Peak Oil News: The Deathwatch for Cheap Oil

Sunday, October 15, 2006

The Deathwatch for Cheap Oil

New York Times

The Deathwatch for Cheap Oil

By Paul B. Brown

Those falling prices at the gasoline pump may only be temporary. Indeed, they could signal the start of an era in which, forecasters say, “the death of cheap, abundant crude might unleash war and plunge the world into a second Great Depression.”

“Peak oil is a reality,” says Willem Kadijk, a hedge fund adviser quoted by Bloomberg Markets magazine. He is just one of many who believe that global oil production is now at or near its peak, and the only place to go is down.

“Once the flow crests and starts to decline, and some geologists say it already has, oil will no longer be able to slake the world’s growing thirst for energy,” Deepak Gopinath writes in summarizing the argument. “The result will be the oil shock to end all oil shocks.”

The price of a barrel of crude oil, which closed yesterday at $58.68, “will spiral to $200 — and keep rising,” he writes.

Representative Roscoe G. Bartlett, a Maryland Republican, has formed the Congressional Peak Oil Caucus to draw attention to the issue. “The world has never faced a problem like this,” he told the magazine.

The nation’s oil companies dispute the assertions. An Exxon Mobil spokesman says the company’s geologists expect global oil production to keep rising for at least the next two decades.

ON SECOND THOUGHT If you think ethanol is a simple answer to solving our gasoline needs, think again, argues Consumer Reports in this month’s cover article, “The Ethanol Myth.”

“Despite the avid support of the Bush administration and major American car companies,” E85 — a commonly used blend of 85 percent ethanol and 15 percent gasoline — “is unlikely to fill more than a small percentage of U.S. energy needs,” the magazine says.

Reasons for the pessimism are that ethanol costs more, is hard to find outside the Midwest — only about 800 gas stations out of 176,000 nationwide sell E85 — and provides fewer miles to the gallon. The magazine tested ethanol on a Chevrolet Tahoe and found that the fuel economy dropped “27 percent when running on E85 compared with gasoline, from an already low 14 m.p.g.”

At the time of the test, the average retail price of E85 was $2.91 a gallon, which meant the 27 percent fuel-economy penalty would have caused drivers to pay “$3.99 for the energy equivalent of a gallon of gasoline.”

A FAR BIGGER BANG The Rolling Stones, fronted by their 63-year-old lead singer, Mick Jagger, are heading into the home stretch of what will be the most commercially successful rock tour of all time, Rolling Stone reports.

By the time the tour ends in Hawaii next month, the band will have sold nearly two million tickets for a total of $256 million in revenue, according to the magazine, which cited figures compiled by Pollstar.

The “Bigger Bang” tour, which began last year, set a record during its 2005 leg when it recorded $162 million in 43 dates, “so this fall’s tour ... could be considered a victory lap,” Brian Hiatt writes.

“We’re kind of looking at it like we’re Lewis and Clark — we’re playing the Wyomings and Montanas,” said Keith Richards, the guitarist.

Michael Cohl, a promoter, said the tour could continue next year, although no dates are scheduled.

In case you were wondering, U2’s 2005 “Vertigo” tour is the second-highest-grossing tour ($138.9 million); the Stones own third place with the “Voodoo Lounge” tour in 1994 ($121.2 million); Bruce Springsteen and the E Street Band grossed $115.9 million in their 2003 tour; and U2 rounds out the top five with $109.7 million in 2001 during its “Elevation” tour.

FINAL TAKE Even assuming that the growing number of companies devoted to space travel are successful, becoming a rocketman (or woman) is going to cost you at least $200,000. However, Popular Mechanics reports that for $295 “you can launch a photo of yourself — or some other keepsake — into space on Bigelow Aerospace’s Genesis II spacecraft, due to launch early next year.” Not surprisingly, the company plans to sell space for corporate advertising as well. Can orbiting billboards be far behind? PAUL B. BROWN

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