Peak Oil- what it is and how it will impact your life

Re: Peak Oil; what it is and how it will impact your life

Yep, and as oil prices rise so does the electric bills. Maybe you will get a contract to put up wind farms in Hawaii.

I get to go to places like the Middle East, or the North Slope of Alaska!
Not fair.

 

Re: Peak Oil; what it is and how it will impact your life

We are, we have 14 up right now and more going in.

 

Re: Peak Oil; what it is and how it will impact your life

Billionaire Texas oil man makes big bets on wind

WASHINGTON (Reuters) - Legendary Texas oil man T. Boone Pickens has gone green with a plan to spend $10 billion to build the world's biggest wind farm. But he's not doing it out of generosity - he expects to turn a buck.



The Southern octogenarian's plans are as big as the Texas prairie, where he lives on a ranch with his horses, and entail fundamentally reworking how Americans use energy.

Next month, Pickens' company, Mesa Power, will begin buying land and ordering 2,700 wind turbines that will eventually generate 4,000 megawatts of electricity - the equivalent of building two commercial scale nuclear power plants - enough power for about 1 million homes.

"These are substantial," said Pickens, speaking to students at Georgetown University on Thursday. "They're big."

Pickens knows a thing or two about big. He heads the BP Capital hedge fund with over $4 billion under management, and earned about $1 billion in 2006 making big bets on commodity and equity markets.

Though a long-time oil man, Pickens said he has embraced the call for cleaner energy sources that don't emit heat-trapping greenhouse gases.

"I'm an environmentalist - I can pass the saliva test," he said.

But Pickens is not out to save the planet. He intends to make money.

Though Pickens admits that wind power won't be as lucrative as oil deals, he still expects the Texas project to turn at least a 25 percent return.

"When I go into these markets, I expect to make money on them," Pickens said. "I don't expect to lose."

America is facing a looming power crunch, with electricity demand expected to grow 15 percent in a decade. And while many states have rejected big coal-fired power projects on environmental concerns, they are offering a bounty of incentives to build renewable sources.

U.S. crude futures at new records above $115 a barrel means a bright future for renewable sources like wind and solar.

Pickens' wind farm is part of his wider vision for replacing natural gas with wind and solar for power generation, and using the natural gas instead to power vehicles.

To picture Pickens' energy strategy, imagine a compass.

Stretching from north to south from Saskatchewan to Texas would be thousands of wind turbines, which could take advantage of some of the best U.S. wind production conditions.

On the east-west axis from Texas to California would be large arrays of solar generation, which could send electricity into growing Southern California cities like Los Angeles.

The end result would be to free up more clean-burning natural gas - primarily a power-generation fuel now - to power automobiles.

Major oil companies have embraced so-called natural gas liquids because they have spent billions of dollars building refineries and pipelines to turn crude oil into gasoline, Pickens said.

But shifting natural gas used in power generation to transportation needs could cut U.S. crude oil imports by nearly 40 percent, he said.

 

Re: Peak Oil; what it is and how it will impact your life

Beat me to it. I had that saved on my clipboard was getting ready to post it.
Finally some real solutions. As the price of oil gets higher it is going to spur more of these types of investments. Great for our electric bills, unfortunatley we can't run our cars or airplanes with wind.

 

Re: Peak Oil; what it is and how it will impact your life

 

Re: Peak Oil; what it is and how it will impact your life

Aha!!! The smoking gun!!!So it's not the evil oil companies manipulating prices, it's those damn Araabs. They have plenty of oil, so much for that peak oil BS, they just aren't releasing it to drive the price up. But if the prices get too high they will raise production to alleviate stress on the market and lower prices.
Hmmmmm......, that sounds familliar for some reason...

OPEC president to propose oil output hike
Cartel may raise production by 500,000 barrels per day
The Associated Press
updated 10:46 a.m. CT, Mon., Aug. 29, 2005

KUWAIT CITY - The president of OPEC said Monday he will propose that the group of oil producing states increase its production by 500,000 barrels a day next month.

He said he wants to boost actual production by 500,000 barrels a day above what the Organization of Petroleum Exporting Countries currently supplies to the market. Past increases in OPEC’s official output ceiling have usually failed to impress the market as the group is known to produce above that limit.

OPEC’s 11 member states pumped more than 30 million barrels a day in July, according to a Dow Jones Newswires survey.

Sheik Ahmed’s comments came as U.S. crude futures briefly surged to more than $70 a barrel on Monday as Hurricane Katrina struck the United States’ Gulf coast.

Sheik Ahmed said OPEC was concerned about the soaring oil price, but he blamed it on factors beyond the group’s control.

"We are trying to do everything to stabilize the prices. It looks like the prices are not related to the production anymore. They are related to other factors, like geopolitics, the weather, the refining," he said.
Sheik Ahmed said most of the extra crude would come from Saudi Arabia.


"Global crude oil production is over 1 million barrels per day lower than last year, while demand is over 1 million bpd higher."

The International Energy Agency, adviser to 26 industrial nations, said last week that consumption of energy would outpace new production for the next five years, leading to a supply crunch in 2012.

U.S. oil could rise to $95 a barrel by the end of the year, from just over $75 now, if OPEC does not or cannot raise output to help meet growing demand, Goldman Sachs said

Seems there was a problem there. They weren't going to let prices go over $95 a barrel. Thier production levels remained flat, the promised increase never happened.

They must have decided to let the price get higher. Everyone knows that they are sitting on enough oil to flood the world if they opened the taps. They are known to have a genie in a bottle that can magically double thier reserves overnight!!

Back in 1989, Saudi Arabia claimed to be sitting on a total of 170 billion barrels of oil. But only a year later—without the discovery of any major new oil fields—the official reserve estimate somehow grew 51.2% to 257 billion barrels.

We know that oil producing companies accurately report thier "proven" reserves. They're as honest as the day is long.

Estimates of proven oil reserves in the Middle East have befuddled analysts for years because the Kingdom of Saudi Arabia has kept estimates of its reserves a state secret.

In January 2004 Royal Dutch Shell, the third-largest oil company in the world, shocked energy markets around the globe by announcing that its proven oil reserves were overstated by 23 percent.

Kuwait, the world’s fifth largest oil producer and an upstanding member of OPEC, had less than 50% of the oil reserves that it officially claimed. And that wasn’t the bad news.

Their findings reported that Kuwait’s now 49 billion barrels of oil didn’t distinguish between their proven, possible and probable reserves.

In other words, they were pretty sure they had 49 billion barrels of oil instead of the 99 billion they reported to have. But they don’t know how much of that 49 billion barrels can actually be extracted from the field.

Still, OPEC claims that they can increase their production to 20 million barrels per day. But how can they increase their output when it’s been found that Middle East oil nations, even Saudi Arabia, are pumping oil from known "post peak" fields?

In some miraculous way, the OPEC countries were reporting that their new reserves weren’t depleting. In fact, they reported them growing.

We certainly can believe what these Arabs say. It's against thier religion to tell a lie. Thier word is gold, you can bet your SUV on it.

As U.S.-led troops stormed central Baghdad, the Iraqi Minister of Information made statements like, "The infidels are committing suicide by the hundreds on the gates of Baghdad."

August 11 - The LA Times reports that the Iraqi military was itself fooled by the creative reporting of Iraqi Information Minister Muhammed Saeed al-Sahaf : "After the information minister claimed that Iraqi forces had retaken the Baghdad airport from U.S. troops, two former commanders said, Republican Guard Gen. Mohammed Daash was dispatched to check out a rumor that four or five American tanks had survived the Iraqi counterattack. Daash returned to his headquarters in a panic. "Four or five tanks!'' the commanders quoted Daash as telling his fellow generals. "Are you out of your minds? The whole damn American Army is at the airport!''

So now that this whole peak oil, supply shortage, scam has been exposed by this honest and courageous beacon of truth I expect we'll see $1 a gallon gas by summer!! I think I'll buy that Hummer I've been looking at.






Ok so this response is sarcastic and smart assed but it is meant to show that we cannot take seriously anything these OPEC ministers or oil company CEO's say about oil prices. Especially OPEC. They have been saying for the last 4 years that they would control prices by increasing production. It hasn't happened yet. And it won't. They simply do not have the capacity to increase thier production enough to affect world oil prices. They lost the ability to significantly control oil prices in the 90's when thier production peaked. Saudi Aramco execs have been quoted as saying that they are at maximum production levels now and don't know how long they can maintain those levels.
The only truthful thing in this article is the admission that other factors beyond thier control are affecting prices. That is absolutely true. So counting on them to miraculesly increase thier production and drive down prices is fairy tale fantasy.

 

Re: Peak Oil; what it is and how it will impact your life

T. Boone Pickens admitting he was wrong on oil supply, world production will not rise.

http://clipsyndicate.com/publish/video/571106?wpid=347

 

Re: Peak Oil; what it is and how it will impact your life

These high prices are here to stay folks. And they are going to go higher. Blame it on the oil companies, the Arabs, Peak Oil, or martians. It doesn't matter, it doesn't change a thing. We are going to pay more and more for the energy we use and for everything else in our lives that it affects.
So we can get ready for it. Prepare for it, expect it, or we can place our hope in some new discovery, some new technology. Or we can believe the "alls well, we'll take care of it" promises by politicians, CEO's, stock speculators, and OPEC Shieks.


Emerging Market Oil Use Exceeds U.S. as Prices Rise
By Mark Shenk

April 21 (Bloomberg) -- Traffic jams in Beijing and humming air conditioners in Dubai are replacing U.S. highways and suburbs as the driver of global oil prices.

China, India, Russia and the Middle East for the first time will consume more crude oil than the U.S., burning 20.67 million barrels a day this year, an increase of 4.4 percent, according to the International Energy Agency in Paris. U.S. demand will contract 2 percent to 20.38 million barrels daily, the IEA says.

Economic growth of more than 8 percent in China and India, coupled with increasing car ownership among the countries' combined populations of 2.45 billion people, will more than compensate for falling U.S. demand. Oil use worldwide will increase 2 percent this year because of growth in emerging markets, the Paris-based IEA says.

``Does the U.S. matter anymore?'' said Mike Wittner, head of oil research at Societe Generale SA in London. ``Has the U.S. mattered for the last few years? It is debatable. As far as the oil market is concerned, demand growth is going to be continued to be driven by China and the Middle East.''

The rising oil price will benefit Exxon Mobil Corp., BP Plc and Royal Dutch Shell Plc, while punishing a U.S. airline industry that recorded four bankruptcies in a month. Higher energy costs will push up food costs at a time when corn and rice are close to new highs.

Crude oil futures jumped to a record $117.05 a barrel on the New York Mercantile Exchange today, more than twice the level of three years ago.

Emerging Markets

CIBC World Markets, Societe Generale and Barclays Plc say oil prices are heading higher because of increasing fuel consumption in emerging markets, regardless of a U.S. downturn.

``The U.S. recession will be a footnote as far as the oil market is concerned,'' says Jeffrey Rubin, chief economist at CIBC World Markets Inc. in Toronto, who has correctly forecast higher oil prices since 2000. ``Supply isn't growing and demand is growing robustly in the developing world.''

Oil will average $120 a barrel for all of 2008, compared with almost $98 in the first quarter of the year, and reach $150 ``by the end of the decade,'' Rubin said.

Historically, a recession in the U.S. would lead to lower prices. Oil fell 26 percent to $19.84 a barrel in New York in 2001 when the economy contracted. The U.S. consumes 24 percent of the world's oil, down from 26 percent seven years ago.

Oil demand in both China and India will rise by 4.7 percent, according to the IEA. China, the world's second-biggest energy user, will consume 7.89 million barrels of oil a day this year. India will use 2.92 million barrels of oil a day in 2008, more than is pumped by OPEC member Venezuela.

Energy Use
Emerging markets burn a fraction of the energy of the U.S., leaving room for growth. The 2.45 billion people in China and India used only half as much crude as 301 million Americans last year. The average person in China consumed less than 20 percent as much energy as the average American in 2005, according to U.S. Energy Department. In India, energy use is less than 10 percent of America on a per-capita basis.

China's passenger car sales jumped 22 percent to 6.298 million last year and may rise 16 percent to about 7.3 million this year. China may boost vehicle output by a million units a year for the next decade to reach 20 million a year by 2017, according to the China Association of Automobile Manufacturers.

Russia and the Middle East are benefiting from rising oil prices. Russia's economy expanded at an annual 8 percent rate in the first quarter, the Economy Ministry said on April 17. Russia, the world's second-biggest oil exporter, will probably grow 7.1 percent this year, Russian Finance Minister Alexei Kudrin said on April 11.

Russian Growth
The Russian government plans to spend some of its new wealth on updating Soviet era transport links. Russia may invest as much as 21 trillion rubles ($895 billion) to improve transportation infrastructure during the next seven years, Transport Minister Igor Levitin said on Feb. 1.
Middle Eastern economic growth will probably accelerate to 6.1 percent this year from 5.8 percent in 2007, the International Monetary Fund said April 9. Oil demand in the region will surge 5.8 percent to 6.97 million barrels a day this year, according to the IEA.

``Many emerging economies are relatively isolated from the impact of the U.S. recession,'' said Edward Morse, chief energy economist at Lehman Brothers Holdings Inc. in New York. ``In the Middle East demand is expected to grow 350,000 barrels a day this year. These are a large number of very small countries having rampant demand growth.''

Hot Summer
Prices may rise as much as $20 a barrel this summer because of Middle East power needs, Morse said. A hot summer would likely result in more burning of crude oil for power generation and a diversion of natural gas from enhanced recovery of oil deposits.

``The predominant market view is that the emerging economies will overcompensate for any possible demand slump in OECD countries,'' said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt. ``I couldn't rule out that oil may go to $150.''

The Paris-based Organization for Economic Cooperation and Development represents 30 industrialized nations, including the U.S., Japan and Germany.

Government price caps and subsidies in India, China and the Middle East protect the public from higher gasoline and diesel prices, measures designed to limit inflation. In Iran, OPEC's second-biggest oil producer, subsidized gasoline pump prices are 1,000 rials a liter, about 11 U.S. cents.

Price Subsidies
``Subsidies of commodity prices buffer populations in oil emerging economies from price increases,'' Morse said. ``This has the effect of increasing fuel demand.''

U.S. pump prices have followed crude oil higher. Regular gasoline, averaged nationwide, rose 2.7 cents to a record $3.445 on April 18, according to AAA, the nation's largest motorist organization. In the U.K. a gallon of gasoline cost $7.99 on average on March 31, according the Automotive Association.

``Even if the fundamentals in general, particularly this quarter, were to weaken, we would think investment flow could be pushing prices to records anyway,'' Wittner said.

Investors have transferred money into commodities, especially energy, during the past year because their returns have outpaced stocks and bonds. Oil gained 22 percent, while the S&P 500 slid 5.6 percent and government bonds returned 12 percent, according to Merrill Lynch & Co. indexes.

Investments tied to commodity indexes rose as much as $4 billion in the first quarter, a third more than in the final three months of last year, Standard & Poor's said April 18.

``It makes sense for investors and hedge funds to invest in these commodities with the weakness of other markets,'' said Eric Wittenauer, an energy analyst at Wachovia Securities in St. Louis.




SAFE: US economic survival tied to oil, gas production hikes
Nick Snow
Washington Editor

WASHINGTON, DC, Apr. 18 -- Record high crude prices, combined with the declining value of the US dollar and growing signs of a recession, make increased US oil and gas production necessary not only for the nation's energy security but also for its economic survival, a leading advocacy group told reporters Apr. 17.

"Energy security can't be subjugated to climate change. If we don't address both, we'll have neither," said Robbie Diamond, president and chief executive of Securing America's Future Energy (SAFE), as the organization released a new report, A Different Type of Price Spike.

"While we pursue the health of our planet, we need to protect the health of our economy," added David P. Steiner, chief executive of Waste Management Inc. and one of four members of SAFE's Energy Security Leadership Council who joined Diamond at the briefing. Adam M. Goldstein, president and chief executive of Royal Caribbean International; Eric S. Schwartz, a senior director at Goldman Sachs; and retired US Air Force Gen. Charles F. Wald also participated.

The latest oil price escalation differs greatly from its predecessors, which could be traced to constrained supplies, Schwartz observed. "Starting a few years ago, we had a demand-side shock from emerging economics, and not just for oil. There also was a shift in financial markets as economically rational investors moved into commodities to diversify their portfolios and diversify their returns," he said.

Emphasizing that it was his personal opinion, Schwartz conceded that derivative markets can have a marginal impact on prices but added that growing demand amid limited supplies is a much greater force. Government has a role in constraining participants who try to move prices, but placing the blame for higher prices entirely on speculators is a mistake, he continued.

Impact was delayed
"It's pretty clear to American families that oil prices are going up and that it's regressive," said Goldstein. The impact was delayed because growing home equity served as a buffer against rising energy costs as long as real estate boomed, he explained. That changed when the subprime mortgage crisis undermined the market and slowing discretionary purchases began to accelerate economic uncertainty, he said.

Soaring crude oil prices pose seriously implications for US military forces, according to Wald. "Even though instability and insurgencies pose threats, I believe limited resources, whether oil or water, are a greater problem," he said, adding that 85% of what a soldier, airman, or sailor carries into the field is either water or petroleum products.

He also said that US military services generally provide the only protection for global oil shipments, whether in the area of the Strait of Hormuz or off West Africa, where multinational oil companies are committing $100 billion to develop new fields.

Diamond said that Congress took a good first step at reducing demand by including tougher automotive efficiency requirements in the 2007 Energy Independence and Security Act. Now it needs to take similarly decisive actions to increase domestic oil and gas production, he maintained.

Participants agreed that it would take time for additional US oil and gas production to have an impact, but they added that it would be worthwhile because it would keep in the US more of the money consumers spend on energy. "Think of the investment that could be made in future energy technologies' research and development with $357 billion if you don't send that money overseas," Steiner said.

 

Re: Peak Oil; what it is and how it will impact your life

Soaring crude oil prices pose seriously implications for US military forces, according to Wald. "Even though instability and insurgencies pose threats, I believe limited resources, whether oil or water, are a greater problem," he said, adding that 85% of what a soldier, airman, or sailor carries into the field is either water or petroleum products.

There it is for all to see. Cut off the oil, and the war cannot be carried out. Where is my tin foil, time for a new hat. OPEC had figured out how to end the war on terror.

 

Re: Peak Oil; what it is and how it will impact your life

This is from one of the many newsletters I get each day. It is edited to remove all the hype for his books and reports and stock urgings. The info is accurate and a pretty good synopsis.


Debunking the Myths about High Gas Prices
By Chris Nelder | Wednesday, April 23rd, 2008

This Earth Day was a watershed moment.
I've never seen so many Earth Day pronouncements, celebrations and headlines. The world has never been so focused on energy and sustainability as it is now.

This Earth Day, Benchmark West Texas Intermediate oil set a new all-time high over $119, and Tapis (the Malaysian benchmark price Far East crude) shot over $124.

Gasoline prices crossed $3.50 a gallon for the first time, and diesel set a new record over $4.20.

A front page story on the Wall Street Journal declared "the age of cheap and easily pumped oil is over," and followed up with several stories about a new crop of suburban farmers who are making their first forays into self-sufficiency. In my book, there's really no better way to celebrate Earth Day than to plant some of your own food.

Five years ago, I was one of the few lone voices out in the wilderness warning about peak oil, and all that it means. Oil had hit a new high around $35 and most traders were arguing that it would soon fall back to $20.

Peak oil was considered a fringe theory, and the financial media were absolutely sure that the market would sort everything out and let us all get back to our "Happy Motoring" fantasies. I had some spirited discussions with investment analysts back then, who basically thought that I just had an apocalyptic bent.

I stuck to my guns. I knew that oil had begun a relentless rise as we approached the global peak of production, and that the Street was in for a rude awakening. And at the end of last year, I predicted that 2008 would be the year that peak oil really hit the mainstream, and the dialogue about energy would start to come around to reality.

Now, as oil hits record high after record high, the Street's own paper of record has admitted that the jig is up. The whole world is finally starting to recognize that we've got a serious problem on our hands, and no amount of "jaw-boning" the Saudis is gonna fix it.

The Oil Price Juggernaut

Maybe the change in attitude had to do with hearing it straight from King Abdullah himself, who said last week that he wasn't interested in increasing Saudi production beyond its current level just to satisfy the rapacious demand of Western consumers.

He's got his own country's future to think about. "When there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it,'" he said.

One week later, U.S. Energy Secretary Sam Bodman admitted that he was powerless to persuade them otherwise. "I have done everything that I know how to do with OPEC," he said. "I have a very good relationship with (Saudi oil minister A) Naimi and all the people that work at OPEC. I wish they would open it up and issue more oil. That's my wish but I can't order them to."

Bodman's admission comes about a month after the White House admitted that it, too, was powerless over the situation. On March 13, while being grilled about high gasoline prices, White House spokeswoman Dana Perino said "It would be wrong of the President to provide false hope to people to think that we are going to be able to have an immediate impact to reduce gas prices...This problem didn't get started overnight, and it's not going to be solved overnight... This is something we're going to have to all work through."

Energy expert Frank Verrastro at the Center for Strategic and International Studies think tank in Washington agreed: "Clearly, there are no easy, near term fixes for higher gas prices."

Myths About High Gas Prices

So why are gasoline prices so high?

Well, consider this: In general, a $1 rise in the price of a barrel of crude oil adds about 2.4 cents to the price of a gallon of gasoline. Since oil prices have doubled since the beginning of 2007, you had to expect gasoline prices to follow.

Of course, the story is a little more complex than that. As my readers know, the factors that weigh on gasoline and oil prices are many and interrelated. But you'd never know it from most of the media coverage. In fact, I have heard and read more myth than fact about gasoline prices.
It's an annual phenomenon. Every year, as gasoline prices rise from their winter lows, we gather to wring our hands and wonder and worry what's going on. As if we'd never seen this happen before.

The outrage over gas prices is as regular as Groundhog Day.
Let's debunk this story and see if we can't get it right, for once.

1. It's Those Evil Oil Companies

Every time oil prices spike up into a new trading range, you can bet that some Congressman will haul Big Oil's CEOs into a hearing and try to pin the blame on them. And this time is no different.

The lack of understanding of the oil markets demonstrated by our fearless leaders is truly appalling.

As ConocoPhillips Chief Executive James Mulva remarked one year ago, "Big Oil is not so big."

My readers know the real score: Big Oil controls only about 10% (at best) of the world's remaining oil reserves, and their share of daily production is slowly eroding. They have reached the point where the oil they produce is coming out of their total reserves, because they can't replenish it with new-found oil anymore.

As we have discussed in these pages previously, since the very basis for the valuation of their companies is the inexorably falling reserves, big oil companies are doing the smart thing and buying back their shares. Wouldn't you, if the alternative was to continue investing skyrocketing amounts of money in order to drill dry holes in decreasingly interesting prospects?

Investigation after investigation into alleged oil company profiteering hasn't resulted in one single prosecutable charge. It's simply barking up the wrong tree.

Remember: Oil is highly fungible. Oil is traded on a global basis. And while Big Oil does benefit from higher prices for their diminishing barrels, they're not setting prices.

Traders are, and speculation has been heavy. The amount of oil traded on paper far exceeds the amount of oil that's actually being sold.

This has prompted more Congressional attention, and questions as to whether the rules for oil trading need to be tightened to keep out speculators.

That may be a good call actually, but for now, the increasing price of oil remains partly due to the flight to commodities.

That said, I think that oil is still badly underpriced on the basis of its true value. So the speculation may in fact be a part of a normal market, functioning as it should to find the correct price.
So: speculators, a qualified yes; Big Oil, not really.

2. It's the Low Refinery Output

Some have blamed high gasoline prices on low refinery output. After all, lower supply means higher prices, right?
Well...not exactly.

If you think gasoline prices are high now, consider this.

A year ago, the typical "crack spread," or the profit on refining a barrel of oil, was over $20 a barrel, and peaked at over $30. Today, it's closer to $10 on average, and for the independent refiners, it's absolutely dismal.

Consequently, refinery utilization has been even lower than usual for this time of year, the "turnaround season" when refiners typically idle some equipment in order to prepare to produce the summer blends of gasoline. Normally, refinery utilization in the turnaround season is in the range of 85-90%, but this year it's barely above 80%.

So why have refining profits collapsed?

It's a squeeze play: Crude prices have gone up much more than gasoline prices for domestic refiners, squeezing out their profit.

So why have gasoline prices not kept up with crude?

Part of the answer is reduced domestic demand. High gasoline prices are really starting to hurt American consumers, and they're cutting back on their trips. Still, although gasoline consumption has fallen by a few percent year over year, total U.S. demand will still rise about a half a percent this year.

The problem here is that the elasticity of U.S. gasoline demand is really very low. Recent studies have suggested that a quadrupling of gasoline price only cuts demand by half, and that only 20% of the demand reduction is due to driving less-the rest owes to reduced vehicle ownership and better mpg.

But the bigger part of the answer owes to a new dynamic in the gasoline trade: Finished gasoline imports have increased dramatically in the last several years, which has pressured prices for the domestic refiners.
This is primarily because Europe is increasingly choosing diesel over gasoline. Their diesel-sipping vehicles are more efficient and generate less emissions. As their diesel demand rises, they have more finished gasoline to export to a hungry world market.

Were this not the case, gasoline prices in the U.S. would have risen as fast as diesel. Diesel prices have gone up twice as much as gasoline prices over the last year:

You might be surprised to know where all that imported gasoline is coming from. It's a very different list than our sources of crude:

Top 10 Sources U.S. Gasoline Imports, 2007 (million barrels)
<TABLE cellSpacing=0 cellPadding=0 width=235 border=0><TBODY><TR><TD width="15%">1.
</TD><TD width="57%">United Kingdom
</TD><TD width="28%">25.1
</TD></TR><TR><TD width="15%">2.
</TD><TD width="57%">U.S. Virgin Islands
</TD><TD width="28%">23.6
</TD></TR><TR><TD width="15%">3.
</TD><TD width="57%">France
</TD><TD width="28%">11.2
</TD></TR><TR><TD width="15%">4.
</TD><TD width="57%">Canada
</TD><TD width="28%">10.6
</TD></TR><TR><TD width="15%">5.
</TD><TD width="57%">Netherlands
</TD><TD width="28%">10.5
</TD></TR><TR><TD width="15%">6.
</TD><TD width="57%">Norway
</TD><TD width="28%">8.4
</TD></TR><TR><TD width="15%">7.
</TD><TD width="57%">Germany
</TD><TD width="28%">8.4
</TD></TR><TR><TD width="15%">8.
</TD><TD width="57%">Russia
</TD><TD width="28%">7.4
</TD></TR><TR><TD width="15%">9.
</TD><TD width="57%">Italy
</TD><TD width="28%">7.2
</TD></TR><TR><TD width="15%">10.
</TD><TD width="57%">OPEC Countries
</TD><TD width="28%">5.5
</TD></TR></TBODY></TABLE>
Source: EIA

As we head into the "summer driving season," with its higher demand and its requirements for specialized blends of gasoline, it seems likely to me that margins will head back into normal territory for this time of year.
If we revisit last year's crack spread highs, gasoline prices could tack on another 48 to 72 cents per gallon!

That's why I've been predicting $4 gas by summer.

3. It's Our Failure to Develop Domestic Supply

This is one of my favorites: the claim that if only those damn environmentalists hadn't made much of our offshore oil reserves off limits to drilling, that we'd be enjoying gas prices under $2 again.
These people demonstrate a severe lack of comprehension about the concept of flow rates.

This is a familiar concept to my regular readers. All together now: "It's not the size of the tank which matters, but the size of the tap."

When you're consuming 21 million barrels a day (mbpd) of oil, bringing on a few field, even a "huge" field producing a quarter million or a half million barrels a day is still a drop in the bucket. It might dampen the rate at which prices increase, but it can't bring them down.

If you understand what Hubbert's Peak is all about you know that there is no turning back the clock on the decline of U.S. oil output, which has been steadily falling for 37 years despite massive investment and the best technology in the world.

4. It's Because They Won't Open the SPR

Finally, we have the Strategic Petroleum Reserve (SPR), which was created as a supply buffer against disruptions like the oil shock of 1973-4. It was a fine idea. I remember sitting in line in a car for three hours in the hot summer Tucson sun, waiting to buy a maximum of five gallons of overpriced gas on an "even" or "odd" day. It sucked.

The SPR can't buffer prices, though. It's strictly an emergency supply. Right now, it's got about 701 million barrels of oil in it, which sounds like a lot. But when you're consuming 21 mbpd, that's only a 33 day supply. More correctly, it's a 58 day supply, since we import only 12 mbpd of the 21 we consume.

Two months isn't much of a buffer against a serious emergency, and in today's environment, we absolutely must be prepared for such an event. It's an insurance policy against natural disasters and oil terrorism. We need look no further than what happened to oil after 9/11 and Katrina to know how quickly oil prices can spike up. To draw the SPR down below current levels would be irresponsible and reckless. That's why I applauded the decision last year to increase the SPR's capacity.

More to the point, the maximum flow rate of the SPR is only 4.4 mbpd, so at most it could only provide about 20% of our daily needs. That would dampen oil prices only a little, and only for a short while, until we had to start refilling it again. And when we did, it would add substantially to the already stretched global supply-demand balance, making price pressure even worse.

The Bottom Line on Gasoline Prices

I have written at length about why oil prices keep going higher. Some of it has to do with the usual factors cited in the press: speculation, geopolitical unrest, OPEC announcements, inventory levels, and so on.
But the most important reason usually goes unsaid: peak oil.

Even the IMF has obliquely admitted there is a problem. Recently, deputy director John Lipsky said, "While oil demand has remained robust, the supply side response to rising prices has been disappointing."

And that's the bottom line right there.

You know the old saw: when you point the finger at somebody else, there are three pointing back at you.

While oil production has leveled off, demand has not, and the reduced demand from the OECD is being more than offset by the red-hot economies of the developing world.

For the first time this year, the combined oil consumption of China, India, Russia and the Middle East will exceed that of the U.S.. Even with all our efforts to curb domestic demand, worldwide oil demand will increase about 2 percent this year, according to the IEA.

Until global demand cools off, there's no way out of the oil price trap.
And however we choose to characterize the reasons, oil supply isn't increasing anymore. The tap is wide open.

As Scotty used to say on Star Trek, "She can't take anymore cap'n! I'm givin' ‘er all she's got!"

The world is now perched precariously on the plateau at the top of the global peak in oil production. And it's not a long plateau. We've been on it for about three years, and I'm giving it another two years, tops. After that, we head on down the other side of Hubbert's Peak.

And I am increasingly doubtful that the world will be able to reduce its demand in time to prepare for the second half of the Age of Oil.

Oil will keep going higher, and gasoline and diesel prices will follow it up-not precisely, and not immediately, but they will follow. And for once, the White House seems to have told the truth about energy:

There's really very little we can do about it.

 

Re: Peak Oil; what it is and how it will impact your life


So these record prices have not done anything to increase the amount of oil supplies. Throughout history high prices have spurred countries and companies to increase production to take advantage of the spike in prices, but not this time. Why? Could it be that we are at world peak and maximum production levels?


Oil Price Rise Fails to Open Tap

As oil prices soared to record levels in recent years, basic economics suggested that consumption would fall and supplies would rise as producers drilled for more oil.

But as prices flirt with $120 a barrel, many energy experts are becoming worried that neither seems to be happening. Higher prices have done little to suppress global demand or attract new production, and the resulting mismatch has sent oil prices ever higher.

That has translated into more pain at the pump, with gasoline setting a fresh record of $3.60 a gallon nationwide on Monday. Experts expect prices above $4 a gallon this summer, and one analyst recently predicted that gasoline could reach $7 in the next four years.

A central reason that oil supplies are not rising much is that major producers outside the OPEC cartel, like Russia, Mexico and Norway, are showing troubling signs of sluggishness. Unlike OPEC, whose explicit goal is to regulate the supply of oil to keep prices up, these countries are the free traders of the oil market, with every incentive to produce flat-out at a time of high prices.

But for a variety of reasons, including sharply higher drilling costs and a rise of nationalistic policies that restrict foreign investment, these countries are failing to increase their output. They seem stuck at about 50 million barrels of oil a day, or 60 percent of the world’s oil supplies, with few prospects for growth.

"According to normal economic theory, and the history of oil, rising prices have two major effects," said Fatih Birol, the chief economist at the International Energy Agency in Paris. "They reduce demand and they induce oil supplies. Not this time."

With global supplies tight, geopolitics continue to play a big role in pushing up oil prices. Oil futures closed at $118.75 a barrel, up 23 cents, on the New York Mercantile Exchange, after strikes by oil workers in Scotland and Nigeria that shut down nearly 1.7 percent of the world’s daily production.

Countries outside the Organization of the Petroleum Exporting Countries have been the main source of production growth in the past three decades, as new fields were discovered in Alaska, the North Sea and the Caspian region.

But analysts at Barclays Capital said last week that non-OPEC supplies were "seemingly dead in the water." Goldman Sachs raised similar concerns last month, saying that growth in non-OPEC supplies "can no longer be taken for granted."

At the same time, oil consumption keeps expanding. Global consumption is forecast to increase by 1.2 million barrels a day this year, to 87.2 million barrels a day, with much of the growth in demand coming from China, India and the Middle East, according to the International Energy Agency, a group that advises industrialized countries.

In the United States and through much of the developed world, the higher fuel prices have led drivers to reduce their consumption, and gasoline demand is expected to drop this year. But that drop will be more than offset by the rise in energy demand from developing countries. In the next two decades, demand is projected to jump by 35 percent, and developing countries will consume more oil than industrialized countries.

Higher oil prices mean record profits for oil companies that have, to some extent, masked the supply problems. Exxon Mobil and Chevron are both expected to deliver knockout performances when reporting quarterly earnings this week, even as they struggle to increase production.

"What is disturbing here is that things seem to get worse, not better," said David Greely, an analyst at Goldman Sachs. "These high prices are not attracting meaningful new supplies."

The outlook for oil supplies "signals a period of unprecedented scarcity," Jeff Rubin, an analyst at CIBC World Markets, said last week. Oil prices might exceed $200 a barrel by 2012, he said, a level that would very likely mean $7-a-gallon gasoline in the United States.

Some regions are simply running out of reserves. Norway’s production has slumped by 25 percent since its peak in 2001, and in Britain, output has dropped 43 percent in eight years. Production from the giant Prudhoe Bay field in Alaska has dropped by 65 percent from its peak two decades ago.

In many other places, the problems are not below ground, as energy executives like to put it, but above ground. Higher petroleum taxes and more costly licensing agreements, a scarcity of workers and swelling costs, as well as political wrangling and violence, are making it harder to raise production.

"It’s a crunch," said J. Robinson West, chairman of PFC Energy, an energy consulting firm in Washington. "The world is not running out of oil, but rather it’s running out of oil production capacity."

Mexico, the second-biggest exporter to the United States, seems increasingly helpless to find new supplies to offset the collapse of its largest oil field, Cantarell. A combination of falling production and rising domestic consumption could wipe out Mexico’s exports within five years.
Foreign investment could help Mexico produce oil from deeper waters, but that is a controversial proposition in a country where oil has long been seen as part of the national patrimony.

Another country, Russia, is also a focus of analysts’ worries. Russia is not exactly running out of places to look for oil — a huge chunk of eastern Siberia remains unexplored — and the country has been the biggest contributor to the growth in energy supplies in the last decade.

But Russian energy officials warned recently that the days of stunning growth that followed the collapse of the Soviet Union were over, as the country focuses on stabilizing its output. Russia today produces about 10 million barrels of oil a day, up from a low of 6 million barrels in 1996.
The Russian government has been muscling Western companies to gain more control over its energy resources. That rise in energy nationalism could freeze new investment and slow any meaningful growth in supplies there for years.

As countries like Russia slow output, analysts say OPEC will have to pick up the slack. The oil cartel accounts for 40 percent of the world’s oil exports and owns more than 75 percent of global reserves. But there are serious concerns that OPEC will also find it tough to increase production.
Saudi Arabia, the world’s top oil exporter, is completing a $50 billion plan to increase capacity to 12.5 million barrels a day, but it signaled recently that it would not go beyond that. That means Saudi Arabia could fall short of the 15 million barrels a day that most experts had expected it to produce in the long run.

OPEC’s 13 members plan to spend $150 billion to expand their capacity by five million barrels a day by 2012. But OPEC will need to pump 60 million barrels a day by 2030, up from around 36 million barrels a day today, to meet the projected growth in demand. Analysts say that without Iran and Iraq — where nearly 30 years of wars and sanctions have crippled oil production — reaching that level will be impossible.

Not everyone is pessimistic about energy supplies. A study by the National Petroleum Council, an industry group that provides advice to the secretary of energy, concluded that the world still had plenty of petroleum resources that could be tapped.

In fact, high prices have set off a global dash for oil. Brazil, for example, has struck large offshore fields that could turn the country into one of the world’s top 10 producers. But developing new fields can take many years.
To make up the shortfall, the world is also increasingly turning to fuels from unconventional sources, like biofuels or heavy oil. Canadian tar sands, for example, have attracted large investments.

But the International Energy Agency estimates that current investments will be insufficient to replace declining oil production. The energy agency said it would take $5.4 trillion by 2030 to raise global output. Otherwise, it warned that a crisis before 2015 involving "an abrupt run-up in prices" could not be ruled out.

 

Re: Peak Oil; what it is and how it will impact your life

So I guess not all college's left wing, liberal, brainwashing efforts are effective. Seems like this college student has kept his ability to think for himself.


Praising petroleum
By Daniel Earnest
As a college student with a car and a strict budget, I can empathize with all Americans who have to pay seemingly exorbitant prices each time they fill their tanks. While it's natural to try to take out our frustration on something, most people wrongly accuse American oil companies of being greedy, obsessive bottom-liners only looking out for themselves.

Little gets said of what good the oil companies actually do for America. According to Energy Tomorrow, an industry publication sponsored by the American Petroleum Institute, in just one 24-hour period, the oil industry delivers enough energy to heat 80 million homes, and enough gasoline to enable 200 million drivers to get to work and carry out their everyday activities and jobs to over 5.9 million people.

Yet still people ignorantly call for the oil companies to decrease gas prices and even sometimes blame President Bush for allowing the prices to rise so high. These people simply fail to think as knowledgeable members of a free enterprise system where the cost of goods and services is determined by global supply and demand.

The U.S. is the largest single consumer of energy in the world and imports approximately 60 percent of its crude oil at a cost of $50 billion per year, amounting to the largest single element of our trade deficit, according to Gibson Consulting. We are not energy self-sufficient and are not entitled to cheaper oil than the rest of the world just because we are Americans.

Less than 2 percent of the world's oil and natural gas reserves are controlled by U.S. energy companies, according to Energy Tomorrow, and simply put, we must pay the going market price for crude oil, or it will go elsewhere.

Like any other good or service, there are basically two ways to decrease gasoline prices - produce more or use less. It is all about supply and demand. Crude oil is a global commodity and it is transportable anywhere in the world. Consumption by emerging economies like India and China, each with huge populations and improving standards of living, is growing rapidly and global demand for crude oil is outpacing supply. Add this to the weak U.S. dollar, which is the standard for all international sales of crude oil, and you have oil prices exceeding $110 per barrel for the first time in history.

Even at current price levels, the U.S. has the cheapest gasoline of any developed nation in the world. In a study that lists gasoline prices throughout the world, the German Technical Cooperation showed that a gallon of gas ran upward of $7 to $8 per gallon in Europe in 2007. The relatively cheap prices Americans enjoy are due in large part to the great job American oil companies do in finding, producing and efficiently delivering energy to consumers.

So if it is all about supply and demand, what can the U.S. government do to offset the high cost of gasoline? They can establish a comprehensive, proactive energy policy that encourages energy conservation and the development of new energy supplies in this country. To achieve this, Congress must remove the moratorium against drilling offshore on the east and west coasts and in the Arctic National Wildlife Refuge, where potentially billions of barrels are trapped below the surface.

American oil companies have proven they are very capable of operating in an environmentally and socially responsible manner in these pristine areas. For example, The American Petroleum Institute asserts that over one-half of the nation's oil and gas is already produced offshore in the Gulf of Mexico and onshore Alaska, and the work has been done without harming the environment.

Being allowed to drill in these areas would have a positive impact on world oil supplies and prices at the gas pump for American consumers, but perhaps even more importantly, reduce our dependence on foreign oil. Most of the oil we import in this country comes from the Middle East, Russia and Venezuela - not exactly the most stable places in the world. So increasing the supply of oil and gas produced in this country is as much a matter of national security as it is a price of gasoline issue.

Second, Congress must offer tax and other incentives to the petroleum industry to develop alternative and renewable sources of energy, but all the while knowing that this is no panacea. Renewable energy resources such as corn-based ethanol and other bio-fuels sound good, but they are actually more costly and worse for the environment than drilling in the ANWR, as they consume more energy, water and other resources than they save.

Ethanol now makes up approximately 5 percent of the U.S. motor fuel supply, with mandates in place to move that to 15-20 percent over the next five years in accordance with the Energy Independence and Security Act. However, the use of crops for motor fuel has driven up the cost of corn, sugar, soy beans and other foods, creating unintended economic and ethical consequences and instigating the "food for fuel" debate. Solar, wind and nuclear energy are also promising alternative sources of energy, but all are more costly than crude oil and natural gas and will have a limited impact during our lifetimes.

Despite all of this, the cost of gasoline is still dependent upon global economic growth and demand for energy - not on some gluttonous bigwig who sits at the top of a skyscraper all day thinking of ways to deceive you and make your life tougher.

Next time you or one of your professors feels like bashing an oil company, think about that orange juice you just bought at the grocery store. Then think about how much more difficult and expensive it is to produce a barrel of oil from 10,000 ft underwater and refine it into gasoline. When you compare the prices, it does not seem too bad, especially considering that gasoline does not grow on trees.
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Re: Peak Oil; what it is and how it will impact your life

PARIS, France (AP) -- A leading global energy monitor fears there may not be enough oil out there to slake the world's thirst -- and is preparing a landmark forecast that could reverberate through the global economy even as major companies announce fuel-related cutbacks.

The International Energy Agency is studying depletion rates at about 400 oil fields in a first-of-its-kind study of world oil supply, chief economist Fatih Birol said.
"We are entering a new world energy order, " Birol told The Associated Press.

Market analysts call the Paris-based IEA the world's most reliable independent source of oil information and welcomed its decision to undertake a deep study of oil supplies.

But the IEA's new forecasts are likely to further upset markets. Oil prices hit an all-time high Thursday above $135 a barrel before falling back.
Less oil would mean even higher prices for everything from gasoline to food. Already, airlines squeezed by jet fuel costs are bleeding profits and predicting cutbacks and industry upheaval. Ford Motor said Thursday it was cutting production of gas-guzzling sport utility vehicles and forecast more rough times ahead.

Birol said the IEA study, whose results will be released in November, was prompted by concern about the volatility of world oil markets and uncertainty about supply levels.

"The prices are very high, and demand did not respond in the last few years as much as one would have expected," Birol said. "The growth in terms of production was not great. We did not see enough investment."
The spurt in oil prices Thursday came after a report in the Wall Street Journal that the IEA was planning to lower its forecast for long-term world supply.

Birol would not speculate on whether the forecast, which will predict supplies through 2030, could go sharply downward. "We will see," he said.
The IEA's past forecasts put oil supply at about 116 million barrels a day in 2030, up from 87 million barrels a day now.

"Although the agency's official assessment isn't expected until later this year, the market's interpretation is that global supply may be significantly tighter than previously projected by the major oil market monitors," said Jim Ritterbusch, president of energy trading advisory service Ritterbusch and Associates in Galena, Illinois.

Birol said oil companies and governments have been cooperative with the IEA experts preparing the report, but added, "It is not an easy task. It is the first time this is being done in the public domain on such a scale."

Simon Wardell, oil analyst at Global Insight in London, was skeptical that the IEA would get a complete picture from "countries that are very closely guarded" such as Saudi Arabia, the No. 1 producer.

That is important because Birol said one of the key shifts coming up is that the world will become increasingly reliant on national oil companies instead of multinational ones.

"Up to now, we have seen that the international oil companies were responsible for bringing a big chunk of the oil to the markets. Now, in many cases, since existing reserves are declining, a big part of oil will need to come from national oil companies. And they have their own conditions, their own context."

Birol called for greater investment everywhere.
Wardell said the IEA report would have limited effect on investment. "It's not like oil companies aren't already looking around," he said.
But he said governments could take notice and "start thinking of policies that would ensure more oil."

Birol noted that, "Both on the demand side and supply side, we have new actors who change the rules of the game."

He said most demand now and in the coming decades will come from China, India and the Middle East. That is a stark shift from past decades, when the U.S. and Europe were demand-drivers.

The IEA is part of the Organization for Economic Cooperation and Development, which brings together 30 rich nations. It has no links to OPEC, and its review may challenge the Organization for Petroleum Exporting Countries' view that the world is well-supplied with oil.

Birol said the report is looking at onshore and offshore supplies -- including hard-to-reach wells in the deep sea.

He noted that Brazilian state oil company Petroleo Brasileiro SA said Thursday it has struck more oil in waters near the huge offshore Tupi field -- but remained cautious about how much "good oil" such fields would produce.

Fears about fuel prices helped send shares in Europe's largest airline, Air France-KLM, down 9 percent Thursday after it announced a quarterly net loss and said it expects the coming year to be "challenging."

CEO Jean-Cyril Spinetta said the soaring cost of fuel means the industry is in for a "profound transformation," predicting capacity reductions, the acceleration of mergers and the exit of some players from the market.

Ford Motor said Thursday it is cutting North American production of pickups and SUVs as car buyers eyeing record gas prices turn toward more fuel-efficient models. The automaker says it no longer expects to return to profitability by 2009 and didn't rule out layoffs and plant closures.

 

Re: Peak Oil; what it is and how it will impact your life

I have noticed quite a few threads around the board of late that discuss the current oil situation. Some appear to be grasping at straws of hope with new "massive" discoveries, and even the long debunked abidiotic oil theory is resurfacing. And of course we're seeing the same old big oil conspiracy. All they have to do is snap thier fingers and we would have $2 a gallon gas again.
I suppose it is human nature to seek out hope when things look grim. To seek a scape goat for, or a magical remedy to, our current situation.
But the facts are that things are never going to get back to "normal". High fuel costs are here to stay and in fact will get much higher in the near future. So I don't see where chasing after every report of a new discovery or a new alternative, new thechnology that some wild eyed speculator is predicting will be our salvation is productive.
My suggestion would be to go back to predictions that have proven temselves accurate. Then see what they have to say about the future.
Here are a few snippets fromt he very first page of this thread. First published in August of 2005, but some of the quoted articles date back to as early as 2002.
They are eerily prophetic. I think I would see what they had to say about the future.


Tuesday December 2, 2003
The Guardian

The oil industry is buzzing. On Thursday, the government approved the development of the biggest deposit discovered in British territory for at least 10 years. Everywhere we are told that this is a "huge" find, which dispels the idea that North Sea oil is in terminal decline. You begin to recognize how serious the human predicament has become when you discover that this "huge" new field will supply the world with oil for five and a quarter days.

Every generation has its taboo, and ours is this: that the resource upon which our lives have been built is running out. We don't talk about it because we cannot imagine it. This is a civilization in denial.

Oil itself won't disappear, but extracting what remains is becoming ever more difficult and expensive. The discovery of new reserves peaked in the 1960s. Every year we use four times as much oil as we find. All the big strikes appear to have been made long ago: the 400m barrels in the new North Sea field would have been considered piffling in the 1970s. Our future supplies depend on the discovery of small new deposits and the better exploitation of big old ones. No one with expertise in the field is in any doubt that the global production of oil will peak before long.

The only question is how long. The most optimistic projections are the ones produced by the US department of energy, which claims that this will not take place until 2037. But the US energy information agency has admitted that the government's figures have been fudged: it has based its projections for oil supply on the projections for oil demand, perhaps in order not to sow panic in the financial markets.

Other analysts are less sanguine. The petroleum geologist Colin Campbell calculates that global extraction will peak before 2010. In August, the geophysicist Kenneth Deffeyes told New Scientist that he was "99% confident" that the date of maximum global production will be 2004. Even if the optimists are correct, we will be scraping the oil barrel within the lifetimes of most of those who are middle-aged today.

The supply of oil will decline, but global demand will not. Today we will burn 76m barrels; by 2020 we will be using 112m barrels a day, after which projected demand accelerates. If supply declines and demand grows, we soon encounter something with which the people of the advanced industrial economies are unfamiliar: shortage. The price of oil will go through the roof.

As the price rises, the sectors which are now almost wholly dependent on crude oil - principally transport and farming - will be forced to contract.

Given that climate change caused by burning oil is cooking the planet, this might appear to be a good thing. The problem is that our lives have become hard-wired to the oil economy. Our sprawling suburbs are impossible to service without cars. (so much for the "just ride a bicycle" plan) High oil prices mean high food prices: much of the world's growing population will go hungry. These problems will be exacerbated by the direct connection between the price of oil and the rate of unemployment. The last five recessions in the US were all preceded by a rise in the oil price.

Oil, of course, is not the only fuel on which vehicles can run. There are plenty of possible substitutes, but none of them is likely to be anywhere near as cheap as crude is today. Petroleum can be extracted from tar sands and oil shale, but in most cases the process uses almost as much energy as it liberates, while creating great mountains and lakes of toxic waste. Natural gas is a better option, but switching from oil to gas propulsion would require a vast and staggeringly expensive new fuel infrastructure. Gas, of course, is subject to the same constraints as oil: at current rates of use, the world has about 50 years' supply, but if gas were to take the place of oil its life would be much shorter.

Vehicles could be run from fuel cells powered by hydrogen, which is produced by the electrolysis of water. But the electricity which produces the hydrogen has to come from somewhere. To fill all the cars in the US would require four times the current capacity of the national grid. Coal burning is filthy, nuclear energy is expensive and lethal. Running the world's cars from wind or solar power would require a greater investment than any civilization has ever made before. New studies suggest that leaking hydrogen could damage the ozone layer and exacerbate global warming.

Turning crops into diesel or methanol is just about viable in terms of recoverable energy, but it means using the land on which food is now grown for fuel. My rough calculations suggest that running the United Kingdom's cars on rapeseed oil would require an area of arable fields the size of England.

There is one possible solution which no one writing about the impending oil crisis seems to have noticed: a technique with which the British and Australian governments are currently experimenting, called underground coal gasification. This is a fancy term for setting light to coal seams which are too deep or too expensive to mine, and catching the gas which emerges. It's a hideous prospect, as it means that several trillion tonnes of carbon which was otherwise impossible to exploit becomes available, with the likely result that global warming will eliminate life on Earth.

We seem, in other words, to be in trouble. Either we lay hands on every available source of fossil fuel, in which case we fry the planet and civilization collapses, or we run out, and civilization collapses.

The only rational response to both the impending end of the oil age and the menace of global warming is to redesign our cities, our farming and our lives. But this cannot happen without massive political pressure, and our problem is that no one ever rioted for austerity. People tend to take to the streets because they want to consume more, not less. Given a choice between a new set of matching tableware and the survival of humanity, I suspect that most people would choose the tableware.

In view of all this, the notion that the war with Iraq had nothing to do with oil is simply preposterous. The US attacked Iraq (which appears to have had no weapons of mass destruction and was not threatening other nations), rather than North Korea (which is actively developing a nuclear weapons program and boasting of its intentions to blow everyone else to kingdom come) because Iraq had something it wanted. In one respect alone, Bush and Blair have been making plans for the day when oil production peaks, by seeking to secure the reserves of other nations.

I refuse to believe that there is not a better means of averting disaster than this. I refuse to believe that human beings are collectively incapable of making rational decisions. But I am beginning to wonder what the basis of my belief might be.


Omens
How will we know when the oil decline bites. People have made various predictions. The first is from the ASPO Newsletter of March 2002 (the ‘Nemesis Report’).

Initially it will be denied. There will be much lying and obfuscation. Then prices will rise and demand will fall. The rich will outbid the poor for available supplies. The system will initially appear to rebalance. The dash for gas will become more frenzied. People will realise nuclear power stations take up to ten years to build. People will also realise wind, waves, solar and other renewables are all pretty marginal and take a lot of energy to construct. There will be a dash for more fuel-efficient vehicles and equipment. The poor will not be able to afford the investment or the fuel.

Exploration and exploitation of oil and gas will become completely frenzied. More and more countries will decide to reserve oil and later gas supplies for their own people. Air quality will be ignored as coal production and consumption expand once more. Once the decline really gets under way, liquids production will fall relentlessly by 5%/year. Energy prices will rise remorselessly. Inflation will become endemic. Resource conflicts will break out.

The spreading of rolling blackouts will ultimately cause severe recession, especially as oil prices go higher, which will happen later this decade. Oil powers aeroplanes, electricity, jobs. Bartlett is quoted as noting that modern agriculture is merely a way of converting petroleum into food! Without energy, food supplies decrease.

Another implication concerns the ability of governments with socialistic tendencies to maintain their socialism…this is the last generation of Brits and Scots who will have the social programs like National Health Care. Governments all over the world will not be able to finance plentiful services in the face of high oil prices.

Political instability will ensue. I am sure that a few leaders will be headless after the masses get to them. It is in such times that Lenin, Hitler and other dangerous individuals take the reigns of power. Life will be a bowl of cherries then.

After the world Hubbert peak, when energy costs go way through the roof, there will be a period in which an emphasis on conservation will occur. This will be like the early 1980s when the price of oil caused the world to become more energy efficient. Smaller cars were purchased, insulation put into houses and lighting changed to efficient bulbs. That will occur again putting off some of the worst problems. But this time, unlike the 80s, there will not be increasing oil production. Every year unrelentingly we will require further efficiencies in our energy use. Every year inflation will add to the price of goods because oil gets scarcer and scarcer…My grandfather told me about the Great Depression, indeed he raised his family during that time. His job was easy by comparison with what is about to hit.

People in Third World countries, like Mexico, will do the only human thing, the thing we all would do in their circumstances – try to get into countries they perceive have wealth and jobs. The army, without oil will be unable to defend the borders. The sight of poor desperate people being shot in order to keep them out will not be pretty.


How will you know?
If you are reading this, you have one big advantage over 99% of the rest of the world – you are aware of the problem. Almost everyone else believes that oil is plentiful or at least a minor problem. They worry about global warming, or poverty, or wars. They will not know of oil depletion or believe it until it hits them in the face, until the prices at the pump go up every day and unemployment begins to soar. But you do. Watch the newspapers and television, searching for the statistics that are usually given little emphasis – in particular, oil production. Download the ASPO newsletters every month, and the BP Statistical Review every year.

As Oil is depleted

Expected Problems:

• Cessation of all fossil fuelled activities.(rationing is coming)
• Cessation of all use of fossil fuels as "raw materials", such as fertilizers, insecticides, and medicines.
• Massive population dieoffs, as only a fraction of the present population can be sustained without the present infrastructure, particularly that of the food industry.
• Economic collapse, as businesses become obsolete.(like the airlines)
• Ecological disasters, as remaining natural resources are plundered in attempts to maintain the failing infrastructure.(like strip mining the rocky mountain regions to extract the dense shale oil and tar sands)
• Governmental oppression, as governments face internal and external challenges, and lack the resources to cope. (Patriot act 2, or is it 3?)
• Civil disturbances as people realize what they have considered normal falls away.
• Severe food and water shortages, leading to riots, thefts, and worse.(happening now in the third world)
• Demands for "sharing", anyone who prepared labelled as "hording". (survivalists outlawed)
• War, as those who are "better off" are seen as unjust, unfair, or evil, or someone with weapons feels they have nothing to lose.

When to act:
• Immediately. When the oil supply dwindles, the shortages, climbing prices and disruptions of shipping and industry may effectively preclude any personal preparations. (we are very near to this point today)
• At the present, you can "click" on the web, or make a phone call, and have unique goods delivered, or labour performed.( the time to prepare was when this article was published in 2002. It is very near to the too little too late mark)


I have said before that my sole purpose in starting this thread was to wake people up. To warn of the dangers I saw coming. In the hopes that those who read these words would prepare themselves and thier families for the day when gasoline and other energy costs would skyrocket and cause great hardship on those who were unprepared or unaware of it.

Well that day is here. I hope that some of you heeded these warnings. For those who didn't, or who are just discovering this, then the time is short but it is not too late. Start now for it is only going to get worse.

There is no new discovery, no new technology that is going to take us back to the carefree, use as much as we want, days of cheap fuel.
Not going to happen folks.

So start getting ready for the worse is yet to come. Get rid of that gas guzzler while you still can. Buy a small 4 cylinder car before thier prices skyrocket beyond reach. Sell that Mc Mansion and buy a small, easy to heat and cool, home.
Stock up on all the food sources that you can. Prepare.

There's a bad moon on the rise

 

Re: Peak Oil; what it is and how it will impact your life

There is a moderately even handed article in this month's National Geographic on peak oil. A couple things stand out, peak is real, timing is not certain. And the prices these days are political, not market driven due to restraints on exploration and drilling. They said that at least twice in the article.

If the greens go away, prices will drop. For a while --

 

Re: Peak Oil; what it is and how it will impact your life

Have we ran out yet?

 

Re: Peak Oil; what it is and how it will impact your life

Have we ran out yet? (Yep. Sure have. We have run out of cheap, easily obtained, easily refined oil. It's gone. Those days are over. Peak oil is not about running out of oil, it's about running out of cheap oil. It's about the ramifications of shortages and constricting supplies.)

 

Re: Peak Oil; what it is and how it will impact your life

Awesome, then I will be able to ride my bike for a few days then.