Decius wrote:
] ] At current rates of production, there were 40.6 years of
] ] consumption covered by proven reserves in 2002, the latest
] ] data available, according to the Wall Street Journal.
] ]
] ] The newspaper, citing the BP Statistical Review, said
] ] that in 1989, there were 44.7 years left of consumption.
] ]
] ] "[A shortage] will probably happen in the next 10 to 20
] ] years," Professor David Goodstein, a physicist at the
] ] California Institute of Technology, told CNNfn.
]
] hrm...

I know you and Bucy probably think I'm drinking the Kool Aid on this, but I really do think we are facing a pretty damn big problem. The good news out of this is that:

In 1989, they said we had 44.7 years left.
In 2002, they said we had 40.6 years left.

Obviously, there is a 13 year span there, with only a 4 year difference. Obviously predictions are wrong. I agree with that, because you can never know all the variables like technological advances, new finds, etc.

Still, the figure did not stay flat or increase. The next thing that will happen is the drilling of the ANWR. I don't see that as a problem really, because current estimates are that there are between 3.5 billion and 20 billion barrels sitting under there. Environmentally speaking, pipelines that are in place now at Prudhoe field has actually allowed an INCREASE of caribou population, because the pipeline is a safe haven. I sit on the fence on that issue and lean towards exploiting ANWR.

But the constant that I've seen out of all the historical data is that the time is running out. That obviously makes logical sense, there is going to reach a point where we recover everything that makes sense to recover, without delving into negative energy returns. That will occur on the downslope, it's just inevitable.

The thing we have to consider in the short term is how much of a dependency we have on fossil fuel for our energy. The electric grid is 70% fossil fuel based, that's just a fact, and the growth rate for new plants here is tied in at a 90% growth rate right now to fossil fuels. And we all know that transportation is basically 95% or greater tied into fossil fuels. Ultimately the ERORI ratios are what matter. And the fact is that none of the technologies as they exist today will be able to make up the difference in what we will lose in fossil fuels, today.

Will technological advances be able to sustain the current demands? I wish they could, we'll see just how well human ingenuity fares in the face of this. If they can, will they be able to sustain AND meet the current global growth rate of consumption? That's asking for quite a lot of technological advance. And it's asking for it in a world where a critical resource is suspected to be reaching its peak production, with a regional war brewing in the area where most of the reserves of the resource are left.

I understand that we have know way of knowing EXACTLY how many barrels of oil are left in the ground. It would be foolish to say we know that. But some very large corporations, you might know their names, have expended a fair amount of capital over the last few decades making it their business to estimate. Even looking through the prism of smart business and all the caveats on biased information, you can still see a picture of what's out there.

Our oil problems today, I still contend, are largely manufactured by a collusion of oil companies and governments to keep the prices artifically high. Everybody wins, because the global oil market would not exist if Saudi Arabia, who can produce oil for $5 a barrel (some estimates say $2, I'm being conservative) sold it for even $10 a barrel. No one else would be able to compete.

We all know this. I think this is actually a good thing, it's the market controlling the burn rate quite effectively, and we pay the premium. Americans think they have cheap gas compared to the rest of the world, but if you factor in the security subsidy we invisibly pay in federal taxes, it's probably closer to global market price than we realize. There's really no way to quantify that of course, given our bracket income tax rates.

Even with all of this in the current system, we are playing a losing game. Most of the plentiful fields have been discovered. ANWR is really the only inshort prize field left in North America that I know of. California's offshore coast will surely be exploited in the future, more so than now, as well as the Gulf, as the environmental laws concede to the laws of fossil fuel demand, and they will try to keep the collusion going in the world markets to keep the oil prices higher and higher. This will hide the fact that oil is becoming harder to produce economically (EROEI wise and money-wise, you'll find they start to go hand in hand.) Guess who is going to win? The Middle East will win this war of attrition ultimately because they have the big prize fields. They are making money hand over fist in the process.

All is not well in the kingdom of Saud though. And we all know what is happening in Iraq. This whole game could come screeching to a halt. Small initial conditions leading to big end results, classic chaos theory. I'm beginning to understand the reasoning behind taking the fight to the Middle East. We need stability there. The oil majors know this. Iraq has to get back online and production increased to keep this thing going.

A lot of Iraq's fields were in jeopardy of being ruined by unstable pumping practices as they scrambled to restore production after Gulf War I. These fields, which were already in place and ready to pump, were too critical a resource to be allowed to lapse. ANWR, for example, is nice, but it will take 5 to 10 years to bring it online and producing. Compare that to the fields of Iraq, a spigot waiting to be repaired and turned back on. In that respect, the up-front cost of war makes sense to keep the bigger investment (the whole game) going. It's buying time.

Not to stray to far into politics of course, but sadly, you can't discuss this in a vacuum devoid of politics. It's not all about the market, and we all know this. I am sad that you feel all of the some 80 points in my original link were "all political" and that you "stand by" that. I really don't see eye to eye with you on that. I do not see that they are all political statements. If you feel that anything anybody says about oil other than relating to market influences is "political" I just can't relate.

Yes, some of the stuff is the same thing some people of a party would say, like saying "conserve energy!" But is that really a political statement? To me, it sounds like common sense. To me, reducing consumption makes sense as a sound policy. To others though, that believe the market should allow you to consume more if you are willing to pay for it, that's fine too. But it fails to account for the big picture. It's a myopic view. It's a faith that technology will just magically bring in an equally efficient oil substitute at the same rate that the oil becomes infeasible to use and sustain the growth rate we have been accustomed to with oil.

I can see the writing on the wall, and it is just not going to pan out like that. Call it a "crackpot doomsday theory" if you will like Bucy does, but like I said, I've been looking at and studying this for two years, both the pro and con side, the far fetched and the reasonable views, trying to piece my own view together, and I still can't make myself feel good about it.

As for your questions, about what we are doing. Well, the obvious thing to me is reducing consumption. Why is that such a "political agenda?" It is sound energy policy as far as I am concerned. When water rationing happens in California, who really complains that they can't water their pretty green grass and feels like they really have something to complain about? It's not necessary. Yes, that could be construed as a political statement, but which is more important at that point, a nice lawn or potable drinking water? I use that example to draw a correlation to lavish oil lifestyles we enjoy. Is that a realistic expectation given the nature of that resource?

I heard Bill O'reilly say something I agreed with the other day. It was one of those hell freezing over moments. He said he thinks people should get rid of their SUVs. That's just one example. I know SUVs are vilified to no end. I use them to illustrate how vain it is to hope that technology will solve our problems. In 2004, tell me, why did fuel efficieny for the US fleet of vehicles peak in 1987 at 22.1 mpg? Why is the 2004 average 20.8 mpg? Tell me again how technology is going to solve our problems when mpg has actually gone DOWN in the last 17 years.

I would continue ranting but it's time for bed. I enjoy this discussion, it's one thing I'm passionate about. One thing I haven't really delved into is a non US-centric point of view. Believe me, China is growing. They accounted for 37% of new oil demand in the last 4 years. The third world wants the industrial economy too. Where do they factor in? They will bootstrap their economies with the generous oil energy subsidy. Tell these countries to start with nuclear or hydrogen or whatever the miracle technology is that is supposed to replace oil, and they will laugh.

RE: As prices rise, concerns grow about world oil supplies