spa annual conference population, peak oil & climate change 15 th of march 2008 peter strachan b...
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SPA Annual Conference
Population, Peak Oil & Climate Change
15th of March 2008
Peter Strachan
B Sc. SF Fin
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Peter Strachan 2
Where in the world are We?
The Big Issues• Climate Change
• Peak Oil/Resources
• Water Security
• Fuel Price & Security
• The rise of the East/China
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Peter Strachan 3
Oil Finding & Development Costs
•F&D Costs up from $5/bbl to >$20/bblProduction costs up same amountNow need $50/bbl to break even on new oil
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Peter Strachan 4
IEA Stats Point to Oil’s Peak
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Peter Strachan 5
Current Oil Market Status
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Peter Strachan 6
Peak Oil Production
• Oil production is peaking NOW!• US recession will slightly stall peak
• A substantial, real oil price rise is expected over coming 5-10 years
• Renewables & alternatives fuels plus technology can not bridge the gap in time
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Peter Strachan 7
Response to Peak Oil
• Replacing 2-3 mmBOPD with renewables will not be achieved
• Technology will not come to the rescue in time
• Economies already jostling for a place at the energy security barrier.
• Market & Political Response!
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Peter Strachan 8
Golden Age of Cheap Oil Passes
1990’s an, infamous age of waste and cheap oil
Today we buy 1/3 of the energy per dollar of average income
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Peter Strachan 9
A World of Scarce Oil
• China in Africa & Sth America securing supplies
• National oil companies ~60-70% of world supplies
• Nigeria, Venezuela, The Gulf, Mexico, North Sea – all in decline
• Giant fields – all in decline• Market breakdown
• Rationing, Competitive bidding, violence!
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Peter Strachan 10
Gold Production has Peaked!
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Peter Strachan 11
Gold Close Up - What Next?
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Peter Strachan 12
Gold, Like Food
• Response to Ag & Mining technology
• New products • Seeds, genetics, fertilisers, pesticides
(petrochemical)• Metallurgy, satellite telemetry, Geophysics
• New mining & agricultural methods• Irrigation, large diesel powered tools• Open pit mining & economies of scale
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Peter Strachan 13
Food Supply
Corn, grain, oil seed
prices all through the
roof
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Peter Strachan 14
Peak Resources – No Magic Pudding
• Driven by 80 years of population growth from 2 to 6.7 billion ( +4.7 Bn!! )
• Long period of sector under-investment
• Rapid wealth expansion – globalisation
• Secular decline in real commodity prices appears to be at an end – real price rises now expected
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Peter Strachan 15
What a Coincidence!
8,000 BC population was 5 million, year 1 pop 200 million.
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Peter Strachan 16
Where Are We?Hot
spots
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Peter Strachan 17
Some Estimates
• The more robust estimates calculate that between 90 to 110 billion humans have ever walked the planet.
• Global population rising at 1.5% pa 65-100 million pa!
• 40% live in Brazil, India & China
• getting richer & demanding a higher protein diet.
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Peter Strachan 18
As Goes Taiwan, so Goes China
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Peter Strachan 19
Per Capita Consumption
•Grains steadyProtein risingFuel Parabolic
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Peter Strachan 20
Where will the People Live?
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Peter Strachan 21
And what will they Eat?
A quadrupling of crops for fuel leaves little on the
plate
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Peter Strachan 22
Food or Fuel
The SUV ate my dinner!
Contribution to Increase in global corn consumption
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Peter Strachan 23
China Struggles to keep Up•Less Arable land per capita
Area under farms struggles to keep up
Pollution reduces yield?
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Peter Strachan 24
Where is This Leading?
•Destroying the Planet!
Oceans dying
AirWaterClimate . . .
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Peter Strachan 25
Let’s Talk About Implications?
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Peter Strachan 26
Factors for Human Advancement
• Localised Critical Population Mass plus Enlightened Leadership
• Early China• Alexandria• Constantinople• Florence of the Medici
• Harnessing Energy• Ox, Horse, Water, Steam and• Oil & Gas
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Peter Strachan 27
What Have we Achieved
• 61 countries with 44% of the World’s total population have TFR <2.1 children per woman
• But large demographic bulges ensure growth will continue
• Amongst them China, Spain, Italy & Australia
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Peter Strachan 28
Way Forward
• Global response required
• Tackle corruption & Lack of education
• Individuals can make a difference
• Reducing Fertility• Carrot and stick• Educate & empower women• Resist fiscal measures which encourage births• Grameen Bank, Micro Credit, etc• Political & social approaches
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Peter Strachan 29
Way Forward• Deal with existing demographics
• Can not be altered• Bulge coming through• Hugely skewed to young population in:
» Middle East» Turkey» Africa & Sth America
• Work to restrict the demographic Bulge• Legal systems
• Humans have proved to be inventive
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Peter Strachan 30
Where Are we Going?
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Peter Strachan 31
If we fail, the ecosystem will sort
itself out with unpredictable
consequences for human life on Earth
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Peter Strachan 32
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Peter Strachan 33
How do you monitor risks?
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Peter Strachan 34
How Does StockAnalysis Work?
• Bottom Up
• Stock Picker
• Resources & General (anything that makes us money!)
• Driven By Top Down Philosophy
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Peter Strachan 35
Finding Less Conventional Oil
Past discovery by ExxonMobil
0
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1930 1950 1970 1990 2010 2030 2050
Bil
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of
Ba
rrel
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Past
Future
Production
“GrowingGap”
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Peter Strachan 36
The Oil Age Ends
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Peter Strachan 37
Time
Production
History :
1 Trillion barrels already consumed
Some Forecasters: 1 Trillion barrels
already consumed peaking about now
EIA: Add 900 Million barrels, Gain 10 years.
ADDING ALMOST A TRILLION BARRELSGAINS ONLY 10 YEARS