Thursday, October 03, 2002
Iraqi oil could determine our children's futures
LOOKING AHEAD by Wally Dobelis
Is the Iraq crisis really about oil prices? Is stability of oil supply essential to the recovery of the world from the current long-term economic recession? You can hear these problems discussed in detail on CNN and Fox News. This column is mostly about how long will the earth's oil supply last, and the tragic lack of activity in developing alternate resources.
During the past two years, prompted by the 2000-01 energy crisis in California (bound to come back again) and New York's unpreparedness for the same, this amateur student of the energy scene made a scary discovery - that the world's main energy source, the hydrocarbon, oil, is running out. Doing a few arithmetical calculations, straight out of the World Almanac, it looked like all the world has is 37 years' worth of oil reserves, at the current (unadjusted for future growth) consumption rate. Further, no one in government was seriously planning for alternate sources - wind , water, hydrogen - perhaps under the sneaky assumption that atomic energy will save the world. For the latter to work, my calculations showed the need for a 20-fold increase in atomic energy plants worldwide, a worrisome proposition environmentally and from the point of view of political endangerment.That's assuming electricity can be converted for transportation.
To the doubters - the 37-year estimate is valid and probably over-optimistic; the Colorado School of Mines' M. King Hubbert Center for Petroleum Studies head man L.F. Ivanhoe notes that economists routinely use the Reserves/Production ratio of 40 years as the demarcation line, although using a graduated line is more realistic. Ivanhoe sees that countries with the heaviest drilling activities, e. g. the US, will dry out first. He also postulates the increasingly expensive recovery cost as limiting the desirability of this source of energy. Incidentally, Oil and Gas Institute sources laugh at all of this, talking of a supply level that is good for hundreds of years.
The reputable Odell Report, "A Guide to Ol Reserves and Resources," available through the Greenpeace web site, is very candid and not alarmist. It refers to the mid-1950s World Oil and Gas Journal and US Geological Survey estimates of about 1,000 to 1,1000 billion barrels (BB) of oil that underlie the above conventional 40-year figures, and attempts to project subsequent discoveries and deep sea explorations. A new figure of 1,800 BB emerges. There is also a Shell Oil estimate of 2,750 to 3,250 BB of conventional oil.
Adding on to normal sources, Odell projects the potential of some 3,000 BB from non-conventional sources, such as tar sands in Northern Canada and oil shale in the US, Brazil, Mozambique and elsewhere. a very costly resource, environmentally and from the point of excessive energy cost. He discredits a 20-year old Russian theory, by Academician Strykowich and his predecessors, that oil comes from great depths of the Earth, valued at 11,000 BB.
After the discourse of the high-flying optimistic assessments, Odell modestly suggests that all of the above sources, whether or not realistic cost-wise, could sustain mankind past the middle of the 21st century. I should rest my case, but there are more findings to identify.
On November 2, 2001 The Economist Magazine, in London, did a research piece about oil running out, and found even more pessimistic information. It involved climbing the legendary "M. King Hubbert's peak." In 1952 this legendary Shell Oil geologist forecast that the US production of oil will top off in the early 1970s and then slowly decline. Oil production in any country will follow that route. He was totally right, as to the US.
Now the Oil Depletion Analysis Centre (ODAC) in Britain has projected that the world-wide peak is just around the corner, per their Colin Campbell ("The Coming Oil Crisis"). Rival analyses by the US Geological Survey (we're fine for a few decades) and the International Energy Agency (demands will be met until 2020) are not taccepted by the pessimist community which now includes the geologist Kenneth Deffeyes of Princeton ("The View From Hubbert's Peak"), who sees the peak date as 2004!!!
The Economist rightly observes that the pessimists have been too glum, predicting oil prices of $150 and $100 a barrel. Their editors like Dr. Michael Lynch of DRI-WEFA, an economics consultant, who faults Hubbell-type analysts for relying on fixed estimates of how much ultimately recoverable oil is below ground; the figure is a "dynamic one and depends upon improvements in infrastructure, knowledge and technology." The cost of producing oil has fallen from $20 a barrel 20 years ago to $4. Dr. Deffeyes counters that after the billions spent on technology he sees little chance of improvement.
So, what's the answer? I have a recent one, from Dr. Michael R Smith of ODAC and the Energy Network, a middle-of the-roader . The world's oil reserves are finite but it will never run our. The key is that supply cease to be able to meet demand. Already 27 countries are past the peak and 14 are about to experience it. Past the peak, the production drops by 4-5 percent a year. When that happens to the world as a whole, growth in demand will be impossible to meet and economic growth will be impacted. Prices will skyrocket when no new discoveries are made, and deepwaters become the resource. He feels the peak will come between 2015 and 2020, and the pinch will be felt in 2010, when massive investments will be required in the Middle East. There is no solution, and the world is not developing any alternatives to cheap oil.
As seen from this corner, the politics played are execrable. The Anglo-American-Dutch oil moguls are not interested in highlighting the dangers, since this will impact stock prices. US government must defend the Arab oil princes, to protect the world economy, and control Iraq, the country with the 2nd highest oil reserves, whose ruler has the anger, the desire and and the capacity to manipulate the world's oil economics to the disadvantage of the industrial countries. So, the concerns involve not only the narrow interests of the oil industry but also our national interests, and the broad welfare of the world's economy. That is all apart from the dangers that terrorists unleash on the West. Good luck, world. If the broad coalitions interested in the development of alternate sources of energy do not start doing their job, instead of letting the anarchists lead them into fighting IMF and World Bank, and the Greens do not stop discrediting themselves by setting utopean economic targets, the children of the next generations may have to revert to living as savages, among immobile car wrecks and inaccessible skyscrapers, cutting down forests for fuel and fighting over water.
Is the Iraq crisis really about oil prices? Is stability of oil supply essential to the recovery of the world from the current long-term economic recession? You can hear these problems discussed in detail on CNN and Fox News. This column is mostly about how long will the earth's oil supply last, and the tragic lack of activity in developing alternate resources.
During the past two years, prompted by the 2000-01 energy crisis in California (bound to come back again) and New York's unpreparedness for the same, this amateur student of the energy scene made a scary discovery - that the world's main energy source, the hydrocarbon, oil, is running out. Doing a few arithmetical calculations, straight out of the World Almanac, it looked like all the world has is 37 years' worth of oil reserves, at the current (unadjusted for future growth) consumption rate. Further, no one in government was seriously planning for alternate sources - wind , water, hydrogen - perhaps under the sneaky assumption that atomic energy will save the world. For the latter to work, my calculations showed the need for a 20-fold increase in atomic energy plants worldwide, a worrisome proposition environmentally and from the point of view of political endangerment.That's assuming electricity can be converted for transportation.
To the doubters - the 37-year estimate is valid and probably over-optimistic; the Colorado School of Mines' M. King Hubbert Center for Petroleum Studies head man L.F. Ivanhoe notes that economists routinely use the Reserves/Production ratio of 40 years as the demarcation line, although using a graduated line is more realistic. Ivanhoe sees that countries with the heaviest drilling activities, e. g. the US, will dry out first. He also postulates the increasingly expensive recovery cost as limiting the desirability of this source of energy. Incidentally, Oil and Gas Institute sources laugh at all of this, talking of a supply level that is good for hundreds of years.
The reputable Odell Report, "A Guide to Ol Reserves and Resources," available through the Greenpeace web site, is very candid and not alarmist. It refers to the mid-1950s World Oil and Gas Journal and US Geological Survey estimates of about 1,000 to 1,1000 billion barrels (BB) of oil that underlie the above conventional 40-year figures, and attempts to project subsequent discoveries and deep sea explorations. A new figure of 1,800 BB emerges. There is also a Shell Oil estimate of 2,750 to 3,250 BB of conventional oil.
Adding on to normal sources, Odell projects the potential of some 3,000 BB from non-conventional sources, such as tar sands in Northern Canada and oil shale in the US, Brazil, Mozambique and elsewhere. a very costly resource, environmentally and from the point of excessive energy cost. He discredits a 20-year old Russian theory, by Academician Strykowich and his predecessors, that oil comes from great depths of the Earth, valued at 11,000 BB.
After the discourse of the high-flying optimistic assessments, Odell modestly suggests that all of the above sources, whether or not realistic cost-wise, could sustain mankind past the middle of the 21st century. I should rest my case, but there are more findings to identify.
On November 2, 2001 The Economist Magazine, in London, did a research piece about oil running out, and found even more pessimistic information. It involved climbing the legendary "M. King Hubbert's peak." In 1952 this legendary Shell Oil geologist forecast that the US production of oil will top off in the early 1970s and then slowly decline. Oil production in any country will follow that route. He was totally right, as to the US.
Now the Oil Depletion Analysis Centre (ODAC) in Britain has projected that the world-wide peak is just around the corner, per their Colin Campbell ("The Coming Oil Crisis"). Rival analyses by the US Geological Survey (we're fine for a few decades) and the International Energy Agency (demands will be met until 2020) are not taccepted by the pessimist community which now includes the geologist Kenneth Deffeyes of Princeton ("The View From Hubbert's Peak"), who sees the peak date as 2004!!!
The Economist rightly observes that the pessimists have been too glum, predicting oil prices of $150 and $100 a barrel. Their editors like Dr. Michael Lynch of DRI-WEFA, an economics consultant, who faults Hubbell-type analysts for relying on fixed estimates of how much ultimately recoverable oil is below ground; the figure is a "dynamic one and depends upon improvements in infrastructure, knowledge and technology." The cost of producing oil has fallen from $20 a barrel 20 years ago to $4. Dr. Deffeyes counters that after the billions spent on technology he sees little chance of improvement.
So, what's the answer? I have a recent one, from Dr. Michael R Smith of ODAC and the Energy Network, a middle-of the-roader . The world's oil reserves are finite but it will never run our. The key is that supply cease to be able to meet demand. Already 27 countries are past the peak and 14 are about to experience it. Past the peak, the production drops by 4-5 percent a year. When that happens to the world as a whole, growth in demand will be impossible to meet and economic growth will be impacted. Prices will skyrocket when no new discoveries are made, and deepwaters become the resource. He feels the peak will come between 2015 and 2020, and the pinch will be felt in 2010, when massive investments will be required in the Middle East. There is no solution, and the world is not developing any alternatives to cheap oil.
As seen from this corner, the politics played are execrable. The Anglo-American-Dutch oil moguls are not interested in highlighting the dangers, since this will impact stock prices. US government must defend the Arab oil princes, to protect the world economy, and control Iraq, the country with the 2nd highest oil reserves, whose ruler has the anger, the desire and and the capacity to manipulate the world's oil economics to the disadvantage of the industrial countries. So, the concerns involve not only the narrow interests of the oil industry but also our national interests, and the broad welfare of the world's economy. That is all apart from the dangers that terrorists unleash on the West. Good luck, world. If the broad coalitions interested in the development of alternate sources of energy do not start doing their job, instead of letting the anarchists lead them into fighting IMF and World Bank, and the Greens do not stop discrediting themselves by setting utopean economic targets, the children of the next generations may have to revert to living as savages, among immobile car wrecks and inaccessible skyscrapers, cutting down forests for fuel and fighting over water.
# posted by Wally Dobelis @ 3:35 PM 
