Category: Oil

No one is going to come out and say, “Guess what? We only have enough oil left on this planet to last another 75 years.” At least no one in the U.S. government or in the U.S. main-stream media. The evidence is there but they try to deny it or only hint at it.

Now of course I don’t know that we actually have 75 years worth of oil left, maybe we have more like 100 years left or maybe only 50. The fact is that we’ve been using oil for 150 years and a lot of signs are pointing to the fact that we have reached or are nearly reaching the peak of oil production. If we continued with the same amount of consumption spread out over the same amount of time, that would mean that we have enough oil to last another 150 years. But we know that’s not the case. Every year we need more and more oil to live the life we want to live.

So where are those hints? Reuters published an article yesterday about the G7 conference that just wrapped up. The body which represents the financial chiefs of the United States, Britain, Canada, France, Germany, Italy, and Japan agreed that “the global economic outlook had brightened significantly”, but as France put it “The principal risk is the oil price risk.” Now why is the price of oil a risk to the future of global economics? Here in the U.S. the industry analysts that are called upon to make a statement whenever there is another hike in gasoline prices often cite increased demand. In fact over the last few months there have been several increases in gas price, and the increased demand of the summer driving season has been regularly suggested as a reason.

Maybe it’s just me. Maybe I’m a crazy or I don’t really understand global economics–and believe me I don’t pretend to understand global economics–but that does sound like a drastic over-simplification of the situation. The kind of “sound bite” material that the American press loves to make use of. Not to mention that I’m not sure that the U.S.’s summer driving season (which if I’m not mistaken we haven’t even hit yet) can be the sole reason that the entire world sees increased gas and oil prices.

It seems much more likely that in addition to increased demand world wide–don’t forget that China and India are rapidly industrializing a large scale–a decrease in the amount of readily available oil, or an increase in cost to get that readily available oil, would be just as much if not more of a factor in the increased price of oil.

Take a look around. You’ll see hints of it everywhere. Today, one day after the G7 conference, Reuters published another article about yet another gasoline price increase. The national average price of gas went up another $0.03 in the last two weeks.

Let’s Go Out The Coast, Have A Few Laughs

Rahul Mahajan is the author of a couple books about the U.S.’s involvement with Iraq. He is currently in Iraq making daily updates to his blog from Baghdad and Fallujah. It’s an interesting read.

One of Rahul’s books is about how we are going to Iraq to secure our oil reserves. It is something I have been thinking a bit about recently. I am not an expert but I read and I can make some basic observations based on what I see. So bare with me because this might start to sound a little silly:

I was watching “Die Hard” the other night. (See I told you.) The first one. The good one. In the beginning of the film, they set the stage for all the guns and explosions that happen later. We see John McClain on the plane, his wife in the office while the Christmas party is getting started, and the ominous truck driving around Los Angeles that we later find out is full of bad guys.

Here’s the point: In one of the shots of the truck, it drives by a gas station where you can clearly see that the price of gas in Los Angeles at the time of the movie, 1988, was $0.74 a gallon. Right now in Los Angeles, gas at most stations costs about $2.29 a gallon–and that’s basic unleaded. So in 16 years, the price of gas has tripled in the same market. That’s a huge increase in price!

Maybe that’s to be expected. Maybe base salaries have tripled in 16 years. Maybe inflation on consumer goods across the boards has increased that much. Like I said, I’m no expert. But it is something to think about.

Com_Bat_Rac_Coon mentioned that there is a “Business Week” European cover story about how it’s getting tougher to get at the oil in Saudi Arabia.

If you’ve read my little introduction to Peak Oil or any number of other websites about it, you know that after we reach the peak it gets increasingly harder to extract the oil from the ground. As it says on the cover, “There’s plenty in the ground. But it won’t be easy to get. The kingdom may need major new foreign investors. Will it dare open up?”

According to the article the Saudis claim that they could easily “ramp up to 10 million bbl. a day from its current 8.5 million and comfortably sustain that level through 2042.” The concern of some of outside analysts is that we really don’t know how much oil they actually have since they are a bit secretive about that. Another concern is that maybe the Saudis can sustain this level of production for the next 40 years, but if oil starts getting scarce in other parts of the world, they might need to double that amount by 2020.

These various oil supply and demand models are all fine, but the real question is what will we do after 2042?

According to this article, the average price of a gallon of gas nationwide has reached a record high. Experts are predicting it to go higher in the next two months during the “run-up to the summer driving season”. Still no mention of peak oil though.

Com_Bat_Rac_Coon posted a link to the Citizens Committee On Oil Peak And Decline statement that is “designed to be published in national and local newspapers, news magazines, the United Nations, NGO newsletters, and any other organ of public discussion”. It would be good for everyone to read the statement and sign it. Peak Oil is going to be the single most important political, social and economic factor in the nation’s and world’s development in the next 50 years.

About a month ago I came across a website that changed my outlook on life. Frankly it scared me. I haven’t as yet completely figured out how this will change things for me in the long run, nor have I entirely come to grips with what this will mean for the future. However, I think it is critical that everyone out there is aware of this, because we as a society, as a nation, and as a species need to decide our fate.

“Peak Oil” is a term to describe the point at which the planet’s oil reserves in relation to the cost of extraction hits the high point. Oil production in any given oil well and in the entire world follows a bell curve. You’re probably familiar with this shape from grades in high school or college.

Basically what this means is that since the 1800s when the first oil well was tapped, the cost of production of those first few barrels of oil was very expensive, but as time goes on the methods get more efficient and the cost to extract one barrel of oil gets cheaper and cheaper. Unfortunately the amount of oil available eventually catches up with the demand. This is the point when production peaks. There is still oil available and it can still be extracted but it gets more and more expensive to get another barrel of oil.

Think of gold. There were several gold rushes in America’s history in the mid-1800s. When gold was first discovered in California, some of it could be just picked up out of stream beds. When those first prospectors got to the site they where able to set up a system for mining the gold out of the ground using picks and shovels. Eventually they had to sift loads of earth and water through a series of filters to extract the gold. And finally over time it was too difficult to get any gold out of the ground and still survive.

Today large corporations use technology to mine for gold. Large deposits like were discovered in the 1850s are no longer available. We now use heavy machines to strip mine for gold. I recently saw a “Modern Marvels” program on the History Channel where they said that it takes many tons of earth put through a series of chemical filters to get an ounce of gold.

Now think about the fact that oil production will eventually reach the point that gold production is at. It sounds far-fetched but it’s true. Still doubtful? Think about how much the price of gas gone up in the last 6 months. Sure, every time we have price spikes like we are currently going through, the price of gas eventually goes back down, but it never seems to go down as far as it was initially.

Need another example? How about Iraq. According to our government we went into Iraq because Saddam Hussein represented a danger to the security of the U.S. and the world, because he had Weapons of Mass Destruction, and because he ignored many U.N. resolutions over the years. But Iraq also has large reserves of oil. Sure, not as much as Saudi Arabia, but it still has a lot. And now since we’ve removed the ruler of Iraq we are going to have troops in the country for many years to guarantee the security of Iraq. Or should I say the security of Iraq’s oil?

Here’s that scary website I found.

And this is a recent editorial from the LA Times.

And here’s an AP article from today about record high U.S. gas prices.