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Re: SC53

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November 06, 2007 07:20AM

This is an article that I recently wrote and submited to, " The People's Press ", a publication distributed in Redding, Ca, in Northern California. My brother knows the people who manage this publication and he got me in touch with them as they were interested in an energy article regarding the issue of Peak Oil.

Peak Oil and the looming World Energy Crisis

Peak Oil is a phrase which has been used as a common reference regarding the concept that overall world production of oil will reach a peak, as in the top of a general Bell Curve, after which an inevitable decline in supply will follow. Peak Oil represents the top of the world oil production Bell Curve, the maximum world production, beyond which production only declines. Peak Oil does not mean the world has run out of oil, but roughly represents the point at which the world has used half of its cumulative oil reserves. After the point of Peak Oil, the production curve becomes static for a relatively short period, then due to many factors, the supply curves decends precipitiously ( some indications for a very sharp decent occuring as soon as 2012 ). Two of these factors for production declines are: excessive population at Peak, as compared to the population at the beginning of the use of oil ( aprox 1850 ) , will mean the second half of stated oil reserves will be used up in a much shorter time frame, perhaps in as little as two or three decades. Also, the easiest to access, and best quality oil has been naturally sought first and after Peak Oil the the supplies will be increasingly poorer in quality, and much harder and therefore much more expensive to develop. World demand for oil continues to increase dramatically, and Peak Oil represents imminent energy declines close at hand. These two opposing trends mean an energy crisis is on the very near term horizen, and the big problems will begin once Peak Oil is reached, because world demand for oil will start outpacing supply. Indications are that this situation has already begun around 2006. Currently, the world is using around 85 million barrels of oil per day, and demand is in the range of 88 million barrels. Many experts cite this as an ominous sign that we are at the Peak of oil production now.
There are many things contributing to the quickly growing reality, that the Oil to run the US economy will be getting increasingly expensive, and increasingly diminished in availability, to such an extent that the the US looks very likely to be headed in the near future for extensive economic and social repercussions due to the dramatic declines of cheap and abundant oil. The US a half century ago used to supply all its own oil, and it was the world's biggest exporter of oil - now the US imports close to 70% of the oil it uses from other countries, with many of those oil exporters being in problematic geopolitical regions. US Big Oil a half century ago had access to, and the ability to capatilize on, 85% of the oil reserves found throughout the world - now US Big Oil has access to less that 15% of world oil reserves, and this figure is continueing to drop. We first began using oil around the middle of the 1800's when world population was close to a million and a half people. The benifits of the very unique source of energy that oil is, allowed world population to sky rocket to the point where it will be 7 billion in just a few years. This has occured in just 150 years and oil was the driving force behind this massive change. US production of its own oil reserves actually peaked in 1971, and has declined ever since. An oil geoligist named M King Hubert predicted this would occur in 1970 and he was off by one year. At the time of his prediction, M King Hubert was ridiculed extensively by most energy industry experts of the time, who said his prediction was nonsense. Through the same method of calculation he also predicted that the world would peak in oil production right about now, and all appearances are that he may have been right again. The finds of new oil reserves worldwide peaked around 1965 and has been falling ever since. The reason the world to this point has had increasing overall production of oil, is that new technologies have allowed oil producers the ability to extract more oil out of mostly already existing oil fields at a faster rate. This means that the oil fields are essentially being used up faster, which will cause us to reach Peak Oil sooner. Of the 50 biggest oil fields in the world, around 40 are already past peak, and are going into depletion. These fields provide the Lion's share of world oil supply. There is also the reality that given the stated reseves for any particular field, the fact is, only a certain percentage of those stated reserves will ever be actually removed from the given field. This is because as the field is exhausted, and goes into depletion, the smaller and smaller percentage of the stated reserve still in the ground becomes more and more problematic to remove from the well, and eventually the situation is that the energy invested, as compared to the energy ( barrels of oil ) returned, turns negative, such that the remaining oil is to expensive to economically remove. Also another huge developing problem is the growing astronomical cost of trying to develop oil fields. The cost of oil industry experts and personel, along with the cost of oil removal infrastructure has made oil projects that where once viable, no longer economically possible.
Countries that have remaining reserves, are more and more nationalizing ( taking back control of ) thier oil production. The exporting countries are seeing dramatic increases in thier own internal demand, which is causing them to reduce the oil supplies they are willing to export. The huge population centers of China and India have negotiated huge contracts of oil and gas with various exporting countries. This competition for remaining supplies of these hydrocarbon fuels, represents oil that the US won't be seeing coming its way, to run its economy. Other countries are also laying plans to further disrupt, in a host of ways, the energy supply that the US could have access too, for example through decreasing exports to the US for the specific purpose of adversely hampering the US economy, and the routing of oil trade to countries other than the US for this same purpose. Back when OPEC ( cooperating group of big oil exporters, most specifically in the middle east ) was formed, the framework of thier system allowed the various member countries an export " quota " or amount, based on thier stated oil reserves for each individual country. The year after OPEC was formed, practically all the member countries suddenly showed almost twice the stated reserves as compared to what they had listed the year before. The indications are, that the various member countries falsely inflated thier stated reserves, to increase thier individual export quota's. The world now has estimated oil reserves of around 1200 billion barrels. The various world energy agencies who moniter world oil supplies base thier projections on this figure. If the OPEC exporters have falsified thier reserve figures, this could mean that roughly 300 billion barrels of oil would have to be removed from the world oil reserve figure, and this would drastically alter the situation of how dramatically world energy will decline after the world production Peak has been reached. OPEC does not allow any outside inspections of its stated reserve figures. Saudi Arabia has the number one stated reserves of oil. The US administrations began a close cooperation with the Saudi Royals as US oil production began going into depletion, just as its economy was contiueing to grow at a fast rate. The agreement basically consisted of a situation where the US administration would provide protection for the Saudi Royal House of Saud, keeping them protected and thier power intact, and in return, the US would have privilaged access to Saudi Arabia's abundant oil. Through the 60's, 70's, 80's and early 90's Saudi Arabia had so much excess oil production, that it was able to put extra oil into the world system to help keep oil prices in a moderate range to help the US economy. Thier ability to do this was also part of thier cooperative agreement with US officials. It is becoming more apparent that Saudi Arabia no longer has this " Spare Capacity " with which to moderate world oil prices. The biggest oil field in the world is Gwar, which is in Saudi Arabia, and it is showing many indications that it has peaked, and is heading into depletion. The Gwar field contributes so much oil production to world supplies that the reality is, if this huge oil field has truly peaked, then world oil production has peaked too.
The reality is also, that the US won't be saved by any reserves that might be found in its domain, like the gulf of Mexico, costal regions and its artic regions, because even the most promising projections of supplies that may lie in these areas, are utterly insignificant when you compare it to what the US ( and the world ) uses in hydrocarbon fuel, every day. The US economic infrastructure, which is huge in size, was built in large measure by 1-5 dollar oil per barrel. In considering what alternative energies could be used to compensate for oil supplies that will not be available to the US because of all these events, in each case, huge problems are encountered. Alternatives are in no position to match the shear scale of the amount of energy supplied by oil, and all its varied uses. Also huge infrastructure that would be required for alternative energy schemes will come up against the astronomical cost that would be necesary to create the vast infrastructures needed for thier nationwide usage. The world currently runs on a energy system set up to use hydrocarbon energy, mostly in its liqud form. World production of all it uses to maintain its societies, depends on huge imputs of hydrocarbon energy to make it happen. Newly envisioned alternative energy schemes will need massive imputs of some source of energy to create the infrastructure of the new source. If oil supplies become prohibitively expensive and in short supply, then what energy will build the new infrastructure? This is a key problem with alternative energy schemes. Even at this stage, various huge proposed energy projects around the world are being canceled, due to insurmountable cost realities. The fact is, not only oil is showing signs that it is reaching Peak. Some other critically important resources that are also showing signs of nearing peak production relatively soon are natural gas, uranium, coal, copper, silicon for solar panel production etc. Biofuels will never even come close to compensating for the volume of energy provided by oil and natural gas, and biofuels require massive amounts of water, huge tracts of farmland, and they compete with our own food supply, and the feed for the animals we eat. So we are facing the imminent decline of the energy thats runs our " endless growth " based economies, with nothing substantial on the horizen to replace this energy as it declines.
US Big Oil is not the big player it once was a half century ago, regarding control and development of world energy. Dramatic changes have occured since then. Many in the US public believe high oil prices is just a Big Oil scam, and even though it is true that US Big Oil has made obscene profits lately, and, they clearly have great influence on US politicians, they still are clearly now not in a position to forestall the coming run-up in oil prices, and the growing depletion of the world reserves that will cause this. Worldwide Peak Oil and the decline of world energy supplies is beyond thier ability to manage now. US Big Oil is scrambling to try and redirect thier future operations into the emerging alternative energy markets. The many energy related commercials that are now very common on mainstream TV clearly show how Big Oil companies are trying to morph themselves away from thier ( soon to decline ) oil production and distribution base that has carried them to enormous profits in recent decades.
Drastic climate changes that are now occuring, and projected to increase in intensity, will also be putting thier own massive pressures on the world's energy supplies. Disruptions in climate will require increasing inputs of energy as societies attempt to rebuild and recover from dire climate events, like bigger droughts, storms of all types, rising sea levels affecting costal infrastructure, loss of water supplies which will adversly affect the ability to grow food and the ability for economies to grow in general due to lack of water. Climate Changes will more and more tear down and destroy the supporting structures for world societies that were in large part initialy built by abundant and cheap energy. Much of the poorer nations of the world will find that rebuilding after disasters will not be possible because the energy to do so will be far too expensive for thier weakened economies and as a result, the citizens of these poor countries will see a declining standard of living for those affected.
Wars and social disruptions because of the growing tense energy situation are happening even now, as exemplified by the militarstic moves of the current US adminstration. Mathew Simmons, energy advisor to president Bush, advised him of the looming energy crisis in early 2001. Shortly afterwards, vice president Cheney held his ( secretive ) energy meeting with all the big players of US Big Oil in attendance, and they laid thier plans of what to do about the coming energy crisis. The wars in Afganistan, then Iraq quickly followed, countries incidently that have provide this administration great locations for US military bases that are seen as key to US ambitions of maintaining the flow of energy from the oil rich middle east region. Iraq also has number two stated oil reserves, and the Production Sharing Agreements as pursued by the US, which would as outlined in the content of the agreement, provide US Big Oil unprecedented access to Iraqi oil supplies, from which they would profit from for the next 30 years in percentages that are far above that seen in any other world oil contracts. A very convenient state of affairs for the US, and US Big Oil to say the least. Afganistan represents territory where oil and gas piplines are in the works to bring precious energy resources from energy rich countries north of Afganistan, down to the gulf of Oman for transport to western countries. Regarding Afganistan, the Taliban, once were working with the US administration on the pipline projects, then decided they did not wish to support them anymore. Well the Taliban have for the time being been removed from that equation, and the US since the invasion of Afganistan, have now built key military bases along the pipline routes to provide protection for the oil pipline projects. Iran, number four in the world regarding stated oil reserves, is seen by this adminstration as representing a threat to US sought dominance of energy flow in this region because of thier influence and central position in the middle east landscape of huge oil and gas reserves, and therefore may soon be targeted for airstrikes, bombings which would have the " true " purpose of disrupting thier economy, infrastructure, and consequently thier ability to challenge US ambitions of trying to control the flow energy resources in the middle east, the region of the world which soon will contain the vast majority of the remaining oil resources. In these endeavors of war, the huge US military complex uses more energy that the US economy, and uses more energy than most other countries combined. World conflicts over energy are now, and will increasingly use vast quantities of oil, and other forms of quickly depleteting hydrcarbon energy resources, and will be precipitating increasingly difficult times for the US, regarding the energy it desires, and is seeking to garner by use of force as seen in its current military engagements. Our military involvement in the middle east is absolutely about oil. The current US adminstration knows the perils facing the US economy because of coming oil depletion, and they have chosen a desperate path of war in the middle east under false pretenses like threats of weapons of mass destruction, democracy building, protecting friends like Isreal, when the real reason we are there is to try and access the regions oil richs, and with our newly established military bases of operation, try to protect oil flow to the west, by any means this adminstration deems necesary. These wars have no reasonable moral basis. They are militaristic moves of a country facing a looming oil crisis that will sooner ( if the US gets pushed out of the middle east by other rising power bases ) , or later ( if the US can control for some period of time extra supplies of middle eastern oil ) see the US facing a gravely faltering economic situation.
These are some of the factors that will be driving the US economy, and the quality of lives of its people, into an increasingly difficult and dire positon. Oil prices in the last 5 years has risen dramatically ( quadrupling in price ), with further price increases inevitable. All of the above issues when combined indicate big problems are coming for the world regarding its ability to produce the energy it needs to run its various economies, to run its food prodution systems, to provide for mass transportation, to constantly maintain and rebuild infrastructure that constantly degrades etc. The information also suggest that the US specifically could very well face increasing energy constraint pressures much more quickly, due to geopolitical realities. There is also a clear trend developing, one that is showing that a growing array of energy institutions, oil industry leaders, and other various world politicians and leaders are more and more starting to recognize the delima before us, and are admiting the problem is much more close at hand than they previously realized. Oil is an incredibly high intensity energy source which has provided the world's societies with the driving force that made the mass human proliferation of the last 150 years possible. Oil has been the indespensible force behind worldwide mass transportation and the astronomical increases in worldwide agricultural production, which represents two key factors which have driven the huge increase in population that we have seen. The worldwide capitalistic economic paradigm of endless growth and the super abundance this system has created ( as a result of cheap abundant hydrocarbon energy ) in the last century, is an amazing mirage that we all got used to, and thought would go on and on. The reality is, it was a unique and transitory event, and inevitable declines of hydrocarbon energy ( oil, natural gas, and coal ), will mean increasingly leaner qualities of the lives for humanity, and will precipitate increasing worldwide social disruptions and crisis situations. For those following these trends as seen in energy issues reporting, researched from a multitude of internet sources from all over the world, the information is suggesting more and more that world is at, or very near reaching the maximum oil production ( Peak Oil ) it will ever produce. This is an exceedinly serious situation that will be creating dramatic changes in the quality of life for all of us, for our nation, and for the rest of the citizens of this world..............

Today oil trading highs reached a new record above 97 dollars. Ali Belchi ( spelling? ) the CNN finacial guy said today that there was nothing regarding oil supply and demand that is contributing to the recent record highs of oil prices. I think the information above suggest that Ali is very wrong in his assumption about the world supply and demand situation.
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