledge the importance of economics, this emphasis is not consistent through (for example, when extolling the vast photosynthetic potential and CO2-consuming benefits of algae, a more fair-handed author would have felt compelled to at least mention that algae is nowhere near cost-competitive at commercial scale).
(I differentiate this from couching arguments in politically/emotionally charged terms, such as referring to Obama bowing to King Abdullah as a “symbolic act of self-denigration.” This is also rampant, and I find it quite irritating for a book aspiring to be a clear-headed policy brief, but I don’t feel dissecting this is worth much further effort.)
One major inconsistency is their selective thinking on fungibility – to them oil is fungible, but corn and other agricultural commodities (and the resources used to grow them) are not.
Second, they dismiss some energy sources up front, only to subtly return to them later. They reject the Pickens Plan to build wind power and run vehicles on displaced natural gas since, despite currently producing 98% of its natural gas consumption, the U.S. only has 3% of world gas reserves and a reserve-to-production ratio of less than 10 years. And yet, in plugging methanol two chapters later, they cite natural gas as one likely feedstock (specifically the 5 tcf of natural gas that is flared each year, especially in Nigeria).
Similarly, they demolish the argument for hydrogen cars based on the energy intensity of producing elemental hydrogen, but later propose a plan to produce methanol from CO2. It sounds win-win, but aside from the energy intensity of splitting CO2 into CO and oxygen, the process then requires… you guessed it… the resulting CO to be reacted with… hydrogen.
Finally, while they generally acknowledge the importance of economics, this emphasis is not consistent through (for example, when extolling the vast photosynthetic potential and CO2-consuming benefits of algae, a more fair-handed author would have felt compelled to at least mention that algae is nowhere near cost-competitive at commercial scale).
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