Key words :
Storm on the Horizon
13 Feb, 2008 07:30 pm
Trouble is brewing. Trouble I have been warning about since I started writing this blog. Trouble that was a big factor in me starting to write this blog...
"An oil crisis is coming in the next 10 years," John Hess said at the annual Cambridge Energy Research Associates CERAWeek conference in Houston. "It is not only a matter of demand. It is not only a matter of supply. It is both."
That's what I have been mostly concerned about. Despite the fact that I think supply can still grow a little from here, I see no easing in demand. And if we do actually peak in the near future - which I think we will - we are not close to being prepared for that.
The number of vehicles in China and India is projected to grow exponentially by 2050. So demand for fuels derived from oil shows no slack despite relatively flat U.S. demand amid the nation's economic slowdown, he said.
Not gonna happen. The energy won't be there for them to grow exponentially. And as they try to grow, they will drive the price of oil up exponentially.
The world is consuming about 86 million barrels a day, and analysts expect demand to grow by about 1.5 million barrels a day each year, the International Energy Agency said.
"Recessions may interrupt this growth, but only temporarily," Hess said.
Where's the growth going to come from? Not only do we have to find and develop new fields to match that projection, but we also have to find and develop new fields to counter depletion. I have forecast before that I think we get to 90 million barrels a day. But we may not. And I definitely don't think we will go much beyond that.
Hess also noted that increased investment is crucial because the Organization of the Petroleum Exporting Countries doesn't have the cushion it once had to protect against supply disruptions. OPEC pumps 40 percent of the world's oil.
In 1985, he said, OPEC had 10 million barrels of spare capacity. Today the cartel has an estimated spare capacity of 2.5 million barrels.
And that's the underpinning on the Peak Lite concept, described in some detail here.
The Dallas Morning News also reported on this story:
Oil Execs: Crisis Coming, but Not Because of Scarcity
Mr. Hess' colleagues sounded more reassuring about their ability to meet demand, but they also said people will have to pay more money and exert more effort to get the energy they need in the future.
"The supply challenge is really not one of scarcity as some believe," said Exxon Mobil Corp. senior vice president Mark Albers.
It's not scarcity. That's a strawman. There is lots of oil left. But getting it out of the ground fast enough to meet growing demand is the problem, and a big reason that oil prices have run up so much in the past 5 years.
Exxon predicts global demand for crude oil will rise around 40 percent by 2030.
I predict that global supply in 2030 is lower than it is today.
Mr. Hess said individuals and governments must address rising demand by conserving energy. The leaders of some of the world's largest energy companies were responding to the theory that people have used most of the oil that's easy to recover, and shortages will soon follow.
"We cannot afford to abandon fossil fuels and still deliver the volume of energy needed to sustain the world's economic and social level, to alleviate global poverty," he said. "Alternatives are simply not ready to shoulder the load. Nor will they be in a position to do so any time soon."
Yet we are being promised that alternatives will be ready to shoulder that load. We just have to mandate them - or so the theory goes.
The men didn't predict future oil prices. Mr. Hess spoke of "healthy" oil prices ? that is, price levels to support enough production to meet demand.
Many of the presenters at the conference said oil prices could drop as low as $60 a barrel, but they aren't likely to go as low as the levels of the late 1990s, when crude traded around $10.
$60? Maybe. But that's quite a change from what many of those guys were suggesting just a couple of years ago: A return to $30 oil.
Am I concerned about this situation? Yes, I am. I think we have economic hardship already upon us as a result of high oil prices, and I can't see an end to it. I have been asking myself a lot lately if the end of growth in oil production means an end to economic growth. It is really hard for me to see how we can have robust growth if oil production is dropping each year and prices are escalating. And economic hardship is only part of the problem. That's what the Western world will see. Some of the world will start to do without while we outbid them for oil.
Originally published on: R-Squared Energy Blog
Key words :
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Somebody at CalTech (I've forgotten his name) is predicting peak coal in about 2025 CE, shortly after peak oil.
Things are going to change. Buy your bicycle now...
I have posted a couple of articles on my blog http:ergobalance.blogspot.com lately, including one about "Peak Coal".