World to Oil Producers — We Don’t Want Your Fracking Crude

World oil prices routed to 49 dollars per barrel today amidst weak global demand. It’s a sea change in the oil and energy markets that is now in the process of rattling many previously well established oil ventures to their foundations. A shot across the bow that may well signal the beginning of the end of crude due to a combination of expensive production, competition by renewables and efficiencies, and a widespread recognition of ramping hazards from human-caused climate change.

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During the summer of 2014, amidst geopolitical crisis after geopolitical crisis in oil producing regions of the globe, world crude oil prices spiked to near 115 dollars per barrel. Ever since the mid 2000s, global producers had struggled to keep up with demand or to even keep crude + condensate production flat. But as of 2012, deregulated US fracking technology had ruptured large sections of the Dakotas, Texas and a strand from the Virginias through Pennsylvania.

US Fracking Ascendant

US oil production rose by 1 million barrels per day for three years running. By end 2014 US crude production had hit 9.13 million barrels per day. US liquids production, including 1 million barrels per day of biofuel, had spiked to 14.3 million barrels per day — making it the largest liquid fuels producer in the world.

But the US wasn’t the only region benefiting from gains. Russia and Iraq also saw oil production rise even as Saudi Arabia completed construction on a surge production capacity of 2 million barrels per day. And in the oil project pipeline more than 55 million barrels per day of new production was planned through the mid 2020s. All projects banking on continued oil price support in excess of 100 dollars per barrel.

Fracking Pads

(Fracking Pads stretch as far as the eye can see in North Dakota’s Bakken Formation. Image source: Greenpeace.)

It was an oil faerie tale come true. High prices and surging production combined to push oil asset valuations to levels never before seen. The oil majors, the world’s most profitable companies in the history of humankind, could rest safe in the assurance that this wealth and power base would continue to extend their reign for decades to come.

But, for the oil producers, the drilling and the service companies, and yes, even for the oil majors themselves, there happened to be more than one serpent in this otherwise rather lovely and gratuitous garden.

Declining Demand

From the control rooms of various corporate Death Stars, oil company executives must have felt quite comfortable with their positions. Even to those with fracking, tar sands, and deep offshore production exposure, 115 dollars per barrel was still quite profitable. And, conventional thinking was that the extra fire-water would, even at this price, support global economic growth which would, in turn, bring about more demand.

Past years experience supported this notion with demand rising by more than 1 million barrels per day each year even during times when the price of oil charged to $120 or higher. The 150 dollar price of economic harm set in 2008 was still a ways off and the forecasts called for demand to grow by 1.3 million barrels per day through 2015.

But demand did not perform as expected. Throughout the world economic weakness reigned. In Russia, sanctions imposed by the US bit deep into economic activity. In Europe, austerity measures resulted in stagnating growth. In China, an unwinding housing bubble did its own damage to demand for oil.

In addition, rapid and widespread increases in vehicle fuel efficiency were also drawing down marginal demand for oil. In the US, corporate average fuel efficiency was rising by 2-3 mpg per year. Worldwide, fuel efficiency standards were also rising. Furthermore, an entirely new animal began to appear on the international stage — the zero oil consuming electric vehicle.

By end 2014, more than 250,000 electric vehicles had been sold in the US with 600,000 EV sales worldwide. Compared to hundreds of millions of ICE vehicles roaming the world’s streets, this initial surge in EV adoption seemed small. Yet it was more than enough to instill a nagging worry among oil company supporters and investors. A worry reinforced by China’s late 2014 pledge to put 5 million EVs on its roads before 2020. So it seemed the tiny EV sprig could well grow into a tree that may later topple most of the oil demand base through the next couple of decades.

First Municipality-owned Solar Powered EV Charging Station in the USA

(Oil corporations’ worst nightmare. Solar charging station with EVs. Image source: Technology Tell.)

And oil companies didn’t need to look to just EVs to find instances of alternative technology drawing down oil demand. Throughout the world island and Middle Eastern nations, for so long dependent on oil-based electricity generation, began to adopt distributed solar systems that were far cheaper than their fossil fuel rivals. Though just 5 percent of global electricity demand still runs on oil, that 5 percent represents upward of 5 million barrels per day of global oil consumption. And eroding that demand in a marginal and sensitive market was beginning to show its impacts.

Throughout the latter half of 2014 demand faltered with growth forecasts winnowed down to 1.1 million, 900,000 and finally 700,000 barrels per day. A near halving of the previous forecast.

The Saudi Gambit

As demand expectations began to fall, so did prices. By September, oil was trading in the 90s and many around the world were looking to OPEC for support. The last time oil went into free-fall OPEC, lead by Saudi Arabia, cut production and prices rocketed back to 100 + dollars per barrel levels. However, this year Saudi Arabia was faced with an upstart US and a resurgent Russia and Iraq. Media outlets in the US were bragging about how North America had unseated the Sauds as the kings of oil production. But these outlets didn’t take into account the essential difference between the cost of North American oil production, which tends to run quite high, and the cost of Saudi production, which is still less than $20 per barrel.

Saudi Arabia must have seen this coming for quite some time as the Kingdom had banked more than 750 billion dollars in oil profits for a rainy day. By late fall, and sitting on this mountain of cash, Saudi Arabia made the then surprising decision to keep pumping oil and to urge its fellows in OPEC to do the same. And so, by November, OPEC’s 30 million barrels per day continued to be delivered.

Combined and surging US, Russian and Iraqi production formed a tsunami of ever cheaper oil competing for a host of unenthusiastic customers. Prices plunged to 65 dollars per barrel by mid December. By today, the price of a barrel in West Texas was 49 dollars, at Brent it was 53 dollars, in the geographically isolated and environmentalist blockaded regions near Alberta barrels traded for less than 37 dollars.

Extraordinarily High Price Production

If oil valuations, due to prices consumers appeared willing to pay, were high earlier this year, so were the costs of producing the new oil. Though there was quite a lot of new, unconventional oil out there to replace the slowly winnowing supplies of traditional fuel, that new oil was tough to reach. It required a great expense in broken and poisoned earth. In regions the size of a small country laid waste. Under skies that ever more frequently disgorged extreme droughts and deluges, after a proceeding series of years that have brought ever higher global temperatures, inexorably rising seas, and ever more rapid glacial melt, the environmental and human cost of extracting that unconventional fuel seemed very high indeed. A price that appeared to be rising to the point of an impending mass extinction event for the Earth due to a wrecked climate. A ghastly sacrifice in the name of oil profiteers. One that would include a growing number of human beings together with countless animal species.

Tar Pit #3

(Tar Sands’ hellish landscape of ruined Earth and toxic tailing ponds. Image source Occupy.)

In the North, in Canada, a vast strip mine wasteland reminiscent of Tolkien’s Mordor hosted colossal machinery devouring gigatons of earth and spitting out sun-blocking plumes of smoke, vomiting massive lakes of poisonous water (lethal to any poor bird who happened to land upon its surface and to fish and Canadians down-stream alike), and spitting out billions of tons of corrosive bitumen. In the US, fracking required the near-constant injection of water and chemicals into the earth, wrecking water sources and farmlands, to produce an equally caustic fracked crude. And far off shore, deep ocean drilling leveraged technology equivalent to lunar landers and the most advanced remote operated vehicles all launched from gigantic sea-based platforms.

The cost to continue to expand these ventures ranged between 50 and 110 dollars per barrel of oil extracted. An observation that shows more than a trillion dollars and 40 million barrels per day of planned oil developments through 2025 unprofitable at today’s price of 49 dollars per barrel. An observation that lead a recent Bloomberg analyst to appropriately term the projects ‘Zombies’ during a December assessment of a Goldman Sachs’ report on the matter:

Oil Zombies 70 dollars

(OMG, Zombies! Goldman Sachs’ report from December showing more than 1 trillion dollars of oil projects at risk under a $50 per barrel oil price regime. Image source: Goldman Sachs and Tom Randall at Bloomberg.)

Putting this investment at risk results in severe instability for global energy markets. The reason is that current oil field decline rates are so extreme that 9 million barrels per day of new production or enhanced recovery from existing wells must come on line every four years just to keep current production flat. Wholesale de-funding of these investments would lead to a rapid drop-off in global oil production in the coming years as rapidly depleting new sources such as fracking and faltering old wells fail en masse.

Notably, almost all new major oil projects are now on indefinite hold pending a return to higher prices. Prices that will almost certainly come at some point due to that raging depletion rate. But the question many are asking is will it come soon enough to prevent massive failures of numerous companies within the unconventional fuels industry?

Even the cost of just maintaining current unconventional production ranges from 35 to 95 dollars per barrel. Far more than the 10-20 dollars per barrel cost of extracting oil from a traditional pressurized oil well. And with current massive price falls to 49 dollars per barrel or less, many companies are now in jeopardy.

Of course, we should probably include trillions and trillions more at risk due to the fact that current oil producers simply must leave most of their caustic product in the ground in order to prevent catastrophic climate change. As a result, the entire oil industry is a zombie at this time.

We Don’t Want Your Fracking Crude!

Compounding the issue of high production cost is a stranding of assets caused by a little televised but widespread phenomena called Blockadia. Perhaps the most visible expression of Blockadia is the ongoing campaign against the Keystone Excel and Northern Gateway Pipelines that have left tar sands oil stranded and dependent upon rail transport in order to access international markets. Even tar sands truck routes and equipment deliveries have been hounded by rampant blockades.

The result is an isolation of Canada’s tar sands that has now driven local prices for a barrel of oil to less than 37 dollars. What this means for Alberta oil is very thin profit margins and no expansion of production whatsoever. If oil strikes below 35 dollars for any extended period, Alberta may be looking at shut-downs over the long haul.

For US fracking the story is similar. From outright bans to constant legal action on the part of communities and individuals, Blockadia has arisen both in the form of protests and in the form of litigation. Even Rex Tillerson, Exxon CEO and funder of some of the most virulent climate change denier hacks in the media sphere, donated money to an anti-fracking campaign aimed at preventing the construction of wells near his multi-million dollar Texas home. Hypocritically, Exxon has funded polluting industries in many disadvantaged and poorer neighborhoods for decades — forcing those without enough monetary muscle to hire troll berserker lawyers to suffer pollution, poisoning and displacement. But turn the tables and Rex likes the fracking crude about as much as the rest of us.

In the end, we are all in what Naomi Klein has called ‘the sacrifice zone.’ A region where the externalities of fossil fuel use become visible and an increasingly violent impediment to daily life and well being. It is for this reason alone that so many pipelines and oil ventures are now under threat of blockade. People are fed up and everyone from moms to scientists to cowboys to Native Americans to activists are willing to put themselves on the line to prevent the worst outcomes of fossil fuel burning. People don’t like being sacrificed or having their children sacrificed for company profits which is the primary reason we don’t want your fracking crude.

Under Threat of Bankruptcy

Sauds’ price war, declining demand, the extraordinary cost of unconventional extraction, and Blockadia now combine to put many oil companies under severe threat. Today, the blood-letting pushed the Dow down by 331 points. Fracking suppliers like United Rentals, which specializes in pumps for hydraulic fracturing, lost 10 percent of its value in just one day. Noble Energy, Diamond Offshore, TransOcean, Anadarko Petroleum, Denbury Resources — all involved in costly unconventional oil extraction — all fell by between 7.8 and 9.5 percent. Baytec, a tar sands player, lost 12.5 percent. Continental Resources, with a large exposure to the US fracking effort, lost 10.7 percent of its valuation. Even energy giants like Chevron and ConocoPhilips fell by more than 4 percent in today’s bloodletting.

Though the US industry has been opaque with regards to risk, given the assessed high costs for both fracking and tar sands and the extremely rapid well depletion rates for fracking, current risks for all US unconventional players are very high. North Sea producers have been more clear in their risks, however, with reports last week identifying 1/3 of oil firms in the offshore region at risk of bankruptcy with oil prices in the range of 55 dollars per barrel.

Even more established companies like Exxon, a company some analysts suspect may be able to prey on weakness in the shale patch, will feel the pinch if oil prices trade in the range of 40-50 dollars per barrel for an extended period with company profits essentially wiped out below 40 dollars.

In short, what we see is that in an over-supplied market high cost producers are very vulnerable to price competition from lower cost producers and from alternatives that can now also increasingly replace base oil consumption outright.

Renewables in the Wings

For it’s not just Saudi Arabia that unconventional oil producers have to take seriously. They are also under existential threat from a combination of rising efficiencies and increasingly cheaper and easy to access renewable energy and electric vehicles.

After this current price fall takes down the marginal producers of fossil fuels that can’t cut it, prices will again rise. Meanwhile, economies of scale will continue to reduce solar panel prices, increase battery storage capacity and economics, and provide electric vehicles at lower costs and ever-greater capabilities.

Within 5-10 years the next price war on marginal oil may well be spear headed by renewables themselves. And that is a good thing, because in order to prevent the very worst impacts of human caused climate change that geological firewater needs to remain where it belongs — in the ground. In other words, there’s good reason not to want that fracking crude.

Links:

Dow Plunges Below 331, Oil Falls Below 50

Bankers See 1 Trillion of Zombie Investments Stranded in Oil Fields

Tar Sands– The Most Destructive Project on Earth

Why My Next Garage Will Be Solar

Market Data

This Changes Everything

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59 Comments

  1. Superb. And of course, if you ARE sitting on massive cheap reserves and can see that renewables will inevitably make oil obsolete, you might as well sell as much as you can now. Which is exactly what Saudi Arabia is doing.

    Note that every northern hemisphere winter for 6 years there has been a seasonal surge in coal prices. This year it hasn’t happened. Expect further declines.

    Reply
    • I am your loyal editor😉

      Have to say I agree with your sharp observation. Saudi Arabia may well be planning its exit. It has already set aside billions for solar panel development in the desert.

      As for coal — great catch. Solar made a big turn this year and it looks to be going viral — even a full press suppression by many utilities and fossil fuel interests hasn’t been able to stop it.

      One upshot from pressure on the fracking industry will be loss of co-produced natural gas from the oil plays. This will drive up natgas prices as well and provide yet more favorability for wind/solar/battery storage.

      Reply
      • Phil

         /  January 6, 2015

        To the extent that the supply of co-produced gas from fracking declines reflecting the decline in production from oil fracking, then gas from coal seam gas (CSG) such as in Australia could step in to the void. Will be interested to see which way world gas prices end up going.

        Given that you cannot turn off CSG (unlike co-produced gas from oil fracking), it will make things interesting for the CSG/LNG industry. If gas prices track oil prices lower for a significant time, then CSG/LNG would lock in loss making scenario endangering their viability. If loss of co-produced gas from closing oil fracking produces insufficient supply thereby increasing international gas prices, then they will be profitable assuming gas prices are high enough to meet levelised costs on average.

        If gas prices decline and CSG fields are operational, they also then might look to ramp up gas-fired electricity generation, shifting from export to the supply of gas from peak to base-load electricity production.

        Interesting times ahead.

        Reply
        • Was referencing the US market, primarily. This is a good assessment of the global market. For the US market, both loss of co-production and a rising dollar will make renewables more competitive vis a vis FF.

    • Andrew Dodds

       /  January 6, 2015

      It’s been a freakishly warm winter so far, at least in my neck of the woods. That could explain the lack of a coal price spike,

      Personally I find all of this worrying. Oil price oscillations, gas price oscillations, economic uncertainty – this does not help when trying to focus on real, physical threats like climate change. After all, if your ship is being tossed about on stormy seas it may be harder to tell if it’s sinking.

      Reply
  2. That should be “note that” not “not that”

    Reply
  3. wili

     /  January 6, 2015

    To what extent might low gasoline prices be a threat to renewables? If they undercut them in price, will they put some projects on hold?

    I realize that mostly oil and its derivatives are mostly _not_ used for generating electricity (especially in most developed countries) and that alternatives mostly do generate electricity; so mostly dropping oil prices won’t be competing directly with most alternatives.

    But there must be some areas where there could be pressure, and I would think it would make paying much more for an electric car, for example, a bit of a harder sell (from a purely financial viewpoint).

    Reply
    • Phil

       /  January 6, 2015

      Hello Wili,

      In terms of electricity generation, lower coal and gas prices make thermal generation more competitive relative to renewables because they lower variable costs that enter into levelised cost calculations. For renewables, the short run marginal costs (typically some O&M) are much lower than gas generation and often comparable or lower than short run marginal cost of coal generators (especially if located at coal mines). However, the overnight capital cost on ($/KW) basis and importantly the annual capacity factors of renewables are often significantly higher and lower respectively than baseload coal and gas generation. This counts significantly in producing lower levelised costs of energy for thermal plant relative to renewables – a key metric in judging viability. Plant with lower levelised costs need lower average prices (from wholesale market operations and/or PPA’s) to be viable over the lifespan of the plant.

      Anything that brings down the capital costs of renewables or increases their annual capacity factor (such as battery or other forms of storage) will be key drivers to improving the commerical viability of renewables. Example of the former is increase in scale of manufacturer of WTG’s and PV systems which have significantly driven down units costs. An example of latter would be molten salt storage options associated with concentrated solar thermal plant which enables such plant to potentially meet intermediate or even baseload production production duties, thereby driving up their annual capacity factor and driving down their levelised cost of energy.

      Reply
      • wili

         /  January 6, 2015

        Thanks, Phil. I’m not sure I followed all of that technical language.

        But it sounds like it’s kind of the opposite of what some of the peak oil folks were saying might happen to the price of renewables as oil prices rose: Their price would go up because oil was still used in their manufacture, transport and other ancillary costs. The claim then was that peak oil and the accompanying ever-higher oil prices that were supposed to go with it would not necessarily help alternatives be competitive.

        Even though that didn’t pan out so much because of constant increases in efficiency, now lower prices for oil can perhaps help lower the cost for renewables.

        I have a feeling, though, that what you just said was more nuanced and complex than that.

        Reply
    • Phil

       /  January 6, 2015

      I forgot to mention, it also depends on how coal, oil and gas prices move together. Thermal coal prices have certainly trended lower in a similar way that oil has gone but international gas prices have tended to remained high.

      Reply
    • Low gasoline prices are practically no threat to wind and solar. Even if we look at the electricity market for oil, composing about 5 million barrels per day of oil demand, solar outcompetes oil all the way down to 17 dollars per barrel. Such a low price would wipe out practically every producer worldwide, so that kind of price leveling is unsustainable for the oil industry.

      As mentioned above, for the US market, low oil prices also result in less co-produced natural gas. And since solar and wind primarily compete with natural gas and coal in electricity markets this may be a boon for wind and solar.

      As for electric vehicles, the impact of low gasoline prices will likely slow adoption somewhat. However, for gasoline to directly compete with electricity for charging an EV the price of gasoline would need to fall to 75 cents to 1 dollar per gallon. Current gasoline prices are dropping 5 year fuel savings for an EV from about 6,000 dollars to around 4,500 dollars. So on a fuel v fuel basis, renewable based electricity is king.

      Add to that the fact that many people who purchase EVs do it because some EVs perform better than ICEs in certain parameters (toque, range etc), that those who purchase EVs do it to lower their carbon footprint, and that those who purchase EVs do it because they don’t like being dependent upon oil companies for their fuel.

      We can well concede that market prices for EVs are higher than ICEs. But this masks a maintence cost savings of 500-800 dollars over the course of five years and a fuel savings of 4,500 to 6000 dollars over the same period.

      As the EVs have lower externalized costs than ICEs and increase US energy independence, the vehicles are rightly supported through subsidies to the tune of a 7,500 dollar cost incentive nationally and through some additional incentives on the state level.

      Finally, the price for EVs is falling relative to ICEs due to production scaling and improvements in battery technology. On premium models, the range barrier is falling and we should expect this fall to ripple through to economy models within the next 5 years.

      So what we see is that renewables are coming to be able to more directly compete with fossil fuels — being able to out-compete them for power generation soon and being able to compete on a more and more level playing field in transport.

      This is a megatrend that lower gasoline prices can’t really do much but slow. And since the low gasoline prices are unsustainable by the oil industry, the almost certainly coming whiplash back to higher prices will only reinforce this megatrend.

      Reply
      • wili

         /  January 6, 2015

        Thanks for the perspective. Pretty much what I suspected.

        Yes, maintenance costs for EV’s tend to be pretty low for the first 5 years or so, till you have to replace the battery pack. Then they get very expensive. Hopefully, advances in battery tech will help there eventually.

        Reply
    • More losses today for the oil patch. Baytec down another 4.5 percent after yesterday’s 12 percent loss (two day loss of nearly 17 percent). Oil down to 48 dollars per barrel (WTI). BP, Exxon, ConocoPhilips and Chevron show 2 day losses in the 5-7 percent range. Most marginal players have lost more than 10 percent over two days…

      Reply
    • Phil

       /  January 6, 2015

      Hello Wili,

      Oil prices would have some impact as an input into construction and transportation costs but would be dominated by what happens to unit capital costs, especially if world production of renewables ramps up and significantly drives units costs lower (like essentially moving from top towards the bottom of an average cost curve). Increased efficiency of technology (e.g. more output per unit of renewable energy input resource) as well as increasing the amount of time each year that the technology can supply power (through storage options) would still lower levelised costs and the average return (e.g. wholesale price or PPA) needed to make the project viable.

      Also, other competing forms of generation including thermal would also be affected by oil prices and most likely to a larger extent than renewables as oil prices could directly influence fuel input costs for oil, natural gas and diesel generation instead of just O&M in the case of renewables. Coal is more uncertain depending upon how oil and coal prices move together – for example, does oil and coal act like substitutes or complements.

      It also depends upon the maturity of the reneweable technology – mature technologies have lower unit capital costs than emerging technologies – for example, why capital cost of solar pv and wind is significantly lower on a ($/KW) basis than solar thermal, wave, for example.

      Reply
  4. Reblogged this on The Secular Jurist and commented:
    Brilliant article – must read.

    Reply
  5. Loni

     /  January 6, 2015

    Robert, I detect a certain amount of satisfaction in your writing of this……….more than a tad I’d say.

    Reply
    • Personally, I’m rather tired of oil company meddling in US and global politics, oil company based suppression of the sciences, oil company based suppression of alternative energy, and oil company based wrecking of the environment for executive and shareholder profits. Oil companies are among the most destructive and irresponsible corporate entities on this world. And considering the crowd we’re looking at, that’s really saying something.

      Reply
  6. Wonderful piece. And heartwarming too.

    Reply
  7. Robert,

    first, thanks for this post (as all the others). Now a bit of context.

    Regarding the “demand” thing. Demand is not usually what people “want”, but what people have “money” for, discretionary income. After the collapse of Lehman Brothers, oil price crashed from 147 dpb (dollars per barrel) to brief 37 dpp, and then rose again above 100 dpb most of the time.

    We now suggest, that previous high oil price was a combination of stagnating conventional global oil production, increasing demand and price rise was amplified by greedy speculators and gamblers. Then the same people undershoot the price of oil, briefly, as the economy choked under high oil price and unmanabeable debt and contracted, consquently. Price decline was not a result of skipping away from fossil fuels, but it was a result of credit bust.

    Now we are in similar position (some call it the second leg of Great(er) Depression). Since the QE3 program ended (see graph, in the linked article, which explains why oil price crashed), so did the “financialization” of markets, and oil price crashed. Carry traders got smoked. The thing is, that the demand never really recovered after Lehman, of was primarily the central bankers (and ZIRP policy) who tried to “resucitate” the global economy, but expectedly, failed miserably. In fact, they made the coming crash much worse. Saving BIG BANK(ster)S was never a good option, they should have left them to go bancupt. But corrupted polititians could not do that. Instead, banks were saved and governments and their taxpayers were used as collateral, enriching the rich (0.1 percenters), and robbing the poor in the process. Now, the endgame is relatively close, expect geo/political mess (Ukrajine just a for-taste of things), all this will be made much worse by climate change.

    So to conclude – it would we REALLY great if we – as humanity – REALLY stopped wanting the fracked oil. Should never been allowed, BTW. Unfortunately, I think its not the case. We just dont have money for this environmental atrocity. Renewable energy is all fine, but cannot run on a large scale without fossil fuels sustainably. Not even electric cars – just think of road infrustructure etc.!

    Best,

    Alex

    Reply
    • There’s a difference between wanting the fracking crude and being a captive to its consumption. But, it seems, the captives are learning ways to set themselves free and that is a good thing!

      Reply
    • Ending QE did drive up the dollar which did have a marginal effect on oil prices. Ignoring supply and demand fundamentals, however, fails to take into account the whole picture.

      Reply
  8. Andy in San Diego

     /  January 6, 2015

    One of my co-workers has shared this with me as we were discussing climate change yesterday.

    It is 1 1/2 hrs long and I only has a chance to start watching it last night. It goes through what the effects are on the planet as the effects of a rise in temperature by 1C increments occur up to a +6C change.

    Reply
    • Ouch. Very bad news…

      Reply
      • Here’s some good news, Obama will veto Keystone. On the news now.

        Reply
        • Fantastic. I’m not sure the Republicans can actually get much support for this now. It seems a bit of a dead horse for everyone but the oil interests.

      • Andy in San Diego

         /  January 6, 2015

        bassman, I agree it is good news but short term. I think it’ll get rail roaded through somehow eventually.

        Reply
      • Griffin

         /  January 6, 2015

        Robert, it is great to read another of your posts! I read the above link, and the link within that further explains the process of the biological pump. My question is, does higher near-surface temps increase the rate of acidification also? It would seem to stand to reason that if more organic carbon is unable to sink, it would therefore have more time to dissolve, with the resultant increase in the local rate of acidification. It’s as if we keep learning more ways of how a warming ocean is a very very bad thing for the life on this planet.

        Reply
        • Generally, the ocean become less able to hold carbon in saturation the higher the temperature — which is one of the reasons why we see acidification progressing more rapidly at the poles.

  9. Phil S

     /  January 6, 2015

    Great post and comments Robert.
    The credit for the zombie tag should go to Raul Ilargi Meijer from The Automatic Earth, who used it the week before.
    http://www.theautomaticearth.com/will-oil-kill-the-zombies/
    But the OMG Bloomberg graph sure grabs your attention.

    Here’s a link discussing how our coalminers are struggling – oversupply, shutdowns, layoffs..
    http://www.abc.net.au/pm/content/2014/s4128855.htm

    All the best (but Death to Mordor!)

    Reply
    • Thanks for the links and credits, Phil.

      RE coal miners — states really need to provide training and job paths for workers in this industry to other sectors. Transitioning to distributed solar and wind and utility based solar and wind would support more jobs of this kind and help get those workers out of dangerous mines.

      We have a similar problem with workers in the oil patch. Unfortunately more casualties of our dependence on dangerous fuels. A situation governments need to recognize and establish job transition assistance and job creation for those under the gun.

      RE bailing out the oil industry — very bad idea. This is an asset class we need to just let go of.

      Reply
      • wili

         /  January 6, 2015

        WVA could train them how to put windmills up on all their hill tops, but they have already removed them all!

        Reply
        • Phil S

           /  January 6, 2015

          20 years ago, time and money spent reducing demand was the best way to achieve cost effectiveness with alt energy. The same still applies now.
          By all means we should be retraining to build and install solar and wind etc, but emphasis on efficiencies must be paramount. Localising production of food and goods, retrofitting buildings and infrastructure, auditing and designing how we use energy, all just as necessary as creating new sources of energy. We each (on average) consume more than all the kings and queens throughout history and most people in ‘developed’ countries seem to take it as a birthright.
          How long can we continue?

        • Sad state. Maybe WVA will miss its mountaintops…

      • Greg Smith

         /  January 7, 2015

        Demand can be lowered, see Germany’s example: “According to preliminary data released by AG Energiebilanzen (AGEB), domestic electricity demand in 2014 dropped to 576 TWh. This is not only a 23 TWh (or 3.9%) decline compared to the 599 TWh consumed in 2013, but also the lowest consumption since 2000. At the same time, net exports have stagnated, leading to the lowest demand for German power in over a decade. In other words, the market volume for electricity produced in Germany contracted, so somebody had to reduce their output.
        http://climatecrocks.com/2015/01/07/germany-lowest-fossil-fuel-use-in-decades/

        Reply
        • Good on top of good. I think increasing efficiency, reduced excess power consumption, and increasing renewables adoption results in a fine virtuous cycle.

  10. Andy in San Diego

     /  January 6, 2015

    Arctic Sea Ice Extent.

    We’re beginning to go outside the -2 std dev for coverage. We’ve had little to no growth for ~ a week now. That big heat pile coming up from the Beaufort did a number. Looking at the forecasts, there appears to be another heal pile coming up from northern Japan, another +20 anomaly blob.

    Anyone have thoughts on where all this heat is coming from?

    Reply
    • wili

       /  January 6, 2015

      GW? ‘-)

      Sea surface temperature anomalies continue to be relatively high (above +.5) in parts of the Pacific. But it does seem like strange behavior.

      Reply
      • Winter tendency for warm air transport into the Arctic through North Atlantic and Bering. We have a lot of ocean heat in that just surges right up and over the sea ice edge.

        I think winter warming may be a rather important story as the years roll on.

        Reply
    • Griffin

       /  January 6, 2015

      Seems like a great topic for a blog post! I would be curious to see if this heat is in any way related to the positive phase switch of the PDO. We have been told to expect a cumulative heat dump into the atmosphere by the NorPac ocean when the PRO is positive. I have also read that the PDO signal itself will soon be overwhelmed by the overall SST increase from GW once the steady warming tipping point has been passed (perhaps already?).

      Reply
      • Phil

         /  January 6, 2015

        Also potentially some interesting times in WPAC with the MJO starting to play a role and the possibility of cyclones and a WWB which should reinforce El Nino type tendencies to re-solidfy or re-emerge in the next three months if a sizeable WWB’s occurred. Alot of ‘if’ there but still interesting to see what happens.

        Reply
        • We seem to be flirting just at the edge of El Nino for the next 6 months in most models. More the same it seems.

      • We did see some rather high Arctic anomalies in the range of +2.5 C this week. Nothing like last year’s spikes but pretty strong all the same.

        Reply
    • We are in 3rd lowest on record range for NH right now for this time of year.

      Huge discrepancy between GFS and NSIDC SH sea ice measures.

      Reply
  11. “The foolish said to the prudent, ‘Give us some of your oil, for our lamps are going out. No, they replied, there may not be enough for both us and you. Instead, go to those who sell oil and buy some for yourselves.”
    – Matthew 25

    Reply
  12. Potential Antarctic Ice Sheet retreat driven by hydrofracturing and ice cliff failure

    “Geological data indicate that global mean sea level has fluctuated on 103 to 106 yr time scales during the last ∼25 million years, at times reaching 20 m or more above modern. If correct, this implies substantial variations in the size of the East Antarctic Ice Sheet (EAIS). However, most climate and ice sheet models have not been able to simulate significant EAIS retreat from continental size, given that atmospheric CO2 levels were relatively low throughout this period. Here, we use a continental ice sheet model to show that mechanisms based on recent observations and analysis have the potential to resolve this model–data conflict. In response to atmospheric and ocean temperatures typical of past warm periods, floating ice shelves may be drastically reduced or removed completely by increased oceanic melting, and by hydrofracturing due to surface melt draining into crevasses. Ice at deep grounding lines may be weakened by hydrofracturing and reduced buttressing, and may fail structurally if stresses exceed the ice yield strength, producing rapid retreat. Incorporating these mechanisms in our ice-sheet model accelerates the expected collapse of the West Antarctic Ice Sheet to decadal time scales, and also causes retreat into major East Antarctic subglacial basins, producing ∼17 m global sea-level rise within a few thousand years. The mechanisms are highly parameterized and should be tested by further process studies. But if accurate, they offer one explanation for past sea-level high stands, and suggest that Antarctica may be more vulnerable to warm climates than in most previous studies.”

    Reply
    • 20 meters of SLR in 103 to 106 years in paleoclimate? I think the models need to work harder.

      Reply
    • Only 17 m in a few thousand years when the data shows 20 to 23 m sea level rise on a century’s timescale. The models are FAR too conservative!

      Reply
  13. They showed this on PBS in December…

    http://video.pbs.org/video/2365380402/

    I’d be interested to hear what you all make of it.

    Reply
    • Griffin

       /  January 7, 2015

      I watched it. Thank you very much for posting the link, it was very well done in showing the link between climate and conflict. Sobering film.

      Reply
  1. World to Oil Producers — We Don’t Want Your Fracking Crude | GarryRogers Nature Conservation

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