Impact of credit crisis on energy

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switters's picture
switters
Status: Platinum Member (Offline)
Joined: Jul 19 2008
Posts: 744
Impact of credit crisis on energy

If you haven't already seen this article on The Oil Drum, I highly recommend reading it.  Especially for those of you who believe that "necessity is the mother of invention" and that renewable energy will prevent a global worldwide energy shortage.  (You know who you are!)

Here's the introduction:

I recently looked through news articles to see which energy sectors
were being affected by the credit crisis. I was amazed at how
widespread and how devastating the impact is.

There are really two closely related problems. One is reduced access
to credit, making new borrowing difficult for nearly every business
that requires debt. Prices for all commodities have been dropping as
well. At least part of the reason for this price decline is the lack of
availability of credit—many of the less credit-worth buyers drop out of
the market. This leaves fewer buyers and almost the same number of
sellers, so the price drops.


In this post, I examine how reduced access to credit and the
concomitant decline in commodity prices is affecting energy companies.
The impact I am seeing across a wide range of energy companies is a
decline in new investment and a stretched-out timeframe for new
projects. In addition, many of the weaker companies in the energy
supply chain are likely to be forced out of business by the credit
crisis.

When energy production is viewed for all companies combined, the
below analysis suggests the credit crisis will cause the production of
virtually all fuels to be in decline, relative to what they otherwise
would have been. I expect production of oil will decline (in absolute
terms, not just relative terms) in the years ahead. Since oil
production was already on a plateau, this decline is expected to bring
about "peak oil". Because of long lead times, uranium production seems
likely to fall short of what is needed by nuclear power plants, within
the next few years.

The long-term implications of declines in energy production are very serious. Research shows that standards of living are closely tied to energy consumption. With less energy available, standards of living are likely to decline.

 

mainecooncat's picture
mainecooncat
Status: Gold Member (Offline)
Joined: Sep 7 2008
Posts: 488
Re: Impact of credit crisis on energy

Random thoughts:

I'm a regular reader of the Oil Drum but haven't seen this one yet. Thanks for the tip.

Indeed, necessity is the mother of invention, but that doesn't mean that the baby's always brought to term.

You said: "(You know who you are!)" And so do I.

Nichoman's picture
Nichoman
Status: Gold Member (Offline)
Joined: Nov 1 2008
Posts: 422
Re: Impact of credit crisis on energy

Consider the Oil Drum one of the most valuable sites on Internet w/r/t our future.   Encourage readers to also read post today "IEA WEO 2008 World Oil Forecasts using Wikipedia Megaprojects, Dec 2008".   Bottom LineCredit Crisis delaying new oil projects coming online...world facing increasing supply shortfalls worse than IEA report despite fall in demand.  Peak Oil here w/i next 1-2 years or has already occurred.   Most compelling...comparing projections from past with actual output shows good consistencies.

 

Here's link...

http://www.theoildrum.com/node/4792#more

 

Add this to financial challenges and one can project sobering consequences beyond what has just started in past year or Chris posts to complicate matters further.

 

Nichoman

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