SPA Annual Conference Population, Peak Oil & Climate Change 15 th of March 2008 Peter Strachan B Sc. SF Fin.

SPA Annual Conference

Population, Peak Oil & Climate Change

15th of March 2008

Peter Strachan

B Sc. SF Fin

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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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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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IEA Stats Point to Oil’s Peak

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Current Oil Market Status

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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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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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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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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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Gold Production has Peaked!

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Gold Close Up - What Next?

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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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Food Supply

Corn, grain, oil seed

prices all through the

roof

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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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What a Coincidence!

8,000 BC population was 5 million, year 1 pop 200 million.

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Where Are We?Hot

spots

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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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As Goes Taiwan, so Goes China

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Per Capita Consumption

•Grains steadyProtein risingFuel Parabolic

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Where will the People Live?

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And what will they Eat?

A quadrupling of crops for fuel leaves little on the

plate

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Food or Fuel

The SUV ate my dinner!

Contribution to Increase in global corn consumption

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China Struggles to keep Up•Less Arable land per capita

Area under farms struggles to keep up

Pollution reduces yield?

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Where is This Leading?

•Destroying the Planet!

Oceans dying

AirWaterClimate . . .

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Let’s Talk About Implications?

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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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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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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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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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Where Are we Going?

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If we fail, the ecosystem will sort

itself out with unpredictable

consequences for human life on Earth

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How do you monitor risks?

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How Does StockAnalysis Work?

• Bottom Up

• Stock Picker

• Resources & General (anything that makes us money!)

• Driven By Top Down Philosophy

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Finding Less Conventional Oil

Past discovery by ExxonMobil

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Past

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“GrowingGap”

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The Oil Age Ends

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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