Peak Oil

[Cairan]

So now approaching 150$ a barrel for the summer of 2008, just as I self-predicted to my peers 4 years ago, and given the attention to oil and gas in the media and around here, I just wanted to know if your opinion on this resource has evolved in the past weeks.

I, for one, am torned between hopeful optimism that humanity will be able to spring back from it's knees in the corner and relaunch itself on a new prosperous trend, going on to colonise the Next Frontiers (oceans and space), and my cartesian analysis of the wall in which our leaders seem headed straight into.

For me, it manifests itself in my interest and investment in my private license, and conversion of our country home in a self-sufficient* outpost...

* Energy and water wise, food will need a lot more work...

 

[Linguofreak]

The US and Canada have oil shale/tar sand reserves that could still last us quite a while. It wouldn't be as cheap as it was in the 90's, but 60 or 80 dollar-a-barrel oil is still better than 140+.

Of course, whether we've reached peak oil or not, we will eventually, so we shouldn't sweep this all under the rug just because the tar sands give us more time.

Panic and complacency both tend to get us nowhere.

 

[willy88]

Well, we're boned.

 

[tl8]

The US and Canada have oil shale/tar sand reserves that could still last us quite a while. It wouldn't be as cheap as it was in the 90's, but 60 or 80 dollar-a-barrel oil is still better than 140+.

Of course, whether we've reached peak oil or not, we will eventually, so we shouldn't sweep this all under the rug just because the tar sands give us more time.

Panic and complacency both tend to get us nowhere.

FYI, the tar sands have as much oil as Saudi Arabia, however the environmental cost is huge

 

[Missioncmdr]

I believe we need to stop using oil or at least greatly reduce our use of it. Peak oil is going to hit us no matter what, or, as some have said, already has happened. I think Jon Stewart said it best when he said looking for more oil to solve the oil crisis is like saying, "I have a cocaine problem. I'm out of cocaine." We need to switch to some other source of energy. We should use the oil we still have to help build new alternative energy facilities.

 

[Cairan]

My analysis of things to come

FYI, the tar sands have as much oil as Saudi Arabia, however the environmental cost is huge

That's an understatement... Stripmining sand, floating it in water and then treating it with natural gas or heat from nuclear power plants is not what I'd call a solution. The return on energy is barely 3:2, meaning you donk down 2 barrel equivalent of energy to get back 3... That's abysmal, might as well go fill up tankers on Titan!

Personnally, I'm not against nuclear power, I think it has the potential to be a true stop-gap measure between now and whenever we get to a full suite of alternatives, including solar, wind, tidal and fusion, in that order of availability.

If any good comes out of $150+ oil is that SUVs and pickups are getting sacked... Train freight is making a huge comeback nowadays in my part of the country and I envision that the airline industry will get a HUGE helping hand in developping an alternative to Jet-A... I watched an airline rep on CNBC today talking about the need to replace oil-based fuel with anything, as long as it won't require all new airplanes and engines.

Considering that a plane can easily stay in service in upwards of 25 years, as long as pilots don't ram them down to the ground too hard and too often, and the huge investment in time and energy in producing one single plane, I guess this sector is the one which will drive the requirements the most. With limited tank volume and fuel mass, we might even see a reduction in range as acceptable both to us and airlines, with a return of refuelling stop-overs on long haul and transatlantic flights.

Ships are pretty much lucky as they can deal with a wider range of stuff to drive marine diesel engines. Both for airplanes and ships I guess algae-based biodiesel will be the way to go.

Trains are fortunate enough to already be operating with electrical engines and not being really limited in volume (just add tank cars behind the engine), so I guess in North America we'll see a switch to hydrogen, with possible partial electrification of the railways.

Cars will pretty much have to reinvent themselves in a short-range role, as I don't think energy is going to be so easily and cheaply available in the near future. Trucks will pretty much be limited only to short hauls between customers and train stations, airports or cargo container terminals.


That's of course if and only if we get to a soft landing as far as transition goes. If agricultural output plummets as a result of price or availability of fuel or chemicals, we're screwed.

For now, I'm not that worried... My tipping points are either when
a) gas gets rationed
b) travel gets restricted
c) "staple" foods from abroad get difficult to obtain
d) pro sport events get cancelled


Any of these will be a sign we're getting in deep...
Those wondering about the relevance of pro sports in my list, just think about the implications causing this: high travel costs and/or low available allocations to leisure by the population

 

[Linguofreak]

FYI, the tar sands have as much oil as Saudi Arabia, however the environmental cost is huge

Had a good long post written and the forum ate it.

To synopsize: I believe the Canadian tar sands alone are supposed to be equivalent to not just the Saudi but the *world* reserves of conventional petroleum.

As for environmental costs: There's enough BS floating around on both sides that I'm never sure what to think. It's the same kind of panic vs. complacency deal. If you panic, you drive the world economy to ruin, if you get too complacent, you end up with an environmental policy like that of Soviet Russia, where the environment damages YOU! (As silly as I find that line of jokes, it seemed remarkably apporpriate here. Sorry.)

The short term solution is to use what resources we do have (tar sands, etc.) to keep the economy afloat.

The mid-to-long term solution is algae-grown biogasoline and plug-in hybrid cars, if those can be made anything near economical.

The long-to-very-long term solution is fuel cells, if the "hydrogen is hard to store at any reasonable density" problem can be overcome, otherwise, the solution lies in as yet unforseen technologies.

 

[tl8]

Had a good long post written and the forum ate it.

To synopsize: I believe the Canadian tar sands alone are supposed to be equivalent to not just the Saudi but the *world* reserves of conventional petroleum.

As for environmental costs: There's enough BS floating around on both sides that I'm never sure what to think. It's the same kind of panic vs. complacency deal. If you panic, you drive the world economy to ruin, if you get too complacent, you end up with an environmental policy like that of Soviet Russia, where the environment damages YOU! (As silly as I find that line of jokes, it seemed remarkably apporpriate here. Sorry.)

The short term solution is to use what resources we do have (tar sands, etc.) to keep the economy afloat.

The mid-to-long term solution is algae-grown biogasoline and plug-in hybrid cars, if those can be made anything near economical.

The long-to-very-long term solution is fuel cells, if the "hydrogen is hard to store at any reasonable density" problem can be overcome, otherwise, the solution lies in as yet unforseen technologies.

I'm not supporting the sands in any way, there is just a load of oil in them. A solar/ H2 economy is the way to go for the future.

On a side note, H2 is the ultimate hydrocarbon.

 

[jgrillo2002]

ok well heres the problem. the dems dont want us to drill in ALL of the major oceans including Alaska which they made drilling those place illegal!?. why. because they are afraid that it will damage the environment. ENVIRONMENT!? please we have our own priorities than worry about that, like keeping us alive. some guy is going to make this legal. hopefully this will really cheapen the prices

 

[Cairan]

Beware of politically charged lobbying factoids!

ok well heres the problem. the dems dont want us to drill in ALL of the major oceans including Alaska which they made drilling those place illegal!?. why. because they are afraid that it will damage the environment. ENVIRONMENT!? please we have our own priorities than worry about that, like keeping us alive. some guy is going to make this legal. hopefully this will really cheapen the prices

Well, I am Canadian so I don't get to vote come November, but here's my 2 cents on this topic.

First, a quick attack of numbers to read thorougly: http://www.eia.doe.gov/basics/quickoil.html

The so-called "dependance on foreign oil" targeted at OPEC is actually very off-target as the largest single supplier of oil to the US is your friendly neighbor up north. That's 2.3 million barrels a day from us. Add some maple syrup on top of that.

The US consumes 25% of global oil production for a mere 5% of the population. That is 20 million barrels a day out of 80-odd million barrels. It also produces about 5 million barrels a day.

The proven reserves, in 2006, were about 20,000 million barrels, of which only 5000 million barrels were NOT in production (not tapped), indeed mostly located off-shore of California and the Gulf of Mexico.

So cut it and slice it anyway you want, we end up with the US, at current production levels, using up all it's proven reserves in a little more than 11 years, not the 60 trumped about in the drilling lobyist ads.

If you go through the historical data of oil discoveries in the US, you will note that most fields were discoverd in the 40s, 50s and 60s, and 70s for Alaska. These discoveries peaked as the easiest and most logical places to look for oil were checked first. Nowadays, it's a party when you find what the US uses up in a single day! This is a clear pattern that increasingly intense prospecting yields ever diminishing returns.

Also, there is a shortage of offshore oil drilling equipment worldwide, as everyone is poking holes at an increasing rate to try to cope with the trend that discoveries are getting smaller and smaller. Even if we knew exactly where to drill off the California coast right now to hit the jackpot, it would take years for production to ramp up. That's what happened here in Canada with the Hibernia fields. Took a couple of years to set up, drill down and suck up the stuff for delivery.

The only true effective measure that can be taken in the United States right now (and in Canada too, as we are as big per capita oil users as our neighbors down south) is to reduce our consumption. Period. If we could get it down to half what it is right now, closer to what is used in Europe or Japan per capita, then the US could extend it's reserves to 20 years, and half the imports would come from the most alike trade partner, just north...

It's easy to offer solutions which wouldn't yield any results during an entire presidential term...

 

[Urwumpe]

Also, about the environment and not needed - when you can eat tar, drink gasoline and breathe LPG, you can start saying that you don't need it and have more important problems to worry about.

Just remember that all things you breathe, drink and eat require a clean environment to be produced or be contaminated and not even be useful for feeding animals (which you want to eat).

For example, the oil sand production uses not salt water, which makes 97% of the water on this planet. It uses the rarer freshwater of which only 1/3rd is available in liquid form. In some states, water is rare and has to be rationed, and in others, it gets wasted like that. Really clever.

Environment protection is just plain logical survival. We are what we eat.

 

[jedidia]

ENVIRONMENT!? please we have our own priorities than worry about that, like keeping us alive.

I accept such a statement at any time comming from someone who lives in the third world. I strongly oppose it comming from anyone from western Europe or northern America. You don't even know what struggle for survival is, you just struggle to keep your standard of living, which is way above average.

Maybe this sounds a bit stupid comming from a swiss, where standard of living is even higher than in the U.S., but i might add to this that me and my wife are working as volunteers and currently don't even have enough of a payday to rent our own appartement and will be of to bosnia again in a year (hopefully...)

In some states, water is rare and has to be rationed, and in others, it gets wasted like that. Really clever.

Well, we use it to flush our toilets, which makes even less sense... :/

 

[Urwumpe]

Well, we use it to flush our toilets, which makes even less sense... :/

If there would be an available alternative, it would make less sense... but I can say personally, as somebody who also has to clean the toilet, a dry toilet will be no option now... ... maybe better materials and technologies make this possible. Or using a classic Japanese toilet (Not these washlet monsters, you can now buy in German DIY stores.) - but I still have a neurotic disorder from seeing a French public toilet using the same principle...

 

[GregBurch]

Depending on how far you stand away from the graph, I think it's reasonable to say we've reached "peak oil" now. There will be fluctuations of 10-30% in price, but I don't think oil prices will go back down to where they were 2-5 years ago.

The main factor that has caused the projections from c.20 years ago to be wrong is the growth in demand from China and India. The unprecedented speed of economic progress in these two countries just wasn't foreseen.

I first went to China in 1979. People were still wearing Mao suits and the economic and social melt-down of the Cultural Revolution and, before that, the Great Leap Forward, were still recent memories. Not even the most ambitious and hopeful Chinese reformer could have foreseen how quickly adopting principles of economic liberty would result in the most unprecedented economic progress in human history. When I pass through Shanghai or Beijing today, I often simply can't believe my eyes, the transformation is so complete and has been so swift. The impact on energy demand is just as unprecedented as every other aspect of China's "awakening."

Meanwhile, our so-called "leaders" stick their heads in the sand. The ONLY hope for restoring energy to the place it had in our economies in anything like a reasonable time is nuclear power. It's safe and clean, but we've been taken down a road of anti-technology paranoia for so long in the West that it will take a generation to shake off the idiocy we've been hobbled with.

 

[Urwumpe]

Apropos 1979. Does somebody remember the oil price in 1979?

At that time, we had been panicking. I have seen pictures of German Autobahns at this time - used by bikers because using cars had been prohibited on Sundays.

 

[GregBurch]

Apropos 1979. Does somebody remember the oil price in 1979?

Yes, BUT ... the two "oil shocks" of the 1970s were entirely a function of political action by OPEC. The situation we face today is completely different.

BTW, imagine how painful the 1970s oil shocks were to me -- a classic American hot-rodder in his teens, whose dreams were suffused with the thumping rhythm of big, beautiful V-8s ... it was TERRIBLE.

 

[Urwumpe]

Yes, BUT ... the two "oil shocks" of the 1970s were entirely a function of political action by OPEC. The situation we face today is completely different.

Not really much, when you look at the fact, that we rely on OPEC for reducing the price by increasing production. OPEC still has a large impact on the price we pay. But they have no economic reason for increasing the production - the bottlenecks are in our own countries, as we can't turn enough oil into gasoline. And as long as the customers pay the higher prices for the same amount of oil, the companies will make more profits and we are ourself responsible for it.

Also, we still have political reasons - at least the question should be valid, why we are still depending so strong on oil after 1979 - especially when looking at the fact, that the oil prices now hit us much harder as they did in 1979, but with us doing less against it as in 1979...

I have now started fixing my bike...it will not really have a big effect on the economy if I start using a bike (my personal gasoline consumption is now 48 litres in 2 months), as well as it will not replace my car completely... but I have hopes of seeing my feet again when I use my bike for traveling the 6 km to the next railway station instead of walking 200m to the bus stop. :lol:

 

[GregBurch]

Not really much, when you look at the fact, that we rely on OPEC for reducing the price by increasing production. OPEC still has a large impact on the price we pay. But they have no economic reason for increasing the production - as long as we buy.

It's different in this regard: in the 1970s, OPEC significantly cut production from levels at which they had been and were able to produce. They're not doing that now. Yes, they could increase production now -- but not by that much when considered as a fraction of current and reasonably expected world demand.

Also, we still have political reasons - at least the question should be valid, why we are still depending so strong on oil after 1979 - especially when looking at the fact, that the oil prices now hit us much harder as they did in 1979, but with us doing less against it as in 1979...

Yes -- it is a political issue. One of the most basic elements of the arguments made by opponents of capitalism is the notion of "market failure." They argue that only the power of the state and the political process can deal with situations that they call "market failure." So, I find it deeply ironic that in this situation -- a "market failure" if ANYTHING can be called such -- state power and the political process is paralyzed with ignorance, fear and short-sightedness. Thus my reference to our "so-called leaders:" Our democratically-elected wielders of the wonderful power of the state aren't doing doodley-squat to save us from the boogey man of "market failure."

 

[Urwumpe]

Is it really a market failure (A market could only fail, when the prices are no longer defined by supply and demand) or are we now just getting too much market for our protectionist minds?

Just remember: The Chinese, which are according to our oil companies, buying too much gasoline and thus increase the prices, should also have to pay the same prices. They are suffering as much from the high prices as we do, maybe even more, when looking that their economy is still developing.

I think we are just not willed to do a very painful act: Crash the oil economy. The oil price is so much pushed high only by the speculative expectation of much higher demand than supply, that even a small drop in demand would make the whole system collapse - and with it large companies, small companies and political stability in the most instable regions of the world...

 

[GregBurch]

Is it really a market failure (A market could only fail, when the prices are no longer defined by supply and demand) or are we now just getting too much market for our protectionist minds?

Well, that's my point: the term "market failure" is just used by anti-capitalists to apply to anything that results from people being economically free that they, personally, don't like. There is no market failure here -- the price is being set by classic increase in demand in the face of a steady supply that is now expected to decrease at some as yet-undetermined point in the future.

Just remember: The Chinese, which are according to our oil companies, buying too much gasoline and thus increase the prices, should also have to pay the same prices. They are suffering as much from the high prices as we do, maybe even more, when looking that their economy is still developing.

I don't know of anybody (or at least anybody who actually has a clue) who is saying that "the Chinese are buying too much gasoline." The beauty of the market is that they are buying just as much as the want at the price they have to pay -- no more and no less. Now, there is a RELATIVELY small factor of whether or not there is a state subsidy for gasoline in China. I think there has been and still is, but it is being swiftly phased out. By the time the really big trends in hydrocarbon energy start to bear on Chinese economic development in a major way, that subsidy will be gone.

I think we are just not willed to do a very painful act: Crash the oil economy. The oil price is so much pushed high only by the speculative expectation of much higher demand than supply, that even a small drop in demand would make the whole system collapse - and with it large companies, small companies and political stability in the most instable regions of the world...

I'm not sure I know what you mean. It's true that hydrocarbon markets are more sophisticated now than they were in the 1970s but, as far as I can see, the "speculative" action of futures traders is in fact accurately signaling the real price of oil and gas production. In fact, those "speculators" are doing us a big favor by delivering the bad news from the future while we still have a chance to do something about it. That is supposed to be the function of a futures contract, and it seems to me that it's working perfectly.