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the peak oil problem - we are running out of cheap oil


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We depend on oil for our food, housing, transportation....literally everything. For one calorie of food, it takes 10 calories of energy to produce it. Our economy and the world's economy depends on cheap oil. As President Bush has said, "We are addicted to Oil". Oil is a finite resource and much research indicates that we may be nearing the end of our supply of easily obtainable, good quality, cheap oil.

Oil has literally made foreign and security policy for decades.  Just since the turn of this century, it has provoked the division of the Middle East after World War I; aroused Germany and Japan to extend their tentacles beyond their borders; the Arab Oil Embargo; Iran versus Iraq; the Gulf War. This is all clear.
-- Secretary of Energy, Bill Richardson, December 9, 1999

What happens when peak production is passed? Our lives change. Prices will increase and supplies will be less readily available, impacting our economy. How soon will that happen? Some say as early as 2007 and some say as late as 2040. What is clear is that supply is peaking and demand is increasing. What is also clear is that...it is imperative to develop alternative sources of energy as soon as possible and wean ourselves off our "Oil Addiction". We need to conserve as much as possible as it will take oil to provide the necessary energy to develop these alternative energy sources. It will also take oil to defend our country, provide police protection, and maintain food and medical care if times get tough. We need to start the transition NOW by conserving as much as possible.

Our country's oil production peaked in the 70's. Drill, Drill, Drill is a short term solution, which will reduce oil prices for now and raise prices for the future. It will deplete our reserves even faster....leaving us less for our kids, grandkids, military and essential services.

Congressman Roscoe Bartlett(R) said, "The United States is the most efficient and productive country in the world. We do lead the world. We cut our use of energy per $1 of GDP by 50 percent since the early 70's. That's really good. However, with only 2 percent of reserves and 8 percent of production, we're depleting our reserves four times faster than the rest of the world. American needs a national energy policy and a program on a scale of the Manhattan Project that developed the atomic bomb during World War II to prevent or mitigate the consequences of global peak oil. Doing nothing or doing too little too late will lead to a global economic and geopolitical tsunami with potentially devastating ramifications." Src: Energy Bulletin (T.Boone Pickens, Charley Maxwell, Matt Simmons, the GAO and many other energy experts agree.)

Just like our addiction to debt, we are trading our future for short term gains. We are now importing most of our oil which leaves us vulnerable. If countries that have the oil raised prices significantly, a world-wide recession is a possibility. This is a national security issue. We are spending billions in the Middle East to stablize and secure the world's oil supply. Russia is flexing its muscles in Georgia (Caspian Pipe Line) and counting on the Europeans not to protest too much because they are dependent on oil from Russsia.

Recent Oil Find in the Gulf (Walker Ridge) - This is GREAT news! Charley Maxwell, respected oil analyst says this discovery of 5-15 billion barrels of oil will help significantly with our dependence on foreign sources of oil as it may be comparable to the Prudhoe Bay area in terms of supply. The bad news is that it will take 5-7 years to bring on line and will be very costly due to its location nearly 4 miles under the ocean floor. He cautions that in terms of world oil supply/demand, it will only extend the Peak Oil curve by approximately four months. Charley reminds us that the best barrel is the barrel that we do not use by conserving. He predicted that within 5-10 years, the US will have a national conservation program in place as a matter of national security policy. And then there is the gulf oil spill. YIKES.

Point..Counterpoint: How does $45 a barrel oil and $2 a gallon gas sound? Something the peak oil folks thought was an outright impossibility just 5 years ago. EconMatters look at some of the other ramifications of what they are labeling the Oil Renaissance in the US, and around the world.

The end of offshore oil drilling? Not a chance - Declining conventional reserves are accelerating the offshore dash. The world’s oil fields are depleting by about 7 per cent a year. To maintain production, the equivalent of new Saudi Arabia has to be found every three years.

The Artic is melting and may open up more oil and gas. The presence of abundant stores of oil and gas near the North Pole is hardly a secret. The problem has always been getting to them, and getting their contents out of the ground. As the Arctic ice melts, increasing the supply of the very fossil fuels believed to be causing climate change in the first place, it may create a feedback loop that only hastens the planet's warming.

What about the oil sands? According to Kjell Aleklett, President of ASPO in Congressional Testimony, "The enormous reserves of oil sands in Canada are often mentioned as a lifesaver for the world. The report to DoE in February inspired us to undertake a “Crash Program Scenario Study for the Canadian Oil Sand Industry” .... In the study we found that Canada must very soon decide if its natural gas should be exported to USA or instead used for the oil sands industry. In a short-term crash program the maximum production from oil sands will be 3.6 million barrels per day in 2018. This production cannot offset even the combined decline of just the Canadian and North Sea provinces. A long-term crash program would give 6 million barrels by 2040, but by then new nuclear power plants would be needed to generate steam for the in-situ production."
Oil Supply/Demand
Figure 1: Discovery of conventional oil and extrapolation of future discoveries and consumption of conventional oil and predicted consumption according to IEA. The number for year 2000 is the average number for the years 1995 to 2004, etc. (K. Aleklett, www.peakoil.net)

I keep hearing the comment that our REAL problem is the refineries and the "evironmentalists" that will not allow them to drill. According to Jim Kunstler (my favorite).... "Most of our oil refineries are more than fifty years old. The metal in their pipes and retort vessels is fatigued. Things break. The companies that sell gasoline, like Exxon-Mobil, realize that they are in a "sunset" industry, so they are not interested in investing any fraction of their currently enormous profits in new refineries (especially when they can use that money to buy back their own stock and jack up the share price). Besides, the public regards oil refineries as obnoxious, and if a new one were even proposed somewhere, an army of NIMBYs would arise and march on the local zoning board to oppose it -- so why bother?"

And of course, the oil shale in Colorado will save us. Well, maybe or then there is Abiotic, "new oil", reserve oil and more. Do a search on the Oil Drum for these topics for more complex analysis provided by researchers. What about Shale Gas? Not a game changer after all.

The report synopsis below is from an article at Supply Chain by Charles Taylor called : The end of cheap oil: Are you ready? Business is taking note of these issues.

Peak Oil Synopsis Report

US military warns oil output may dip causing massive shortages by 2015

Learn More

Videos on the subject that help to give a clearer understanding of the issues:

More Peak Oil videos (just watch the first one if time challenged).

What can we do?

Jeffrey J. Brown, an independent petroleum geologist in the Dallas, Texas area recommends “ELP” on an individual basis:

Economize--Try to live on half or less of your current income.

Localize--Try to reduce the distance between work and home to as close to zero as possible, in much smaller more energy efficient housing, and integrate yourself into the community.

Produce--Try to become, or work for, a provider of essential goods and services.

When policy changes become possible, he would strongly recommend an Energy Consumption Tax, to be primarily used to fund Social Security and Medicare, offset by cutting or eliminating the highly regressive Payroll Tax.

Pioneering Welsh town begins the transition to a life without oil - There is, as the ads say, no Plan B. The age of cheap oil is drawing to a close, climate change already threatens, and politicians dither. But the people of Lampeter, a small community in the middle of rural Wales, gathered together earlier this week to mobilise for a new war effort. They decided to plan their "energy descent".

Take the Quiz and find out how much you know about Peak Oil.

The Peak Oil Crisis: Connecting the Dots

For Sound Energy Policy, Don't Look to Congress


From The Top (Geopolitics)

Dick Cheney on Oil -- Fall 1999, London Institute of Petroleum

"That means by 2010 we will need on the order of an additional fifty million barrels a day." "Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies..."

"By 2020, Gulf oil producers are projected to supply between 54 and 67 percent of the world's oil. Thus, the global economy will almost certainly continue to depend on the supply of oil from OPEC members, particularly in the Gulf. This region will remain vital to U.S. interests."

"Oil is unique in that it is so strategic in nature. We are not talking about soapflakes or leisurewear here. Energy is truly fundamental to the world's economy. The Gulf War was a reflection of that reality."

President George W. Bush on:

Oil: "In terms of world supply, I think if you look at all the statistics, demand is outracing supply, and supplies are getting tight." March 16, 2005

Mission Accomplished:  "On the first day of the campaign, Marine units were ordered to secure 600 Iraqi oil wells and prevent environmental disaster." April 3, 2003

On Alternative Energy: “The problem is we get oil from some parts of the world and they simply don’t like us. And so the more dependent we are on that type of energy, the less likely it will be that we are able to compete, and so people have good, high-paying jobs." September 4, 2006

The Great Energy Game ...

Vice President Dick Cheney, a former oilman, visited Kazakhstan in May, as did the European Union's energy commissioner. Before arriving, Cheney gave a speech attacking Russian manipulation of energy resources: "No legitimate interest is served when oil and gas become tools of intimidation or blackmail." Afterward, Russian dailies warned of "the beginning of a second cold war." Cheney left with a pledge from Kazakh President Nursultan Nazarbayev to export Kazakh gas through a trans-Caspian pipeline, when-and if-it is built.

But soon after, Nazarbayev went to Russian President Vladimir Putin's summer residence on the Black Sea and agreed to cooperate in extracting oil from three fields in the Caspian, as well as to share military equipment and expertise. The leaders also signed a long-term contract for Gazprom to transport Kazakh gas. "The U.S. in the mid-'90s had better leverage because it offered sovereignty and western technology," says Verrastro. "Now countries believe Russia and China can hurt them, and the U.S. won't necessarily protect them, so they are hedging their bets." offsite article, read more...

The peak oil crisis: the Saudi op-ed (good article)

Peak Oil Articles ...

Hubbert Peak theory - Wikipedia discussion.

How to Wean a Town Off Fossil Fuels

11/9 - Shell Oil president discusses new fuels, energy security - Shell Oil isn't just about oil anymore. The multinational company has invested $1 billion in wind over the last decade, owns companies working on solar and hydrogen technologies and will soon announce the acquisition of an entity that uses municipal waste to produce biofuel.

"With these, we could go a very long way toward meeting energy security requirements," according to John Hofmeister, president of Shell Oil Company. But conservation has to take hold "in our hearts, minds and behavior of who we are as a people. We have to teach our young people that energy is a precious commodity. We're doing a disservice to young people, because instead of teaching about energy, we're allowing ignorance to reign."