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VK2AAB > FUEL 24.02.10 06:39l 95 Lines 6140 Bytes #999 (0) @ WW
BID : 6017_VK2AAB
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Subj: The Peak Oil Crisis: The Crunch
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Sent: 100223/2152Z @:VK2AAB.#SYD.NSW.AUS.OC #:6017 [SYDNEY] FBB7.00i $:6017_VK2
From: VK2AAB@VK2AAB.#SYD.NSW.AUS.OC
To : FUEL@WW
I believe you may find this article of interest.
While it has special reference to the UK, in these matters
we are all in the same boat.
73 Barry VK2AAB
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The Peak Oil Crisis: The Crunch
By Tom Whipple
22 February, 2010
Postcarbon.org
Another study warning governments of the imminence and danger of peak oil was
released last week. This one was an updated version of a similar report
produced by a group of British industrialists 14 months ago.
The intended audience of the report is the new British government that will
take office after an election later this year. The authors hope that a new
government will take a more serious view of the dangers to Britain (and
everywhere else for that matter) of impending high oil prices and shortages
which previous British governments were unwilling to confront or prepare for.
The English-speaking world has always been entranced with noble titles - Duke,
Earl, Count, even Sir. When you combine "Sir" with the words multi-billionaire
and virgin you have a sure winner. Even if the topic is as mundane as peak
oil, much of the world press pays attention. When the spokesman for the recent
report turned out to be none other than billionaire and Virgin Group founder
Sir Richard Branson, many British publications and even a few American,
including Forbes, the Wall Street Journal, and the Christian Science Monitor,
felt impelled to write s_XXThe new report, produced by the UK's Industry Taskforce for Peak Oil and
Energy Security, is of interest because it updates the estimates of when the
oil "crunch" (when demand exceeds production) will occur to account for the
global economic slowdown. In addition, the amount of unbiased attention that
has been given to the report including that of the British government shows
that a wider understanding of the problem is starting to take hold.
For most, the key concern is not whether there will be much higher gasoline
prices ahead, but when. To answer this question, we have to take into account
trends in the three major variables that determine oil prices and also be
aware that there are numerous geopolitical factors affecting the situation,
such as the Iranian nuclear standoff; stability of the Iraqi government after
the US pullout; the drought in Venezuela; and the Nigerian insurgency.
The first two issues encompass the balance of new oil supplies and declining
production from existing oil fields. Here the report suggests a fairly
specific time frame when significant additions of new production to the
world's oil supply is likely to end. The report says time is around the end of
the current year. From 2011 on, the relentless drop in production of just over
4 million b/d from the fields that are currently producing about 85 million
barrels a day will be just barely balanced with production from new projects
through 2014. After that world production will go into decline.
In other words, the world's ability to keep increasing its oil production will
come to an end this year after 150 years of more or less steady growth. While
new production from projects such as those in the deep waters off Brazil and
the Gulf of Mexico will continue, these projects are five to ten years away
from significantly adding to global production and likely will be overbalanced
by the 4 million b/d annual drop in production from existing fields. New
production will, of course, slow the pace of global oil depletion, but will
not be enough to allow for global economic growth.
High oil prices may or may not come in the next year or so because of recent
drops in demand for oil in 2008 and early 2009. Currently world oil production
is running about 85 million b/d; however, there is said be another 6 or so
million b/d of unused productive capacity that could start producing oil in a
few months. Although some are skeptical about the size and quality of this
"reserve capacity" about 4 million barrels a day (b/d) of which is in Saudi
Arabia, in theory it could keep the lid on prices for a while. In fact world
oil production could increase to 91-92 million b/d if demand increases soon.
The third major variable determining the timing of the crunch, and one that is
much harder to predict, will be the growth or decline in global demand for
oil. At the moment, demand from the US and the other OECD nations appears to
be falling slowly and all eyes are on China, India and other developing
countries where demand grew rapidly in 2009 and despite accumulating problems
shows every indication of continuing to increase in 2010 and beyond.
So there you have it. What is likely the best current thinking on the peak oil
situation concludes that world oil production will stop growing at the end of
this year; will just balance annual global depletion of 4 million b/d for the
next four years or so; and then enter into irreversible decline. In the
meantime, there may be enough spare capacity that has built up since 2008 to
keep prices from spiking for awhile. If the growing demand from Asia and
within the oil producing countries themselves continues, however, it is likely
to consume much of the reserve production capacity over the next few years.
Geopolitical disruptions of oil supplies could, of course, trigger off price
spikes at any time.
Although they do not seem likely at the minute, governmental restrictions on
carbon emissions could reduce the demand for oil and delay the task force's
crunch beyond 2015.
An interesting sidelight to the new report's official launch was that Chris
Barton, the government official responsible for Britain's energy security,
showed up and answered questions about the government's position. In what can
be best characterized as backing down the flag pole, Barton acknowledged that
the government really does not know when peak oil will occur but acknowledged
the risks could be serious. For a government that until recently had been in
complete denial that is more evidence that the message and dangers of peak oil
are sinking in.
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