fayfreethinkers.com

DAR
One would think the world would consider this a pretty big deal.



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Energy Watchdog Warns of Supply Crunch Within Five Years
By James Moore
The Independent UK

Tuesday 10 July 2007

The world faces an oil supply crunch with prices poised to soar to new all-time highs over the next five years, a report from the International Energy Agency warned yesterday.

In its Medium-Term Oil Market report the Paris-based organisation predicted that demand would rise by 2.2 per cent a year between 2007 and 2012 - up from a previous forecast of 2 per cent - as the world's economy expands at about 4.5 per cent a year.

That means demand is set to grow by 1.9m barrels a day to 95.8m barrels a day by 2012.

The demand will be driven by the fast-growing economies of Asia and the Middle East, where the thirst for black gold will grow more than three times faster than the 30 industrialised members of the Organisation for Economic Co-operation and Development. That is because several countries in those regions are set to break the $3,000 per capita income level, when consumers can afford to buy energy-consuming products such as cars and white goods.

Industrial nations are also expected to have to place an increasing reliance on Opec companies to meet the demand, thanks to continuing geopolitical tensions in alternative producers.

The report assumes no net expansion of capacity from Iran, Iraq and Venezuela and that 500,000 barrels a day of Nigerian oil - shut for a year - will not reopen in the next five.

Yesterday oil prices rose to an 11-month high above $76 a barrel, as rising demand and maintenance of the North Sea field fuelled worries about supplies.

Brent Crude climbed to a high of $76.34 - not reached since last August, when a record high of $78.65 was recorded.

Analysts warned that prices were likely to remain high amid continuing global tensions, kidnappings in Nigeria and the hurricane season coming into full swing.

The IEA's report said: "Despite four years of high oil prices, this report sees increasing market tightness beyond 2010. It is possible that the supply crunch could be deferred - but not by much."

It continues: "The potential effects of a combination of low Opec spare capacity and slow non-Opec production growth are of significant concern - all the more so when considered alongside tightness in other hydrocarbons, particularly the natural gas market."

IEA's head of oil industry and markets division Lawrence Eagles warned: "The results of our analysis are quite strong. Something needs to happen. Either we need to have more supplies coming on stream, or we need to have lower demand growth."

The IEA has also warned that additional global refining capacity over the next five years will not match earlier expectations as a result of rising costs and a shortage of engineers. This will delay construction.

Production of biofuels is set to reach 1.75m barrels per day by 2012 - more than double last year's levels, but this will leave its contribution at just 2 per cent of global supplies, and the economics of producing the fuel is likely to hinder further growth.

The Independent

An excellent primer on Peak Oil can be read here.

DAR
And a quote from above that should be branded on Bush's forehead, and everyone else who thinks the answer to our energy crisis is somehow hydrogen:

"Hydrogen, touted by many as a seamless solution, is actually an energy carrier, but not an energy source. Hydrogen must be produced using an energy source such as natural gas or nuclear power. Because of energy losses in transformation, the hydrogen will always contain less energy than was invested in it." --ibid

Oh - a "supply crunch" but not "peak" - THAT makes it OK to continue using oil as if it were a magical self-renewing resource. Yeah, right. There is only one sane response to use of a wasting asset - find something else that isn't a wasting asset.

The Peak Oil Crisis: A Message From Houston
By Tom Whipple
The Falls Church News-Press

Thursday 25 October 2007

We gathered at a hotel near the Convention Center, some 525 of us from 18 countries and 36 states attending the Association for the Study of Peak Oil-USA's 3rd annual conference. The PowerPoints flashed by at mind-blowing speed as speaker after distinguished speaker shared the latest thoughts and insights into the peaking of world oil production.

For those of us acquainted with the field, there was nothing startling. World oil production has either peaked already or is certain to do so within the next few years if the world's petroleum industry manages to eek out a little more production. But the good times are clearly over.

Peak production of conventional oil came 30 months ago and although new production projects will come on stream in the next few years, they will have a hard time balancing the depletion from existing fields which various speakers placed at 4-5 percent a year and probably increasing. As a greater share of world production shifts to undersea production, which is expensive and is usually water flooded to get the oil out as quickly as possible, some believe the annual world depletion rate could increase to six percent or more.

The most ominous development for countries such as the U.S., which must import most of its oil, is the emerging concept of "peak exports" which was discussed by several speakers. Peak exports simply means that oil-producing countries are using more and more oil at home - leaving less to sell abroad. Moreover, sentiment is starting to develop in many nations that they must save some oil for future generations, not just sell it to the foreign devils as quickly as possible.

This clearly means that major oil importers will face a shortfall in their ability to obtain oil many months or years sooner than they had been anticipating. The fall in the amount of oil available for purchase is likely to drop much more quickly than declines in production. When world oil exports fall, if they have not started doing so already, effects are likely to sharp and painful.

For me, the most interesting insight of the conference had nothing to do with oil production but rather was an insight I gained into the psyche of the American people. A keen observer of the American scene pointed out that most literate Americans are aware that we have some sort of energy problem. If for no other reason than unprecedented gasoline prices and the TV ads featuring yellow corn-fueled cars, most have at least an uneasy feeling that some sort of transformation is coming.

The problem is that most have no concept as to how soon the transformation will start and how much their lives are going to change. The President, his government, the Congress, the oil companies, and indeed the media have left us with the impression that we have the transformation to an alternative fuel future well in hand. Bills mandating and increasing the supply of ethanol have been passed or are in the hopper. The President makes periodic references to hydrogen-powered cars. The oil companies allege there is no problem and the media takes it all in and remains mute.

The peak oil problem is not that most of us don't recognize a transition is coming - if for no other reason than reducing our dependence on "foreign oil" - it is that we don't recognize that the transition will come soon and will inflict more economic pain and social dislocation on the American people than we have experienced since the Civil War or perhaps ever.

Thus the message from Houston was "it will be soon and it will be bad, very bad," much sooner and much worse than 99 percent of the American people realize.

Earlier this week, a European Organization called Energy Watch released a paper concluding as many others have done that world oil production peaked last year and will decline steeply over the next 22 years so that by 2030 production will be in the vicinity of 40 million barrels per day which is less than half of current production. In ten years production will be down on the order of 20 million barrels per day.

What we in America have not yet begun to grasp is that numbers like this imply the near total demise of the private internal combustion powered automobile. Your local gasoline station is at the end of the distribution pipeline and is the most likely to be cut off. If gasoline available for distribution in the U.S. were to fall from 9 million barrels a day to the order of 5 million through a combination of declining production and declining exports, it is not hard to figure out what would happen when the government gets around to prioritizing uses.

Food production and distribution would come first, then public health (clean water, sewage, sanitation, medical services), then public safety including the armed forces, and finally some level of economic activity that uses petroleum products.

Thirty seconds of pondering this situation should leave you with the idea that there will be very little gasoline available for your gas station to sell to you. For sure, there will be a lot fewer gas stations around ten years from now and you are not going to like the prices.
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LINK

Tom Whipple is a retired government analyst and has been following the peak oil issue for several years.

Whipple is incorrect - the military will come first - and they are already the largest consumer of U.S. oil (domestic and foreign). Then we'll get to incidentals like food, public health, etc.

This is where I feel like Cassandra (except I know the Freethinkers actually DO believe it). We have the ability to avoid this disaster. The technology is in existence. Industry could "Mobilize" like it did in WWII and get us off petroleum in 10 years flat. We aren't going to do it. Industry will only do it if Congress produces - and passes - with a veto-proof majority - an energy bill that gives Industry incentive for making the change - and no choice. I don't mean ordering them to change, but making it impossible for them not to. The same way FDR did back in 1942 - "essential" materials were conscripted - Industry only got them for war production. No steel for cars, all the steel you want/can use for tanks, ships, planes, etc. If the energy bill said not one dime for fossil fuels acquisition and the only refineries are for biofuels, the only new power plants are renewables, it would happen. If the agi bill got off the "corn" subsidies and rebuilt our "family" farm system, we'd reduce the water and fuel needs - and could still utilize agri wastes for fuel - it would happen. If the auto industry could only have steel, rubber, plastic for efficient vehicles, it would happen. But it won't. (And we're going to run out of water before we run out of petroleum - happy water wars - GA is already suing FL over water - and "mountaintop removal' style coal mining is just destroying the eastern watershed.)

You guys who weren't around in the 70s for our last "oil crisis" don't recall how well big oil can sell that shit. I had 2, sometimes three big gas guzzling vans working for me so I stayed a bit frightened for a few years.

Two very sincere middle managers from different oil companies convinced me that in 20 years we would run out of oil based upon current estimates.
They convinced many others too. They were supposed to convince many people because their respective corporations had trained them to fill the media and us regular folks minds full of oil scarcity. It keeps people from bitchin about super high prices. Then one day the bubble burst.

BTW, Venezuela has the largest reserves, not sweet crude, but crude, largest reserves known. "Venezuela’s crude oil reserves will soon be certified at 316 billion barrels, the largest in the world, surpassing even those of Saudi Arabia."
http://www.venezuelanalysis.com/analysis/2617

People keep getting confused about what "Peak" means - just that we've pumped (and burned) all the easy oil. Everything from here on out will be more and more expensive to get in terms of energy expended for energy produced. Sure there's a whole lot left in the ground, which is why now is the time to get off it. We can phase off it now - wait another 20 years, especially at the world's escalating rate of use, and we'll have to go "cold turkey". (And yes, I remember the 1970s very well, thank you.)

LaWood wrote: Two very sincere middle managers from different oil companies convinced me that in 20 years we would run out of oil based upon current estimates.

DAR
Anyone who says "peak oil" means oil is going to "run out" even in a hundred years clearly does not understand the issue of peak oil (this goes double for that idiot Greg Palast). See the chart at the top of this thread.

They convinced many others too. They were supposed to convince many people because their respective corporations had trained them to fill the media and us regular folks minds full of oil scarcity.

DAR
This sounds like a good price fixing conspiracy except that until recently the big oil boys have been ridiculing the claims of peak oil. Now it is becoming rather deniable.

It keeps people from bitchin about super high prices. Then one day the bubble burst.

DAR
I think gas prices are extremely low but people still bitch. They haven't seen anything yet. In 1999 oil hit $10 a barrel. Last week it touched $92. And China and India haven't even begun to really start sucking on the straw.

BTW, Venezuela has the largest reserves, not sweet crude, but crude, largest reserves known.

DAR
Here is an excerpt from an article on the Council on Foreign Relations page:

"Venezuela has an estimated 78 billion barrels of conventional crude oil reserves and an additional estimated 235 billion barrels of unconventional extra-heavy crude oil in the Orinoco Belt region located southeast of Caracas. If development in the region can turn this extra-heavy tar-like oil into a more marketable commodity, Venezuela’s total reserves could rival those of Saudi Arabia, reports the New York Times. Yet Professor Tinker-Salas argues that production of extra-heavy crude oil is “only viable long as the price of oil remains over $50 per barrel.”

LINK

Larry, the world burns 78 billion barrels of oil in about 2.5 years. Then it's gone. If you want to go with the optimistic number which includes the extra heavy tar material then you get about 11 years not counting the fact that demand goes up about 3% per year and the fact that it takes a lot of energy to convert the heavy stuff.

See the copy of the handout posted on this issue for more.

Intuitively I would like to agree with you. We are happily buzzing around on cheap gas. People are buying Hummers like there is no tomorrow. It seems like we can just keep using more and more. But we can't. I think the only question is whether we will have a hard landing or a soft. I know you have heard this before in the 70's but the US did peak and had the world to draw from. When world oil peaks, the parties over (even though, we will never "run out" of oil).

D.
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"The returns are coming in on how well exploration for new oil and gas fields fared in 2005. Overall the picture is disappointing despite the expenditure of some $15 billion by publicly traded companies alone. There were no significant (billion barrel or more) discoveries announced in 2005. Worldwide, total new oil discovered during the year comes to 4.5 billion barrels -- a 53-day supply at current rates of consumption. New discoveries in 2004 and 2005 were the lowest recorded since World War II." LINK

DAR-
I was not referring to "peak oil" as the situation in the 70s. Then such a term was not well known. I'm simply saying that the "shortage" and "running out" back then was a whopper deliberately generated to help justify high prices.

Peak oil, as I learned it 3-4 years ago, is that point when consumption is outstripping known reserves.

I think a wise society-economy will find several energy sources rather than be vunderable to one primary source and most of it imported. That same argument was put forth in the 70s- how we should develop a diversity of sources. President Carter worked on it. Then Raygun was elected and most research subsidies ended. Locally Otto Zenke, physicist ,was active at the state level.

Brazil is completely off of oil. It runs on biofuel produced from sugar cane.
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Thats part of the reason I am still amazed that Chavez is still in power. U.S. backed like the one against him rarely fail like it did. And often the second time the CIA will get you....unless you are Castro.
More likely as oil goes up. Wanna bet may liberals then applaud.