Next Oil Crisis Window Just Two and a Half Years Away 20 comments
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Gregor.us Monthly for March, titled Saga North America and published Tuesday this week, takes an in-depth look at future North American Oil supply. It’s not a pretty picture. In fact, I’d advise politicians to start paying attention. Not only for the broader issues involved, but because I’m now forecasting a mammoth spike in the price of oil during the year leading up to the 2012 US election. I expect oil to hit a number above 200.00. And that should make for fireworks on the campaign trail.
200.00 dollar oil will not just affect domestic US politics, however. Because of Canada’s potential to increase supply, and, because of Mexico’s ongoing and spectacular supply crash, Washington will find itself trapped between climate policy with regard to the Alberta Oil Sands, and the loss of Mexican oil exports. Yes, that would be the complete loss of all oil exports from Mexico to the United States, by 2012.
An excerpt from Saga North America:
In Washington of course we find the most enduring, multi-decade lack of realism as it pertains to energy and energy supply. The current administration is no different… Given that the stimulus bill only devoted about 1.2% to Rail, with nearly 5.0% or more to Roads and Bridges, one is hard pressed to find any policy from the current administration that would help Americans reduce their driving miles… The bottom line is that Washington’s neglect of its own, depleted national energy supply in a country that is structurally married to liquid fuel transport is a big part of the reason the coming price spike will be so damaging. The extreme difficulty the administration presently faces in the financial crisis is a kind of preview of what’s to come when oil makes its next ascent well above the previous price high of 150.00. It may appear as ironic, but the North American country that has to import the bulk of its oil supply, the US, is also the least realistic about global oil depletion, and its ability to continue bidding for free market oil.
I doubt very much that people are aware that combined Canadian, US, and Mexican oil production reached its highest levels this decade when oil was trading at 30.00, and then fell to its lowest levels of production when oil was trading up towards 150.00. It is either amusing, or distressing, how many observers would prefer explanations of a mythological or nefarious kind with regard to oil’s rise this decade, when every step of the way it can all be more easily explained by geology.
My crisis window is merely 2.5 years away. I expect 200.00 dollar oil will be incoming, starting some time in Q3 of 2011.
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I agree that oil sands producers should continuously upgrade their processes to lessen emissions, but I am totally against shutting the tar sands down completely. The industry has created many well paying jobs in Canada. There is nearly zero unemployment in Alberta and the oil sands have reduced the unemployment rate across Canada, especially in depressed areas like Atlantic Canada.
Environmentalists need to decide whether they want oil from the Canadian tar sands (a strong and loyal ally of the USA) or oil from despots in Saudi Arabia and Iran (who fund terrorists against the USA with their oil proceeds).
The U.S. and Americans in general want cheap oil. It's just human (business) nature (ask Adam Smith) to buy things as cheaply as possible. National security is more important but out of sight when an individual company or individual is buying energy. The cheaper the better. Large businesses have always been willing to do business with "evil" people and governments no matter what is happening on the world stage. Those of us old enough remember that during WWII Japanese ships and shells fired at our guys were made with U.S. steel. It happened before and it will happen again.......this time with energy.
No one knows what's going to happen tomorrow to oil supplies and prices (what if someone attacks Iran's nukes, for instance?), let alone two and a half years from now. What did this person say two and a half years ago about the $150 per barrel bubble last summer?
1) Disruption of supply
2) Global competition for supply
3) Obama printed yet another $1 trillion and no-one wants the "green-back"
I would have thought one Jimmy Carter in my lifetime would have been sufficient.
Hopefully, there will be no attack. In any case, the price of oil in dollars will rise inexorably as they are printing dollars much faster than they are replacing the oil we burn.
I am a firm believer in Thomas Freidman's idea that the USA should establish a "floor" for gasoline prices via taxes. At times like this when fuel is cheap, a gasoline tax would kick in to keep the price at maybe $4/gal. It could be dialed in over the course of a few years in order to give people a chance to prepare buy buying more efficient vehicles.
The only way to decrease consumption and inspire people to think about long-term solutions is through the pain generated by high prices.
"The United States produces about 200 million gallons of waste grease each year, compared with a combined total of 180 billion gallons of gasoline and petroleum diesel used annually."
---not enough of it around to be used on a massive scale.
"Volkswagen's CEO Says Electric Cars Not Viable for 35 Years "
"Although the technology for electric vehicles is progressing rapidly, no country has the infrastructure to support them, according to Stefan Jacoby, CEO of Volkswagen America. Jacoby's comments essentially echo what his boss, VW Group Chairman Dr. Martin Winterkorn, recently outlined when he said electric vehicles are "very far away" from mass production.
"What would happen if 50 million new electric customers would plug their electric cars in an electric socket?" he said to Automotive News, "There is no country on earth that is really properly prepared for electric cars." He added it could take 35 years for electric vehicles to gain a significant global market share."
"Hybrids gather dust at AutoNation dealerships"
March 6th, 2009
www.physorg.com/news15...
--Hybrids aren't cheap. The suggested retail price of a Prius starts at $22,000. It is said to get at least 45 miles to the gallon. By comparison, a Toyota Yaris sells for about $14,000. It has a conventional engine and gets 36 miles to the gallon on the highway."
How about nat-gas vehicles?
"...Writing for the Earth Policy Institute, Jonathan G. Dorn argues that modifying American autos to run on compressed natural gas (CNG) would be a waste of time and effort.
Dorn goes beyond the obvious conceptual criticism — that natural gas is a finite resource, like oil, so making that switch means at best simply buying more time — and gets down to details of the proposal. He says that, even without using gas for transportation, the U.S. already uses about a quarter of the world’s gas supply while owning only 3% of proved reserves. “At current rates of consumption,” he says, “U.S. proved reserves would only meet national demand for another nine years.”
Dorn envisions that a switch to natural gas-powered cars would make the U.S. more and more dependent on imports, and notes that the two nations at the top of the list of those with large reserves, Russia and Iran, aren’t exactly countries we want to rely on.
As for further gas exploration here, he cites environmental worries surrounding extracting natural gas from “unconventional sources” like tight sandstone and gas shales."
So there is no short term solution to avoid 2012.
Supply is now a problem, as Hubbert's Peak is past being theory and already into history.
Demand is also a problem, as is highlighted primarily by the Chinese economic expansion.
Finally, the US $ is also likely to undergo a substantial devaluation, due to the enormous "printing of money" currently under way, thus raising the cost of buying Oil, even further.
So, with Supply down, Demand up & the US$ value down, you would think the price of Oil would go through the roof.
If that happens, it's because the politicians succeed in returning Global Production and therefore Oil ussage, to what is was.
If that Happens, the economy will tank again, even more than now.
If it doesn't happen, it will be because the economy has already tanked and it stays down, where it has been put, production continues to fall away and the usage of Oil continues to drop.
At some point, the usage of Oil & the economy will find a new & lower level, where the Economy & Oil can be sustained, hopefully, until a replacement for Oil and its many uses can be found?
If not, then all bets are off!
Russia and the Middle East hold about 75% of the world's proven
natural gas reserves. Have you heard of Gazprom? So you would just be supplanting one dependancy on a finite resource for another.
"The United States has scarcely 3 percent of the world’s proved
natural gas reserves. Over the last decade, the decline in U.S.
conventional natural gas production has been offset by turning to more unconventional sources, such as coalbed methane, tight sandstones, and gas shales. Between 1998 and 2007, this unconventional production increased from 28 to 47 percent of total output. Growing reliance on gas shales in particular is raising concerns about water consumption and contamination. Extracting gas from this source involves hydraulic fracturing, a process that injects water, sand, and chemicals into the shale layer at extremely high pressures. The process can use millions of gallons of water per extraction well and is known to leak chemicals into surrounding aquifers. The Commissioner of the Department of Environmental Protection for New York City recently wrote to the New York State Department of Environmental Conservation voicing concerns
that drilling for natural gas in the Marcellus Shale formation will
contaminate New York City’s watershed, jeopardizing drinking water.
Opposition to unconventional production is likely to rise as gas
companies attempt to expand operations into increasingly sensitive
areas." Even without the increased demand that would result from an NG vehicle fleet, the U.S. already consumes nearly a quarter of the world’s natural gas. In 2007, the United States used about 23.1 Tcf of natural gas, making it one of the worldwide leaders in natural gas consumption. According to the Energy Information Administration's (EIA's) International Energy Outlook, the United States typically accounts for 20 to 25 percent of total worldwide consumption of natural gas. According to the Energy Information Administration (EIA), net imports of natural gas accounts for about 15 percent of natural gas use in the United States annualy. At current rates of consumption, U.S. proved reserves would only meet national demand for another nine years."
Current proven reserves of natural gas for the United States is
211.085 Tcf see here: www.eia.doe.gov/emeu/i...
U.S. natural gas production has remained relatively constant over the last two decades and is unlikely to increase over the long run,
despite growing consumption. Consequently, any rise in demand is
likely to be met by increasing imports. Since the late 1980s, U.S. net imports of natural gas—primarily from Canada—have tripled. The U.S. Department of Energy projects that by 2016 the majority of U.S. natural gas imports will come from outside North America."
"With Russia and Iran topping the list of countries with the largest
proved reserves of natural gas, a growing reliance on imports would increase the strategic vulnerability of the United States. These two nations—which along with 14 others collectively control nearly three fourths of the world’s natural gas reserves—are members of a Gas Exporting Countries Forum that was established in 2001. While there is no direct evidence that these countries are seeking to form a natural gas cartel, at the Forum’s 2005 annual meeting they discussed how to maintain a satisfactorily high natural gas price."
1. renewable energy sources, far from a Fool's Paradies, will help us whittle away at the edges of the energy crisis, and are significant enough to warrant pursuing, although you're right: they can't supplant nukes and hydrocarbons, at least not in our lifetimes; and
2. Few people acknowledge the importance of conservation. I bet we could maintain this country's economy on 25% less oil usage, without much of a hiccup in our output or even our convenience, if we put our collective minds to it . . .
On Apr 03 09:48 PM northstar10000 wrote:
> Forget the dreams of natural gas, wind, solar, biomass or any other
> fools paradise. Oil is it for transportation, nukes are it for electricity
> period. As soon as we face the reality of this we can prepare for
> what that means. At this point their are simply too many fools who
> want to believe in green dreams and refuse to face the facts. Nothing
> can replace nukes and oil period get it ++++++