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Zaroc Stone
Guest
Preparing for Life After Oil
By Michael T. Klare, The Nation. Posted November 8, 2007.
Welcome to the Age of Insuffiency: As oil prices hit new highs and
supplies sink, our way of life will drastically change.
This past May, in an unheralded and almost unnoticed move, the Energy
Department signaled a fundamental, near epochal shift in US and indeed
world history: we are nearing the end of the Petroleum Age and have
entered the Age of Insufficiency. The department stopped talking about
"oil" in its projections of future petroleum availability and began
speaking of "liquids." The global output of "liquids," the department
indicated, would rise from 84 million barrels of oil equivalent (mboe)
per day in 2005 to a projected 117.7 mboe in 2030 -- barely enough to
satisfy anticipated world demand of 117.6 mboe. Aside from suggesting
the degree to which oil companies have ceased being mere suppliers of
petroleum and are now purveyors of a wide variety of liquid products
-- including synthetic fuels derived from natural gas, corn, coal and
other substances -- this change hints at something more fundamental:
we have entered a new era of intensified energy competition and
growing reliance on the use of force to protect overseas sources of
petroleum.
To appreciate the nature of the change, it is useful to probe a bit
deeper into the Energy Department's curious terminology. "Liquids,"
the department explains in its International Energy Outlook for 2007,
encompasses "conventional" petroleum as well as "unconventional"
liquids -- notably tar sands (bitumen), oil shale, biofuels,
coal-to-liquids and gas-to-liquids. Once a relatively insignificant
component of the energy business, these fuels have come to assume much
greater importance as the output of conventional petroleum has
faltered. Indeed, the Energy Department projects that unconventional
liquids production will jump from a mere 2.4 mboe per day in 2005 to
10.5 in 2030, a fourfold increase. But the real story is not the
impressive growth in unconventional fuels but the stagnation in
conventional oil output. Looked at from this perspective, it is hard
to escape the conclusion that the switch from "oil" to "liquids" in
the department's terminology is a not so subtle attempt to disguise
the fact that worldwide oil production is at or near its peak capacity
and that we can soon expect a downturn in the global availability of
conventional petroleum.
Petroleum is, of course, a finite substance, and geologists have long
warned of its ultimate disappearance. The extraction of oil, like that
of other nonrenewable resources, will follow a parabolic curve over
time. Production rises quickly at first and then gradually slows until
approximately half the original supply has been exhausted; at that
point, a peak in sustainable output is attained and production begins
an irreversible decline until it becomes too expensive to lift what
little remains. Most oil geologists believe we have already reached
the midway point in the depletion of the world's original petroleum
inheritance and so are nearing a peak in global output; the only real
debate is over how close we have come to that point, with some experts
claiming we are at the peak now and others saying it is still a few
years or maybe a decade away.
Until very recently, Energy Department analysts were firmly in the
camp of those wild-eyed optimists who claimed that peak oil was so far
in the future that we didn't really need to give it much thought.
Putting aside the science of the matter, the promulgation of such a
rose-colored view obviated any need to advocate improvements in
automobile fuel efficiency or to accelerate progress on the
development of alternative fuels. Given White House priorities, it is
hardly surprising that this view prevailed in Washington.
In just the past six months, however, the signs of an imminent peak in
conventional oil production have become impossible even for
conservative industry analysts to ignore. These have come from the
take-no-prisoners world of oil pricing and deal-making, on the one
hand, and the analysis of international energy experts, on the other.
Most dramatic, perhaps, has been the spectacular rise in oil prices.
The price of light, sweet crude crossed the longstanding psychological
barrier of $80 per barrel on the New York Mercantile Exchange for the
first time in September, and has since risen to as high as $90. Many
reasons have been cited for the rise in crude prices, including unrest
in Nigeria's oil-producing Delta region, pipeline sabotage in Mexico,
increased hurricane activity in the Gulf of Mexico and fears of
Turkish attacks on Kurdish guerrilla sanctuaries in Iraq. But the
underlying reality is that most oil-producing countries are pumping at
maximum capacity and finding it increasingly difficult to boost
production in the face of rising international demand.
Even a decision by the Organization of the Petroleum Exporting
Countries (OPEC) to boost production by 500,000 barrels per day failed
to halt the upward momentum in prices. Concerned that an excessive
rise in oil costs would trigger a worldwide recession and lower demand
for their products, the OPEC countries agreed to increase their
combined output at a meeting in Vienna on September 11. "We think that
the market is a little bit high," explained Kuwait's acting oil
minister, Mohammad al-Olaim. But the move did little to slow the rise
in prices. Clearly, OPEC would have to undertake a much larger
production increase to alter the market environment, and it is not at
all clear that its members possess the capacity to do that -- now or
in the future.
Much more to this. See: http://www.alternet.org/audits/66625/
By Michael T. Klare, The Nation. Posted November 8, 2007.
Welcome to the Age of Insuffiency: As oil prices hit new highs and
supplies sink, our way of life will drastically change.
This past May, in an unheralded and almost unnoticed move, the Energy
Department signaled a fundamental, near epochal shift in US and indeed
world history: we are nearing the end of the Petroleum Age and have
entered the Age of Insufficiency. The department stopped talking about
"oil" in its projections of future petroleum availability and began
speaking of "liquids." The global output of "liquids," the department
indicated, would rise from 84 million barrels of oil equivalent (mboe)
per day in 2005 to a projected 117.7 mboe in 2030 -- barely enough to
satisfy anticipated world demand of 117.6 mboe. Aside from suggesting
the degree to which oil companies have ceased being mere suppliers of
petroleum and are now purveyors of a wide variety of liquid products
-- including synthetic fuels derived from natural gas, corn, coal and
other substances -- this change hints at something more fundamental:
we have entered a new era of intensified energy competition and
growing reliance on the use of force to protect overseas sources of
petroleum.
To appreciate the nature of the change, it is useful to probe a bit
deeper into the Energy Department's curious terminology. "Liquids,"
the department explains in its International Energy Outlook for 2007,
encompasses "conventional" petroleum as well as "unconventional"
liquids -- notably tar sands (bitumen), oil shale, biofuels,
coal-to-liquids and gas-to-liquids. Once a relatively insignificant
component of the energy business, these fuels have come to assume much
greater importance as the output of conventional petroleum has
faltered. Indeed, the Energy Department projects that unconventional
liquids production will jump from a mere 2.4 mboe per day in 2005 to
10.5 in 2030, a fourfold increase. But the real story is not the
impressive growth in unconventional fuels but the stagnation in
conventional oil output. Looked at from this perspective, it is hard
to escape the conclusion that the switch from "oil" to "liquids" in
the department's terminology is a not so subtle attempt to disguise
the fact that worldwide oil production is at or near its peak capacity
and that we can soon expect a downturn in the global availability of
conventional petroleum.
Petroleum is, of course, a finite substance, and geologists have long
warned of its ultimate disappearance. The extraction of oil, like that
of other nonrenewable resources, will follow a parabolic curve over
time. Production rises quickly at first and then gradually slows until
approximately half the original supply has been exhausted; at that
point, a peak in sustainable output is attained and production begins
an irreversible decline until it becomes too expensive to lift what
little remains. Most oil geologists believe we have already reached
the midway point in the depletion of the world's original petroleum
inheritance and so are nearing a peak in global output; the only real
debate is over how close we have come to that point, with some experts
claiming we are at the peak now and others saying it is still a few
years or maybe a decade away.
Until very recently, Energy Department analysts were firmly in the
camp of those wild-eyed optimists who claimed that peak oil was so far
in the future that we didn't really need to give it much thought.
Putting aside the science of the matter, the promulgation of such a
rose-colored view obviated any need to advocate improvements in
automobile fuel efficiency or to accelerate progress on the
development of alternative fuels. Given White House priorities, it is
hardly surprising that this view prevailed in Washington.
In just the past six months, however, the signs of an imminent peak in
conventional oil production have become impossible even for
conservative industry analysts to ignore. These have come from the
take-no-prisoners world of oil pricing and deal-making, on the one
hand, and the analysis of international energy experts, on the other.
Most dramatic, perhaps, has been the spectacular rise in oil prices.
The price of light, sweet crude crossed the longstanding psychological
barrier of $80 per barrel on the New York Mercantile Exchange for the
first time in September, and has since risen to as high as $90. Many
reasons have been cited for the rise in crude prices, including unrest
in Nigeria's oil-producing Delta region, pipeline sabotage in Mexico,
increased hurricane activity in the Gulf of Mexico and fears of
Turkish attacks on Kurdish guerrilla sanctuaries in Iraq. But the
underlying reality is that most oil-producing countries are pumping at
maximum capacity and finding it increasingly difficult to boost
production in the face of rising international demand.
Even a decision by the Organization of the Petroleum Exporting
Countries (OPEC) to boost production by 500,000 barrels per day failed
to halt the upward momentum in prices. Concerned that an excessive
rise in oil costs would trigger a worldwide recession and lower demand
for their products, the OPEC countries agreed to increase their
combined output at a meeting in Vienna on September 11. "We think that
the market is a little bit high," explained Kuwait's acting oil
minister, Mohammad al-Olaim. But the move did little to slow the rise
in prices. Clearly, OPEC would have to undertake a much larger
production increase to alter the market environment, and it is not at
all clear that its members possess the capacity to do that -- now or
in the future.
Much more to this. See: http://www.alternet.org/audits/66625/