Peak Oil: Say Hello Again to $100 Oil

Discussion in 'Archive: The Senate Floor' started by Darth_Yuthura, Dec 1, 2009.

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  1. Darth_Yuthura Jedi Master

    Member Since:
    Nov 7, 2007
    star 4
    I have to say that it really makes me worry about how the next decade or two will unravel. I don't know if I would like to see the consequences of peak oil unfold sooner or later. If sooner, then it means there's time where we can start switching to alternative energies. If the price of oil spiked twenty years ago, we might have taken steps to ensure we could stay ahead of the curve when supplies actually do fall short of demand.

    Until recently, the discovery of new oil supplies have outpaced the change in demand. Only now are we looking at a world where we'll be pushing capacity everywhere and still not be able to meet demand. And now that we're ever more confident that our technological advances will allow us to keep our ways of life going without drastically changing anything... we're doomed.

    When the next recession happens, how can we possibly expect to get out of it then?
  2. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    Blithe, DY, here's an interesting assessment of the looming oil import crisis that the U.S. is facing, caused in the most immediate sense by declining imports from Mexico and Venezuela.

    The Oil Export Crisis Has Arrived
    Given the very modest increases from unconventional domestic production and Canada, the decline of imports from Mexico and Venezuela means the U.S. will be increasingly forced to depend on suppliers farther afield ? the very same suppliers that China has been buying into in size. The "collision course with China" that I wrote about in July 2005 has nearly reached the point of impact.

    It also means that when oil prices rise again, the pain will be far greater for the U.S. than it is for our top suppliers. Next time, the spear of declining oil exports will puncture a lung.


    Like the blog author, I've also been arguing for half a decade that U.S. oil sourcing challenges coupled with the meteoric rise in China's energy demand will bring China and the U.S. increasingly into conflict.
  3. Blithe Force Ghost

    Member Since:
    Jun 24, 2003
    star 4
    Yes, the brewing trade war will only be exacerbated by the oil crisis. It's a catch-22 scenario: The U.S. primarily wants the Chinese government to allow the RMB to appreciate against the dollar, effectively acting as an expansionary monetary policy for the U.S., and debasing the U.S. dollar, supposedly increasing exports; however, that debasement will prove troublesome as the weak dollar puts upward pressure on the price of crude oil, as well as a large number of other essential commodities, like agricultural goods and raw materials (mainly metals).

    Ultimately, I fear that his awkward situation will lead to not only increasing hostilities between the two nations on a wide variety of issues, but specifically, it will bring about a new wave of protectionism in this country, one not seen since the Smoot-Hawley Tariff of the Great Depression era, or the Tariff of Abominations of the nullification crisis. The rules and guidelines of the WTO will be able to put a limit on how rapidly protectionist measures progress around the world, but can ultimately do very little to prevent it.
  4. Danaan Jedi Master

    Member Since:
    Apr 23, 2008
    star 4
    So I guess the Chevy Volt will really take off...
  5. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    Pretty much. The one serious assessment of peak oil mitigation suggests that our only viable short term approach will be to throw as much coal at the problem as we can mine and build coal-fire electricity generation plants as quickly as the logistics of raw materials and the labor force allow.

    China is throwing everything it can at its energy demand growth, but the real backbone of their energy supply is electricity from coal-fired steam turbines.

    People think (or don't) that climate change is a problem now. Imagine what it will be like when the world population has increased by 40% and oil supplies have dropped by half, so that to maintain a per capita energy supply comparable to what we have today and compensate for the loss of our primary transportation fuel we burn four or five times as much coal as we're burning today. In practice, that's what the conversion to electric cars will mean.
  6. Darth_Yuthura Jedi Master

    Member Since:
    Nov 7, 2007
    star 4
    I just happened to come across a professor instructing one of his classes about the benefits of green technology. People don't do it for tree-huggers, but for financial motives. All green technology is supposed to be good long-term solutions, but businesses are so concerned with profit that they take a lot of short-term solutions and then bail once they've dragged the company down.

    What really got my attention was that this professor said that he expected oil to peak in about oh... 2040 or so. So long after he died, we'd all have to deal with the problem.

    This was an INSTRUCTOR telling students that! 2040! So he essentially told his students to expect another 30 or so years before we really have to worry about switching to alternate fuels. I consider that a best-case scenario. He should have told his students that we really can't say for sure when it will happen; but that between rising demand, diminishing output from major oil fields, and uncertainty that we will find new reserves when they will be needed... I was really urging to correct him, but I wasn't a part of his class.

    Even if his estimates are accurate, that still doesn't mean we shouldn't be preparing for an earlier peak oil event. Because if we don't, it will come crashing down on top of us beyond the likes of which anyone could imagine.
  7. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    I really enjoyed that Xtranormal video from the atheism thread, so I decided to make one of my own summing up the peak oil thread so far. Special thanks to Darth_Ghost, Darth_Y and Fire_Ice_Death for contributing dialogue to the script.

    http://www.xtranormal.com/watch/6274217/
  8. Darth_Yuthura Jedi Master

    Member Since:
    Nov 7, 2007
    star 4
    I didn't know I was being recorded, otherwise I would have said something more... dramatic. The video was amusing.
  9. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    Thanks DY. FID has been very entertaining in his reaction to my peak oil monologing, and the video is mostly a tribute to him.
  10. Fire_Ice_Death Chosen One

    Member Since:
    Feb 15, 2001
    star 7
    My pleasure. You were right, I do regret it. :p
  11. Danaan Jedi Master

    Member Since:
    Apr 23, 2008
    star 4
    So, I take it you feel that you know this stuff better than the instructor does? Not that it can't be so, I don't know the circumstances, but if the instructor has spent years of full-time study, it might be a bold assumption to make...
  12. Darth_Yuthura Jedi Master

    Member Since:
    Nov 7, 2007
    star 4
    That's right, I don't have the same credentials of that instructor. Maybe he made the mistake of saying 'peak oil' when he meant something else.

    The world's oil supplies will never really be 'depleted' per say, but determining peak oil is an event which can't be determined until after it's happened. We can make estimates of the future by measuring past trends, but I don't know of any estimates which range up to thirty years from now. For all we know, supply may already have peaked.
  13. Fire_Ice_Death Chosen One

    Member Since:
    Feb 15, 2001
    star 7
    So, if I read that correctly: Peak oil is something that will most likely happen, but we don't know when it'll happen, but we won't know when it happens until afterward. And we make estimates based on peak oil even though we don't know when it'll happen. But it will, that's a fact. Hmm...yeah, doesn't that strike you as a little bit...stupid? I'm not saying peak oil will never happen or that it won't exist, just that the current thinking on it is...dumb. It's like those kooks on the street preaching the end is near except they don't even know when it'll happen, but by golly they just know it will! I'm just wondering why we treat this like hard science if that is how it's treated.
  14. Darth_Yuthura Jedi Master

    Member Since:
    Nov 7, 2007
    star 4
    You can't really predict when exactly oil wells are going to dry up, when new sources are going to be found, whether known sources which weren't favorable are going to be tapped, changes in demand, and improvements in technology. Predicting peak oil means considering all of these, and a lot of other variables.

    What we can say for certain is that rich oil fields in the past have consistently improved as technology improved, but eventually entered a stage of terminal decline. This has happened with many sources in the past and they all followed the same pattern of steady improvements followed by a steep drop in output before drying up. Injecting water into wells has been a major breakthrough, but it just allowed previously-dry wells to extract oil of which previously was unreachable. But despite technological improvements, the US oil production capacity had peaked in the 1960's and entered terminal decline. The reason why we didn't suffer economically then was because we were able to import what we couldn't extract from domestic sources.

    The concern is that the available oil wells in the Middle East and other major sources are taking on increased demand while the rate of new sources being tapped is starting to stagnate. While there are still supplies being discovered and exploited, the rate of wells drying up is increasing faster than new fields are replacing them.
  15. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    There have been a number of efforts to predict the likely date of peak oil based on the best data available. The problem is that the data is not readily available. Field by field oil production data is in many countries a state secret.

    This is why Matthew Simmons argued for global treaties to provide more transparent data on energy resources as a first step.

    Meanwhile, there have been some laudable attempts to set a date. A new Kuwait study puts the date at 2014.

    Light sweet crude has almost certainly peaked. Crude oil in general may have peaked. The uncertainty is mostly about the "total liquids" which includes LNG and biofuels, unconventional oil.

    The oil megaproject database attempts to come at the problem from the point of view of supply expansion projects in the pipeline and when they come online as mapped against projected demand.
  16. Darth_Yuthura Jedi Master

    Member Since:
    Nov 7, 2007
    star 4
    Thank-you. I also should have addressed the quality and volume of each newly-discovered oil source has diminished ever since the 1980's. Maybe this might change, but I certainly don't see anything short of a miracle happening for that to happen.
  17. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    Good article with a number of interesting points, but the bottom line is that China is now Saudi Arabia's biggest customer for crude oil.

    China?s Growth Shifts the Geopolitics of Oil

    The point of this is I think that people get caught up in "peak oil" and what that might mean, but the real issue is the global picture for exports, who is doing the producing, and for whom. For industrialized nations, this is one of the major geopolitical issues of our time, not that there really has been a time in the last 80 years when that hasn't been the case.

    It doesn't take too much of a strong misreading to view World War 2 as an oil war, and even less of a misreading to view the first and second Persian Gulf wars as primarily oil wars.

    Chances are, the next major war will be an oil war too.

  18. Darth_Yuthura Jedi Master

    Member Since:
    Nov 7, 2007
    star 4
    These kinds of conflicts aren't exactly for oil in itself, but for virtually any valuable resource. The reason why oil tends to be the most sought after is because it constantly needs to be provided.

    Consider valuable metals. They are just as essential to providing for a modern industrial economy, yet they are rarely taken into account when a war is at hand. Japan had depended on French IndoChina and the Phillipinnes for such valuable metals as bauxite and tungsten. Not to mention rubber and varieties of lumber not available in the Japanese mainland. But it was primarily for oil which they needed to sustain themselves.

    The thing with metals, quarry minerals, and lumber is that you only need a given quantity in order to achieve a certain scale production. Even if you don't recycle any of these, you don't have to be as concerned with running out, as they are primarily building materials. But these are a significant cause for concern in addition to oil shortages.
  19. Alpha-Red Force Ghost

    Member Since:
    Apr 25, 2004
    star 5
  20. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    A little more than 10% of U.S. oil imports come from Venezuela, which is now in an oil export and generalized energy crisis. Oil exports have dropped 16% year on year as Venezuela is forced to use its refined petroleum to generate electricity for domestic use.

    Electricity crisis hits Venezuelan oil exports
  21. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7

    Der Spiegel is reporting on a new study by the German Army on peak oil. I'm reading the full German document now. Amazing stuff. The German army is more pessimistic than I am on the potential for oil wars, food shortages and general global economic collapse in the coming decades.
  22. Kimball_Kinnison Force Ghost

    Member Since:
    Oct 28, 2001
    star 6
    No! That's not possible!

    :p

    Kimball Kinnison
  23. Jabbadabbado Manager Emeritus

    Member Since:
    Mar 19, 1999
    star 7
    If anything, the Germans may think they have more time to prepare than they really have.

    In any case, the Germans are a good point of comparison to us in terms of energy. Their major suppliers are Great Britain, Norway (both North Sea oil), and Russia. Unfortunately, North Sea oil production is nearly a decade past peak and in decline, and Great Britain is no longer a reliable oil exporter. Indeed, they've become a net energy importer and are deep in crisis planning for their future energy sourcing. Norway will be able to export oil for many years, but this will decline year on year until it no longer has oil for the export market in 15 years or so.

    Russia is the big energy player on the continent, and Germany relies heavily on Russia for both oil and natural gas.

    Germany's position is comparable to America's reliance on its closest suppliers: Mexico, Canada, South America and the West Coast of Africa. Mexico, at the very least is in steep post peak production decline, and South America and Nigeria may not remain reliable suppliers because of political conflict and increasing domestic consumption.

    America's main energy advantage relative to Germany are our coal reserves and domestic oil production, which though in decline for four decades is still substantial if only a fraction of our current consumption.

    Germany's main energy advantage relative to the U.S. is more than a half century of responsible energy policy: heavy gas taxes to suppress car travel and truck transport, federal support of passenger and freight rail transport as well as heavy investment in municipal public transportation and more recently heavy public investment in alternative energy infrastructure. In essence, Europe has been subsidizing American oil consumption for the last generation, but now in particular its long-term energy policies are paying off in the form of comparative economic advantage.

    Europe has an opportunity, and perhaps a responsibility now, to really step up militarily to promote stability in the oil producing regions that help supply it.
  24. DarthBoba Manager Emeritus

    Member Since:
    Jun 29, 2000
    star 9
    It's not just the German Army looking into alternatives to gas.

    Although from the wording of your post, the US initiative in the area is more couched in "we can't depend on foreign countries for our energy needs" than "we're just plain running out of gas".

    DARPA biofuel program

    It's mostly for the Air Force (far and away the biggest user of various kinds of fuel for obvious reasons) right now, but if it's successful I'd expect the Army and Navy to start following suit.

    The Navy has it's own 'green fleet' concept, as well: Green Fleet


    And the Army's next tactical truck, the Joint Light Tactical Vehicle, is going to be powered by a diesel-electric hybrid engine.

    JLTV
  25. Gonk Jedi Grand Master

    Member Since:
    Jul 8, 1998
    star 6
    ...you just know those Germans are trying to get ahead of the crisis before everyone else in another world domination bid.

    Third time's the charm!
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