As we move closer to higher then $100 oil, many of the organizations that have looked down upon the peak oil theorists, have revised their opinions on the pending energy problem. The Wall Street Journal and IEA are both noting that things have not gone as they should. Life has a remarkably effective way of dealing with plans made by humans. The first article is written by Dave Cohen at ASPO and discusses the IEA's recent comments.
The Paris-based International Energy Agency has issued its World Energy Outlook 2007 — China and India Insights. The release provoked the usual firestorm of hand wringing and protest. "I am sorry to say this, but we are headed toward really bad days," IEA chief economist Fatih Birol told Time Magazine this week. "Lots of targets have been set but very little has been done. There is a lot of talk and no action." Lest the peak oil people feel justified by the bad news, Birol made sure to divorce the IEA's position from any possible connection with peak oil (see David Strahan's Supply Crunch is not Peak Oil — IEA, November 7th, 2007). Oh my! Rather than explain the intricacies of everyone's position here, let's talk about the human love affair with cars as a way of understanding the IEA's annual report.The second article of note comes from Tom Whipple of ASPO and noted in the Energy Bulletin in which he comments about the Wall Street Journal.
This make-believe world finally came crashing down on Monday when the Wall Street Journal published a front-page story admitting there was a big, big problem with oil production just ahead. Now the flagship of economic journalism does not come to such a decision lightly. To admit that you have been dead wrong in ignoring the most important economic issue the world is likely to face in the next century certainly strains your journalistic credibility.Now lets be clear, the current situation within the energy markets was to have never appeared. Why, because they had the excellent research from Cambridge Energy Research Associates to assure them there would be an unprecedented increase in the energy industries production volume. The head of that soon to be defunct organization is none other Dr. Daniel Yergin and his comments in the Washington Post two years ago. I'm still waiting to hear some clarification from Yergin, and at least an admission that he was wrong, dead wrong.
The situation should be clearly evident to anyone who has worked in oil and gas in the past 10 years. And have seen the increasing level of difficulty and risk in the business. I saw what was required, a much higher intensity of engineering and earth science effort / barrel of oil, could not and would not be resolved by the traditional hierarchy. It is too slow, and as I diagnosed then, too focused on the compliance and governance of the regulations of the business, and all but ignored the legal, financial, cultural and operational decision-making frameworks of the Joint Operating Committee.
It should also be clear that the competitive offerings to this software development proposal are also unaware of the JOC. SAP, Oracle and Qbyte don't recognize it. Therefore in order to change to systems, other then manual systems, an oil and gas producer needs to build software that defines and supports the organization, first. Otherwise they will remain organizationally constrained and will re-visit this situation same time next year. It's like the IEA says "Lots of targets have been set but very little has been done. There is a lot of talk and no action."
The oil and gas industry has to decide to fund these software developments in order to eliminate the hierarchy and bureaucracy and unleash the speed and innovativeness that can be captured and organized through the Joint Operating Committee. The logic for this is compellingly documented in this blog's 500,000+ words that extend and enhance my original thesis.
Ideas like how an enhanced division of labor will provide growth with the resources we have today. How the JOC is the natural form of organizations for oil and gas. How people use networks naturally to do their work. And finally the accountants capture the month-to-month changes in the voucher as a natural part of their work. Yet based on the over the top and violent response I have received from the bureaucracies, they will have none of it. For they see no issues whatsoever, business is good (with $100 oil) and they are not motivated to do anything about it.
So I continue on with my quest of how and what this software needs to make it real. The financial resources locked up in the bureaucracies, with no concern for what is happening just outside their office doors. Oh well, I'm sure the oil volumes won't decline too quickly, or maybe we'll have a recession, or maybe even Santa can take care of it.
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