Realitology
“The Study of Reality”
Warning! This Blog Contains Social Commentary, Brilliant Observations, Dry Wit, and Rampant Sarcasm. Use At Your Own Risk.
Posted Business, Consumerism, Energy, Environment, Politics, Society on Tuesday, July 10th, 2007.
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For years some have said that the world is running out of oil. Many said that we’d be out within 50 years. Others said that there was enough oil to last for hundreds of years and that the folks who predicted the end of oil were alarmists.
In reality, the world won’t "run out of oil". There will still be plenty of it in the ground, it’s just that we won’t be able to get it easily or at all. Much of the remaining oil is held in shale rock or tar sands (not easy or cheap to extract), or is located in the deep ocean where there is currently no easy/cost-effective way to get it.
According to the peak oil theory the world’s oil production will be a bell curve–fast production growth, a small top, and then a rapid decline. Some say global oil production already peaked in 2004 and is now in decline. While the oil industry and many governments say that peak oil theory is nonsense and that there will be a long plateau of oil production but that it won’t happen until some 20-50 years in the future.
It does seem to be turning out however that the peak and decline of worldwide oil production has indeed already started or will in the very near future. Consider a few facts:
US oil production peaked in 1970
North Sea oil production peaked in 1999
Mexican oil production peaked in 2006
There is also a fair amount of evidence that Saudi Arabia and Iran’s production has peaked, either because the oil is simply running out, or because they have over-pumped which has damaged the fields and made much of the oil unretreivable. Information has recently come to light that Kuwait has half of the reserves it has been publicly claiming. In 2005 the Worldwatch Institute noted that oil production is in decline in 33 of the 48 largest oil producing countries.
Dr Colin Campbell, a former chief geologist and vice-president at a string of oil companies including BP, Shell, Fina, Exxon and ChevronTexaco, is currently the head of the Oil Depletion Analysis Center. He and his organization say that demand will start outstripping supply in as little as four years.
Of course the oil companies deny this, but as Dr. Campbell points out, they have a history of overstating supply and "proven reserves", and of denying production declines for years after they have already happened.
BP’s Statistical Review is the most widely used estimate of world oil reserves but as Dr Campbell points out it is only a summary of highly political estimates supplied by governments and oil companies.
As Dr Campbell explains: "When I was the boss of an oil company I would never tell the truth. It’s not part of the game."
Read the whole story here.
A few more articles to ponder:
The world is facing an oil supply “crunch” within five years that will force up prices to record levels and increase the west’s dependence on oil cartel Opec, the industrialised countries’ energy watchdog has warned.
In its starkest warning yet on the world’s fuel outlook, the International Energy Agency said “oil looks extremely tight in five years time” and there are “prospects of even tighter natural gas markets at the turn of the decade”.
In today’s Forbes:
Oil hit a fresh 11-month high having already risen for nine days running and is still well supported by concerns of a global supply crunch…
From today’s Resource Investor:
Not only has the Paris-based International Energy Agency (IEA), the energy watchdog of the Organisation for Economic Co-operation and Development (OECD) countries, warned in its latest medium-term oil market report that a market crunch is looming over around 2012…
I’m obviously not an oil analyst but it does seem apparent that some bad times are ahead for the world as oil production tightens/declines and demand soars. Consider:
The importance of black gold
* A reduction of as little as 10 to 15 per cent could cripple oil-dependent industrial economies. In the 1970s, a reduction of just 5 per cent caused a price increase of more than 400 per cent.
* Most farming equipment is either built in oil-powered plants or uses diesel as fuel. Nearly all pesticides and many fertilisers are made from oil.
* Most plastics, used in everything from computers and mobile phones to pipelines, clothing and carpets, are made from oil-based substances.
* Manufacturing requires huge amounts of fossil fuels. The construction of a single car in the US requires, on average, at least 20 barrels of oil.
* Most renewable energy equipment requires large amounts of oil to produce.
* Metal production – particularly aluminium – cosmetics, hair dye, ink and many common painkillers all rely on oil.
Also consider how this coming change will affect global wars and power plays. It’s a fairly scary scenario. Russia has been flexing it’s economic/energy muscles for the past few years and even went to far as to make a claim to a huge swath of the arctic to secure it’s energy reserves. I fear it’s only going to get more bizarre and more tense as China and India continue to demand more energy.
Good thing we’re finally starting to seriously look at "alternative" energy sources, but we’re still years away from it reaching its potential. Are we prepared as a nation to take more public transportation and give up our SUVs? I’ll bet we will be with gas at $6 a gallon! I think we’re in for a few rocky decades.
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