As oil continued to pour into the Gulf of Mexico on a recent Saturday, Jennifer Wilkerson spent three hours on the phone talking about life after petroleum.
For Mrs. Wilkerson, 33, a moderate Democrat from Oakton, Va., who designs computer interfaces, the spill reinforced what she had been obsessing over for more than a year ”” that oil use was outstripping the world’s supply. She worried about what would come after: maybe food shortages, a collapse of the economy, a breakdown of civil order. Her call was part of a telephone course about how to live through it all.
In bleak times, there is a boom in doom.
Americans have long been fascinated by disaster scenarios, from the population explosion to the cold war to global warming. These days the doomers, as Mrs. Wilkerson jokingly calls herself and likeminded others, have a new focus: peak oil. They argue that oil supplies peaked as early as 2008 and will decline rapidly, taking the economy with them.
[i]These days the doomers, … have a new focus: peak oil. They argue that oil supplies peaked as early as 2008 and will decline rapidly, taking the economy with them.[/i]
Because the Alberta oil patch paid for my MSc in geology I find that a rather silly comment. Oil supplies peaked in the late 1850s. We didn’t know they were there, but they began to decline as soon as extraction began. Since that time there has been an ongoing dance between known “reserves” and the pace of discovery for new reserves.
Hubbard’s “Peak Oil” — these are not scare quotes, but the introduction of a specific term with a known technical meaning — refers quite specifically to “conventional” reserves. If you will, the easy oil. Shale oil, deep-water oil, oil sands, and all those things do not count when referring to Peak Oil.
We’re not going to run out of oil anytime soon, even though nearly every official “reserves” figure from the Middle East is total BS. Back in 1986 — remember, oil prices were in the cellar back then — OPEC decided to allot its pumping quotas in proportion to each country’s stated reserves. Within about a month Arabia, Iraq, Yemen, and all the others better than doubled their official numbers, which are still in use today.
Non-conventional reserves such as the Alberta-Saskatchewan oil sands are decidedly “in the money” with crude over about 50 bucks. There are huge new deep-water fields off Brazil, and each additional well “proves” ever greater volume.
There is much more that could be said, but this is already long and there is a more important point to be made: one of basic economics. Nations can choose amongst a) reduce government deficits, b) increase personal savings, and c) run a trade deficit. They cannot do all three, and it’s a matter of basic economic arithmetic. You quite simply cannot reduce government deficits and increase personal savings — both very desirable and necessary — while running a trade deficit.
America’s non-oil trade deficit has come down nicely over the last five years, but the most important chunk of what remains relates to oil imports. Those need to come down, and come down rapidly, and that’s without considering the geopolitical implications of our current import patterns.
Windmills and solar are not going to get the job done. Not even close. We need to be building coal refineries to produce jet fuel, diesel, and so on. This is proven technology. We need to be converting trains and trucks to di-methyl ether (a close diesel equivalent easily derived from coal and requiring only very minor modifications to the engines). We need to be moving full ahead on nuclear electricity, and we need to make much wider use of our abundant supplies of natural gas.
These efforts would build our economy and prepare for the future. Unfortunately, before we can start on any of it we shall have to sweep the hard-core ‘environmentalists’ out of the way. That group of profoundly anti-progress people have made it impossible to build a new refinery or a new nuclear plant in this country since my now-greying son was in diapers.
1. Well said, sir.
The oil industry will not buy into your ideas, Bart, and for a good reason: P R O F I T S. As long as they can make a buck off of the consumer who fills up at his local gas station, they’ll stifle any attempt to replace our dependence on oil with viable alternatives.
It’s called unbridled corporate greed.
Typical oil industry profits per gallon of gasoline, from start to finish, are about 7 to 10 cents per gallon, when things are going well. Typical taxes are 33 cents per gallon. Who takes all the risk? Now who is it you think is “greedy”?
Filling station owners typically [i]gross[/i] 12 to 14 cents a gallon, much of that devoured by credit card fees, especially when gas prices are high. They make their money on snacks, not fuel.
Crude oil prices are discovered by worldwide markets, and are also quality dependent. Eight of the ten largest oil companies in the world are [i]government[/i] owned. If there’s greed in ‘Big Oil’ it is government greed, not “corporate” as you suggest.
There is also the important matter of competitive substitution. If globally priced oil gets too expensive for too long, natural gas — which is abundant, cheap, and trades only in [i]regional[/i] markets (transport issue) — will be substituted.
It is environmentalists and their Pharisaic permitting processes that are standing in the way of real progress.
5. May I copy that and share?
Affirmative.