Peak Oil News: Oil Executive Predicts Future Energy Crisis

Friday, April 13, 2007

Oil Executive Predicts Future Energy Crisis

The Cornell Daily Sun

By Lauren Kramer

“I would submit to you that your lifestyle, your career, will depend upon energy security. Not just now, not just in a few years, but as we look out ahead over the decades: your career, your economic wellbeing, whatever course you may take in life … Energy security will touch you,” began John Hofmeister, president of Shell Oil Company, at his on-campus lecture yesterday.

Entitled “How the U.S. Can Ensure Energy Supply for the Future,” Hofmeister’s presentation addressed the role of American public policy in attaining energy security amid an impending energy crisis. Shell Oil Company, a longtime world leader in gasoline and oil retailing and production technology, is actively pursuing a solution to the world’s forthcoming depletion of energy resources.

Hofmeister said that an example of how “marginal the supply-demand relationship is on something as fundamental as gasoline” is the hurricane season of 2005. Devastated by Hurricanes Katrina and Rita, the entire southeast coast of the United States nearly experienced power outage when refinery production came to a halt. With twelve hours to spare before coastal energy shortage, emergency power sources saved production.

What separates people around the world “from available and affordable energy,” Hofmeister said, “is public policy.” Following his claim that individual lifestyle, in addition to modern economy, is dependent on energy availability, Hofmeister’s vision for Shell and for the world is both gradual transition to new and different energy sources and a change of heart within political arena.

While Shell has already begun investigation into alternate energy sources ranging from coal gasification and thin-film technology to wind power and hydrogen fuel cells, Hofmeister acknowledged the decades it will realistically take to alter such a fossil-fuel-ingrained existence. Not only does new technology remain in its infancy, but markets are not developed to pay for such technologies — particularly when many alternate sources of energy are not abundantly available.

Defining energy security as “reliable and affordable energy to met the needs of society from now until every generation that we can conceive of in our imagination,” Hofmeister recommended a solution to the lack of alternate energy sources in the form of policy change.

“We have now faced two years of, frankly, unacceptable high price and unnecessary high price because energy demand continues to exceed energy supply … We can get angry, or we can change public policy,” Hofmeister said.

Functioning as an oppositional force in making more energy available, Hofmeister said that policy is what prohibits energy companies from accessing some of the continent’s lesser-known sources. Unconventional solid forms of gas and oil, for instance, are available but not accessible in the massive rocks of Colorado and mid-western America. There exist 110 billion barrels of ready-to-produce oil and gas in the United States alone — enough for over thirty years of oil and gas production — that are banned from industrial use.

Regardless of the outcome of the energy issue at hand, Hofmeister said that the Shell Oil Company foresees two major changes: energy efficiency and energy education. With hope for the technologists of tomorrow, the company aims to “extract greater energy” from existing sources using “less per unit of input per unit of output of energy.” In addition, Hofmeister stresses reaching out and teaching consumers, students and society as a whole. In his eyes, “there is no silver bullet for energy security.”


At 3:20 PM, April 17, 2007, Anonymous Anonymous said...

I would worry more of news along the lines of below. The GCC is launching their common currency in 2010 and a common oil exchange to replace NYMEX is not to far fetched. If the GCC presents their own petroleum bourse the US loses its grip on oil and the dollar becomes a lot less powerful.

Gulf oil bourse to open soon

The Gulf Petroleum Exchange will begin operating in the near future, said the Saudi Oil Minister Ali Naimi after a meeting of the GCC sunday.

Ali Naimi said Saudi Arabia and the Gulf Cooperation Council have decided to establish a Gulf Dinar based oil exchange on the Persian Gulf in Dubai, UAE, because "there was no such oil trading body in the region."

"The GPEX could help many countries transact petroleum under more favorable conditions," he said.

He did not say exactly when the GPEX oil bourse would open.

The official also said that senior officials from the Oil Ministry and the Gulf Cooperation Council will meet with members of the GCC Energy Commission in the near future to discuss issues related to making the groundbreaking project operational.

Naimi said the Saudi Oil Ministry and a number of other GCC bodies have made large investments in the project.

The oil bourse would transact petroleum, petrochemicals and gas in various non-dollar currencies, primarily the Gulf Dinar. It would also establish a Gulf Dinar based pricing mechanism for oil trading, or oil marker as it is called by traders.

The three current oil markers are all US-dollar denominated.

The two major oil bourses are the New York Mercantile Exchange (NYMEX) in New York City and the International Petroleum Exchange (IPE) in London. The Gulf Petroleum Exchange (GPEX) in Dubai would establish a fourth oil marker, denominated by the Gulf Dinar.

By Neville Parker 1 April 2007

Khaleej Times


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