Peak Oil News: 04/01/2008 - 05/01/2008

Monday, April 28, 2008

Gasoline May Soon Cost a Sawbuck

The New York Sun

Big New Shock at the Pump Forecast by Two Analysts

By Dan Dorfman

Get ready for another economic shock of major proportions — a virtual doubling of prices at the gas pump to as much as $10 a gallon.

That's the message from a couple of analytical energy industry trackers, both of whom, based on the surging oil prices, see considerably more pain at the pump than most drivers realize.

Gasoline nationally is in an accelerated upswing, having jumped to $3.58 a gallon from $3.50 in just the past week. In some parts of the country, including New York City and the West Coast, gas is already sporting a price tag above $4 a gallon. There was a pray-in at a Chevron station in San Francisco on Friday led by a minister asking God for cheaper gas, and an Arco gas station in San Mateo, Calif., has already raised its price to a sky-high $4.62.

In Manhattan, at a Mobil gas station at York Avenue and East 61st Street, premium gas is now $4.03 a gallon. Two days ago, it was $3.96. Why such a high price? "Blame the people at STOPEC (he meant OPEC) and the oil companies," an attendant there told me.

These increases are taking place before the all-important summer driving season, signaling even higher prices ahead.

That's also the outlook of the Automobile Association of America. "As long as the price of crude oil stays above $100 a barrel, drivers will be forced to pay more and more at the gas pump," a AAA spokesman, Troy Green, said.

Oil recently hit an all-time high of nearly $120 a barrel, more than double its early 2007 price of about $50 a barrel. It closed Friday at $118.52.

The forecasts calling for a jump to between $7 and $10 a gallon are based on the view that the price of crude is on its way to $200 in two to three years.

Translating this price into dollars and cents at the gas pump, one of our forecasters, the chairman of Houston-based Dune Energy, Alan Gaines, sees gas rising to $7-$8 a gallon. The other, a commodities tracker at Weiss Research in Jupiter, Fla., Sean Brodrick, projects a range of $8 to $10 a gallon.

While $7-$10 a gallon would be ground-breaking in America, these prices would not be trendsetting internationally. For example, European drivers are already shelling out $9 a gallon (which includes a $2-a-gallon tax).

Canadians are also being hit with rising gas prices. They are paying the American-dollar equivalent of $4.92 a gallon, and they're being told to brace themselves for prices above $5.65 a gallon this summer.

Early last year, with a barrel of oil trading in the low $50s and gasoline nationally selling in a range of $2.30 to $2.50 a gallon, Mr. Gaines — in an impressive display of crystal ball gazing — accurately predicted oil was $100-bound and that gasoline would follow suit by reaching $4 a gallon.

His latest prediction of $200 oil is open to question, since it would undoubtedly create considerable global economic distress. Further, just about every energy expert I talk to cautions me to expect a sizable pullback in oil prices, maybe to between $50 and $70 a barrel, especially if there's a global economic slowdown.

While Mr. Gaines thinks there could be a temporary decline in the oil price, he's convinced an overall uptrend is unstoppable. In fact, he thinks his $200 forecast could be conservative, and that perhaps $250 could be reached. His reasoning: a combination of shrinking supply and increasing demand, especially from China, India, and America.

Mr. Brodrick's $200 oil forecast is largely predicated on a combination of pretty flat supply and rip-roaring demand. Other key catalysts include surging demand in China and India, where auto sales are booming, and major supply disruptions in Nigeria and also in Mexico, our second-largest source of oil imports, where oil production has fallen off a cliff.

More factors include the ever-present danger of additional supply disruptions from volatile countries in the Middle East that are not our allies, and the unwillingness of SUV-loving Americans to trim their unquenchable thirst for foreign oil. Likewise, for the first time, emerging markets this year will use more oil than America.

To Mr. Brodrick, it all adds up to an ongoing energy bull market. His favorite plays are the Energy Select Sector SPDR Fund ; United States Natural Gas Fund LP; Apache Corp.; Occidental Petroleum; Anadarko Petroleum, and Schlumberger.

Sunday, April 27, 2008

Pray-in at S.F. gas station asks God to lower prices

By David R. Baker, Chronicle Staff Writer

Rocky Twyman has a radical solution for surging gasoline prices: prayer.

Twyman - a community organizer, church choir director and public relations consultant from the Washington, D.C., suburbs - staged a pray-in at a San Francisco Chevron station on Friday, asking God for cheaper gas. He did the same thing in the nation's Capitol on Wednesday, with volunteers from a soup kitchen joining in. Today he will lead members of an Oakland church in prayer.

Yes, it's come to that.

"God is the only one we can turn to at this point," said Twyman, 59. "Our leaders don't seem to be able to do anything about it. The prices keep soaring and soaring."

Gas prices have been driven relentlessly higher this year by the bull market for crude oil, gasoline's main ingredient. A gallon of regular now costs $3.89, on average, in California, while the national average has hit $3.58.

To solve the problem, Twyman isn't begging the Lord for any specific act of intervention. He is not asking God to make OPEC pump more oil. Nor is he praying for all the speculative investors to be purged from the New York Mercantile Exchange, where crude oil is traded.

Instead, he says anyone who wants to follow his example should keep it simple.

"God, deliver us from these high gas prices," Twyman said. "That's all they have to say."

Consumer advocates who have been howling about gasoline prices for months say they understand his frustration, even if they haven't tried his tactics.

"Given the complete inertia and silence of this White House on a crisis that has people feeling just hopeless, prayer is probably as good as anything," said Judy Dugan, research director with the nonprofit group Consumer Watchdog. "Frankly, I wish them luck."

Her organization has a list of proposals to help tame gas prices. Federal officials could stop adding oil for the nation's Strategic Petroleum Reserve and start selling some instead, for example. That would boost supplies in the market and drive down the price. Officials also could tighten oversight of crude oil trading.

"This is government's job - it shouldn't be God's job - but government is in gridlock or ignoring it," Dugan said.

Some of Consumer Watchdog's ideas may finally be gaining support. House Speaker Nancy Pelosi, D-San Francisco, on Thursday asked President Bush to stop filling the strategic oil reserve. And on Friday, she called on the Federal Trade Commission to investigate whether the oil market is being manipulated.

Twyman, 59, has a history of taking on interesting causes, some whimsical, some deadly serious. Three years ago, he led a petition drive to have Oprah Winfrey nominated for the Nobel Peace Prize. It didn't work, obviously, but he says he had a great time with it.

His real passion, however, has been persuading African Americans to become bone marrow donors. A friend of his who had just adopted a child died from leukemia in 1995 without ever finding a donor, and Twyman threw himself into the cause.

For years, racial and ethnic minorities have been underrepresented on the national donor registry, a problem because people in need of a transplant have a greater chance of finding a match with donors of the same race or ethnic group. Twyman estimates that his bone marrow drives, many of them organized through churches, have netted 14,000 potential donors. The drives also brought him an Above & Beyond award from the Congressional Medal of Honor Society.

Twyman knows his approach to gasoline prices may sound simplistic. He's quick to point out that anyone praying for cheaper fuel also has an obligation to do something more active about the problem.

"People have to walk more, leave those cars at home, and carpool, man," he said. "We have to become more practical."

He's also hoping that if enough people start praying at the pump, politicians who might actually be able to do something about the problem will listen.

But he says his prayer for gas-price relief from God is sincere.

"I've seen him work miracles in my life," Twyman said. "He told us that all we need to do is ask and believe. He can do it, and he will do it, but we have to ask him to do it."

Thursday, April 24, 2008

Brazil Oil Finds May End Reliance on Middle East, Zeihan Says

By Joe Carroll

Brazil's discoveries of what may be two of the world's three biggest oil finds in the past 30 years could help end the Western Hemisphere's reliance on Middle East crude, Strategic Forecasting Inc. said.

Saudi Arabia's influence as the biggest oil exporter would wane if the fields are as big as advertised, and China and India would become dominant buyers of Persian Gulf oil, said Peter Zeihan, vice president of analysis at Strategic Forecasting in Austin, Texas. Zeihan's firm, which consults for companies and governments around the world, was described in a 2001 Barron's article as “the shadow CIA.''

Brazil may be pumping “several million'' barrels of crude daily by 2020, vaulting the nation into the ranks of the world's seven biggest producers, Zeihan said in a telephone interview. The U.S. Navy's presence in the Persian Gulf and adjacent waters would be reduced, leaving the region exposed to more conflict, he said.

“We could see that world becoming a very violent one,'' said Zeihan, former chief of Middle East and East Asia analysis for Strategic Forecasting. “If the United States isn't getting any crude from the Gulf, what benefit does it have in policing the Gulf anymore? All of the geopolitical flux that wracks that region regularly suddenly isn't our problem.''

Tupi and Carioca

Brazil's state-controlled Petroleo Brasileiro SA in November said the offshore Tupi field may hold 8 billion barrels of recoverable crude. Among discoveries in the past 30 years, only the 15-billion-barrel Kashagan field in Kazakhstan is larger.

Haroldo Lima, director of the country's oil agency, last week said another subsea field, Carioca, may have 33 billion barrels of oil. That would be the third biggest field in history, behind only the Ghawar field in Saudi Arabia and Burgan in Kuwait.

Analysts Mark Flannery of Credit Suisse Group and Gustavo Gattass of UBS AG challenge the estimate for Carioca. Lima, the Brazilian oil agency director, later attributed the figure to a magazine.

Flannery told clients during an April 16 conference call that 600 million barrels is a “reasonable'' estimate and suggested Lima may have been referring to the entire geologic formation to which Carioca belongs.

Supply Boost

Carioca is one of seven fields identified so far in the BM- S-9 exploration area, part of a formation called Sugar Loaf.

If additional drilling by Petrobras, as Petroleo Brasileiro is known, confirms the Tupi and Carioca estimates, the fields together would contain enough oil to supply every refinery on the U.S. Gulf Coast for 15 years. Petrobras said it needs at least three months to determine how much crude Carioca may hold.

Zeihan said that beyond supply gains from Brazil, it will take a tripling of Canadian oil-sands output and greater fuel efficiency to end Western reliance on Middle East oil.

The U.S. imports about 10 million barrels of oil a day, or 66 percent of its needs, according to the Energy Department in Washington. Saudi Arabia was the second-largest supplier in January, behind Canada.

Persian Gulf nations accounted for 23 percent of U.S. imports, compared with Brazil's 1.7 percent share. Brazilian crude output rose 1.9 percent last year to 2.14 million barrels, according to the International Energy Agency.

“Hemispheric energy independence sounds a little pie-in- the-sky given that this hemisphere already is generating one- third of overall global demand,'' said Jason Gammel, an oil analyst at Macquarie Bank Ltd. in New York. “It's pretty tough to talk about self-sufficiency unless we were to see food-based biofuels taking an even bigger role in the next five to 10 years than is already mandated.''

Offshore Fields

Zeihan predicts a 2012 start to production at Tupi. Technology needed to tap fields like Tupi, which sit hundreds of miles offshore beneath thousands of feet of rock, sand and salt, hasn't been developed, he said.

Petrobras, Chevron Corp., Royal Dutch Shell Plc and Norsk Hydro ASA plan to start pumping oil from eight Brazilian fields in the next 2 1/2 years that will produce a combined 1.02 million barrels a day, enough to supply two-thirds of the crude used by U.S. East Coast refineries.

More discoveries will follow in Brazil's offshore basins, most of which have yet to be opened to exploration, Zeihan said. Repsol YPF SA, Exxon Mobil Corp. and Devon Energy Corp. are among the producers scouring Brazil's waters for reserves.

“The finds they've got so far are just the tip of the iceberg,'' Zeihan said. “Brazil is going to change the balance of the global oil markets, and Petrobras will become a geopolitical supermajor.''

Tuesday, April 22, 2008

Gasoline usage heads down

By Steve Everly

U.S. drivers are doing something they haven’t done for nearly two decades — consume less gasoline.

Gas consumption so far this year is down about 0.2 percent compared to last year, according to the Energy Information Administration. The federal agency is predicting that gasoline demand will be down 0.4 percent this summer and 0.3 percent for the year.

That may not sound like much, but it would be the first time since 1991 that there’s been a decline in annual gas consumption. And it would be only the eighth year since 1951 in which demand for gasoline has declined.

The federal agency noted that the decline was occurring in part because of a slowing economy. But it also said that higher gas prices were having an effect on demand.

“Sustained higher gasoline prices are beginning to show up in lower gasoline consumption,” said Tancred Lidderdale, an analyst for the Energy Information Administration.

Both gasoline and diesel prices are now at record levels.

According to AAA, the national average on Monday for a gallon of gasoline was $3.50 a gallon, or 64 cents higher than a year ago. Diesel was $4.20 per gallon, or $1.27 higher than a year ago.

A gallon of E-85, a blend that contains 85 percent ethanol, was $2.89 a gallon. AAA also gives an adjusted price reflecting the fact that ethanol has less energy than conventional gasoline. By that measure, a price-adjusted gallon of E-85 was $3.81.

Crude oil prices were up on Monday for the sixth straight day. Light, sweet crude for May delivery rose to a record $117.76 a barrel on the New York Mercantile Exchange before settling at $117.48, up 79 cents from Friday’s close.

Figures that track gas consumption can be volatile from week to week. But the idea that demand for the year will be down is gaining support.

Lehi German, publisher of Fundamental Petroleum Trends, said the federal agency’s prediction of a downturn was “in the ballpark.” In addition, diesel demand has shown signs of softening as well.

Although higher fuel prices were expected to have an effect on demand, it wasn’t clear just how high they would have to go to do so. Many market watchers believed prices would have to stay above $3 per gallon for several months or even a year.

That tipping point for gasoline demand may have arrived.

Mike Right, a spokesman for AAA Club of Missouri, said that a decline in gasoline usage shouldn’t come as much of a surprise. A survey conducted in January by AAA found that many motorists were already deciding to change vacation plans for this summer by planning for shorter trips.

“We are starting to see some signs of that,” he said.

Verne Covell of Smithville counts himself as one who’s had enough.

Now retired, Covell bought a pickup and travel trailer when he retired in 2000. Long trips with his wife to places like Canada were common.

This year, however, there will be at most a trip to south Missouri. The trailer may even stay in storage for the entire year because of fuel prices.

“We’re getting on and you don’t know how long you have,” he said. “But this year we decided it just got too expensive.”

There are indications that a fundamental shift in consumer driving habits may have started in December, when total miles traveled in the U.S. dropped 3.9 percent compared with the same month a year earlier. Miles traveled in the Midwest were down 5.8 percent.

Mainly because of the December drop, the Federal Highway Administration said it was estimating that miles traveled for all of 2007 were down 0.4 percent.

A question now is whether the curtailing of gas consumption could gain momentum, especially if prices climb further.

Steve Mosby is vice president of Admo Energy, an area company that helps other companies, including gas stations, control the cost they pay for fuel. He said his company had been getting recent reports from customers of substantial reductions in the number of gallons being pumped.

And those changes may show up in daily commuting habits in addition to plans for longer trips.

Demand already is increasing for automobiles offering higher gas mileage.

The Kansas City Area Transportation Authority also reports that bus ridership has been growing as gas prices have increased. Last year ridership was up 4.1 percent. For the first two months of this year, compared to the same period last year, the number of riders was up 9 percent.

“I certainly think gas prices are having an impact on our ridership,” said Dick Jarrold, a senior director at ATA.

A decline in gasoline demand could help give some relief from high prices. Although prices are surging as the traditional summer driving season approaches, some market followers expect prices to ease back later this summer.

One ongoing concern is that even though Americans may be cutting back on gas consumption, emerging middle classes in faster-growing countries such as China and India are quickly embracing the driving habit and pushing global demand for fuel higher.

“That’s the billion-dollar question,” Mosby said.

Shell's Chief Strategist: Two Scenarios in Oil's Future


Oil prices reached $117 a barrel this month, triggering speculation about where the world's energy supply is headed. Jeremy Bentham, head strategist for Shell Oil, which recently released an energy forecast looking to the year 2050, talks with co-host Steve Inskeep about his company's outlook for the world energy market.

Visit NPR to listen

Monday, April 21, 2008

World Publics Say Oil Needs to Be Replaced as Energy Source

Most Think Price Will Go Much Higher – Americans Think Their Government Is Acting as if Oil Will Not Run Out

Full report (PDF)

A new poll finds that majorities in 15 of 16 nations surveyed around the world think that oil is running out and governments should make a major effort to find new sources of energy. Most think that future oil prices will be much higher.

Only 22 percent on average believe that "enough new oil will be found so that it can remain a primary source of energy for the foreseeable future." Only in Nigeria does a majority (53%) endorse the view that governments can rely on oil in the long term.

Instead, an average of 70 percent takes the position that governments should assume that "oil is running out and it is necessary to make a major effort to replace oil as a primary source of energy." The largest majorities endorsing this view are found in South Korea (97%), France (91%), Mexico (83%) and China (80%). The smallest are in Russia (53%) and India (54%), while in Nigeria only a minority (45%) holds this view.

"The widespread consensus that oil needs to be replaced as an energy source may be prompted by concerns about the effect of oil on climate change as well as the belief that oil will run out," said Steven Kull, director of

The poll of 14,896 respondents was conducted by, a collaborative research project involving research centers from around the world and managed by the Program on International Policy Attitudes (PIPA) at the University of Maryland. Interviews were conducted in 16 nations including most of the largest nations --China, India, the United States, Indonesia, Nigeria, and Russia--as well as Mexico, Britain, France, Azerbaijan, Ukraine, Egypt, Turkey, the Palestinian Territories and South Korea. The nations included represent 58 percent of the world population.

A majority in the United States (57%), the world's biggest consumer of oil, believes their government is acting on the assumption that oil can remain a primary source of energy. This is also true in Nigeria (63%). However, while most Americans believe their government's assumptions are incorrect, most Nigerians think it is correct.

In 12 of the 16 nations, the dominant view among those polled is that their governments assume oil is running out and needs to be replaced. This is especially true in South Korea (79%), China (70%), and Egypt (67%). In Iran, which is developing a controversial nuclear energy program, 63 percent say that oil must be replaced while only 12 percent--the lowest percentage among the countries polled--say their government assumes enough oil can be found.

Publics in two other countries express doubts that their governments are making plans to develop alternative sources of energy. Azerbaijanis say their government assumes enough oil will be found by a margin of 50 percent to 31 percent. Russians are divided: 37 percent think their government assumes there will be enough oil and 34 percent do not. In both countries, modest majorities among those who think their government is counting on oil also believe that this is a mistake.

Interestingly in four of the five countries that are net oil exporters the perception that their government is planning for oil running out is below the average of 53 percent. These include Azerbaijan (31%), Nigeria (32%), Russia (34%), and Mexico (49%). The exception is Iran which is well above the average, with 63 percent believing that that their government is planning for oil running out.

There is a strong consensus around the world that the cost of oil will be higher in ten years. On average four out of five (79%) say that oil prices will be higher, including 55 percent who say they will be much higher.

Although oil prices recently retreated somewhat from their latest spike, this has not reassured world publics, according to Kull.

"People around the world seem to assume that these higher prices are not only here to stay but will even go higher," the director of said.

Publics differ only about whether oil prices will be much higher or only somewhat higher. The most pessimistic are Indonesia (74%) France (81%) and Egypt (67%). The lowest percentages saying oil prices will be much higher are found in China (29%), Russia (35%), and Nigeria (42%).

Friday, April 18, 2008

Fertilizer costs add to food price hikes

There are lots of factors behind the soaring prices of food around the world. A big one is the rapidly growing cost of fertilizer. Dan Grech reports.

TESS VIGELAND: Credit isn't the only thing in short supply these days. So is a long list of commodities, including rice, wheat and corn, as we mentioned yesterday. There are lots of factors driving the cost of food around the world. And one big one is fertilizer. Marketplace's Dan Grech reports.

DAN GRECH: Fertilizer has become a precious commodity. The price has doubled in the past six months.

Today China, the world's largest grain producer, said it would double duties on all fertilizers, to discourage its export. China is essentially sacrificing the domestic fertilizer industry to protect its farmers.

So why is fertilizer so expensive? High energy prices. Natural gas is a key ingredient of nitrogen-based fertilizers.

Jim Prevor is editor of Produce Business magazine.

JIM PREVOR: All the things that farmers need to grow products are going up. That includes transportation, fuel to run tractors, going well beyond just fertilizer prices.

China's tight grip on fertilizer could have a global impact. It's one of the principal suppliers to India, Pakistan, Australia and Latin America.

Parr Rossen is an agricultural economist at Texas A&M. He says these global forces will soon hit the grocery aisle.

PARR ROSSEN: Higher fertilizer prices are going to result in higher food costs as well as higher fuel costs.

But Rossen says farmers can't simply do away with fertilizer without devastating their harvest.

I'm Dan Grech for Marketplace.

Wednesday, April 16, 2008

When the oil runs out

Waikato Times

By Jeff Neems

James Samuel wants to see New Zealanders get off their couches, into their garden, and get some dirt under their fingernails.

Samuel is the national co-ordinator for Transition Towns, a movement pioneered in the UK in late 2006.

While Transition Towns essentially grew from the notion of permaculture an approach to designing human settlements, in particular the development of perennial agricultural systems that mimic the structure and interrelationship found in natural ecologies Samuel says its "main drivers" are peak oil and climate change.

Transition Towns is based on several key assumptions, says Samuel, who details the first one: "Life with dramatically lower energy consumption is inevitable and it's better to plan for it than be taken by surprise."

"Our settlements and communities lack the resilience to enable them to weather the severe energy shocks that will accompany peak oil."

Transition Towns aims to equip communities with the tools to prepare for life with an environment affected by climate change, and without cheap energy sources, particularly oil. Many oil industry experts believe the world's oil production has peaked already, and that prices will continually increase as supplies diminish and eventually dry up the "peak oil" theory. It is gaining publicity worldwide as crude oil prices push above the $US100 a barrel mark. It has been the subject of the award-winning documentary film Crude Awakening: The Oil Crash and the equally compelling The End Of Suburbia.

"We're really not in a strong position," says Samuel. "I was in Zimbabwe two years ago, and saw what happened to a community that couldn't get oil as freely as it has been able to four-day petrol queues."

In last 150 years since we began exploiting the cheap energy source that is oil we've become isolated from one another, argues Samuel.

"We're sitting in front of our TVs in our houses, being fed information which is rather dubious. At the same time you've got climate change and peak oil issues appearing in newspapers, on the very same pages as adverts for the latest Mercedes, or holidays in Brisbane."

"We could do worse than actually start talking to our neighbours a little more, and find ways to take care of each other."

Samuel says Cuba is an example of a country that had to quickly transform itself when its oil supplies dropped by 50 per cent overnight following the collapse of the Soviet Union.

`They needed to build their resilience very quickly, and it took a little while the average Cuban lost about 20lbs of body fat in the first three months."

Crucially, says Samuel, the Cuban food supply diminished as well: "About half the oil supply in Cuba was used to grow food and if half your fuel supply drops, so does food production."

`Cubans switched to organic food cultivation and localised urban food growing, and their efforts were recorded in another documentary film, The Power Of Community: How Cuba Survived Peak Oil.

Samuel says Transition Towns' third key assumption is that as a community we have to act collectively, and we have to act now.

The fourth assumption, says Samuel, is that "by using creative genius in the community to creatively and proactively design our energy descent, we can build ways of living that are more connected, more enriching and recognise the biological limits of our planet".

"Transition Towns is like a toolbox, a guiding framework."

While Transition Towns doesn't claim to have the answers to the problems society is beginning to face, Samuel says it aims to equip communities to fend for themselves and adapt from lives of high energy consumption to low energy consumption.

"This is about community. This is not about self-sufficiency, but community sufficiency, and the resilience that can be created in a community when we work together," he says.

People in communities need to look at re-localisation, and not globalisation, he argues.

"(We) bring in chopped spinach from Holland. Can't we grow our own spinach in this country? Can't we chop it ourselves?

"In New Zealand, we are not short on land, and there's plenty of it to grow food on and if you want to build a little resilience into your life, grow some food in your backyard. And if you don't have your own backyard, find somebody who does."

Lots of older people around who have grown food on their properties, have fantastic soil as a result, but can no longer tend it, says Samuel.

"Go and team up with them, build a plot, help feed them as well."

A Transition Towns group in Upper Hutt has listed suggested sustainable methods on the movement's New Zealand website ( home gardens based on permaculture models, community gardens (there is already one in Hamilton East), keeping chickens, planting trees which produce fruit, improving cycleways (cars will be redundant when there is no oil), implementing home and farm water harvesting methods and aiming to produce zero waste.

Samuel points to Transition Towns' 12-step process detailed on its website as providing guidance for communities looking to begin their transition.

"It's very much about building strength within the community first, about actively getting in, getting dirt under your fingernails and actually making things happen," he says.

"Any initiative like this tends to grow and thrive when it has leadership so the first step is to create a core group to lead."

Samuel believes the Transition Towns movement is growing exponentially in New Zealand, and he sees himself as riding a wave of people who are realising it's a tool kit they can use.

"It's not a prescriptive model," he stresses. "It's a framework, some steps we've found work."

Samuel believes the vast majority of New Zealanders are unaware of what is round the corner in terms of energy depletion and climate change.

"There's a good deal of denial," he says. "The existence of information is not enough to change. There's much more to it."

So when will New Zealanders face up to the problem?

"When we can't get as much oil as we'd like to get, and the price starts going through the roof."

Nor is Samuel concerned by people who disregard the issues society now faces and the problems and possible solutions he's trying to bring to light.

"I'm not going to try to convince them the realities are already showing themselves."

Brazil in 'major oil field' find


Brazil has discovered what could be the third biggest oil reserve in the world, according to the head of the country's National Petroleum Agency.

The deep-sea find by state-run oil firm Petrobras could yield 33 billion barrels in reserves.

Further tests are required to assess the scale of the find, off the coast of Rio de Janeiro, but analysts say it could have significant implications.

Brazil announced sizeable new gas and oil discoveries last year as well.

'Big number'

In December 2007, Brazil said it had found a new reserve in the Espirito Santo region a month after a reserve in the nearby Tupi oil field of up to eight billion barrels was found.

According to the US Energy Department, Brazil's existing proven oil reserves total 11.8 billion barrels, while the US holds 21.8 billion.

Referring to the latest discovery, Citigroup analyst Tim Evans said: "It's a big, big number".

Petrobras said "more conclusive data" about the potential of the discovery would only be known after further evaluation.

A spokesperson for the National Petroleum Agency said the statement by its president Harold Lima about the find was based on unconfirmed sources.

Even if the reserves are proven, it is likely to take ten years before the latest find can be turned into significant supplies.

Russian output slumps as oil price hits a record


By Guy Chazan And Neil King Jr

Russian oil production has begun to stagnate and even slump, adding to market uncertainties that have helped push oil prices to record highs.

Russian oil production, for years a vital font of new crude for world energy markets, has begun to stagnate and even slump, adding to market uncertainties that have helped push oil prices to records even as the global economy founders.

Russian supply in the first three months of this year fell for the first time this decade, averaging 10 million barrels a day, a 1% drop from the year-earlier period, according to the International Energy Agency, the industrialized world's energy watchdog. That is dismal news for a country that saw double-digit-percentage output growth earlier this decade.

On Monday, U.S. benchmark crude rose $1.62, or 1.5%, on the New York Mercantile Exchange to settle at $111.76 -- an all-time high, even after adjusting prices during past booms for inflation.

The slowdown in Russia, the world's second-biggest oil exporter after Saudi Arabia, has intensified already widespread concerns about long-term oil supply amid diminishing output from once-huge fields like Alaska's Prudhoe Bay and Mexico's Cantarell field in the Gulf of Mexico. Fading optimism that strong Russian output this year would offset ebbing flows from once-reliable sources like the North Sea has increased jitters in an already tense oil market.

As prices have soared, Saudi Arabia and other members of the Organization of Petroleum Exporting Countries have argued that anticipated bursts in new supplies from non-OPEC countries mean the world hasn't needed additional barrels from OPEC. Even with an easing in oil-demand growth due to the U.S. economic downturn, many analysts still worry that a global supply pinch later this year could send prices still higher.

"There isn't a lot of supply coming on right now, so this [lack of non-OPEC growth] is framing the whole narrative of the market," said Roger Diwan, a financial energy adviser at PFC Energy in Washington.

Russia's production slump also highlights a troubling reality: Despite soaring oil prices in the past five years, crude output among non-OPEC countries has remained essentially flat since 2005, defying the normal link between high prices and increased production. The reasons for that plateau range from spiraling exploration costs to the increasingly remote climates where new oil pockets are being found.

Some senior officials in Russia, such as the country's natural-resources minister, Yuri Trutnev, are now predicting that the country's full-year production may be lower than last year's. Opinion, however, is split. Russia's energy ministry says it still expects a rise of 1.8%, while the Paris-based International Energy Agency is predicting 0.8% growth.

Still, it is clear that Russia's oil production has hit at least a temporary ceiling after years of strong growth.

Russian oil output collapsed after the breakup of the Soviet Union as the price of crude plummeted and investment dried up. But it began to recover in 1999 as newly minted private oil companies used Western techniques to rejuvenate mature fields. Russia became the world's biggest source of incremental new barrels of oil as output grew from six million barrels a day in 1996 to an average of 9.4 million barrels last year.

Saudi Arabia during the same period went from around 8.2 million barrels a day to 9.2 million barrels last year, according the U.S. Energy Information Administration.

Russia's challenge now is that its older Siberian fields, which accounted for much of the rebound, have reverted to their long-term downward trend. Russia will need to open up the remote, untapped expanses of East Siberia to ensure future growth. But so far, oil companies have been deterred by heavy taxes that provide little incentive to invest in so-called greenfield production.

Business sentiment has also suffered from growing state interference in the energy sector, typified by the nationalization of oil giant OAO Yukos and the travails of foreign investors like Royal Dutch Shell PLC, which was forced to sell half its stake in a big project off Russia's east coast to the state-run gas company. BP's Russian joint venture, TNK-BP, has also come under pressure: Last month, intelligence services arrested one of its employees on suspicion of industrial espionage.

In an interview, Leonid Fedun, vice president of OAO Lukoil, one of Russia's biggest oil companies, blamed the first-quarter slip in Russian production on an electricity-supply crunch in western Siberia and a mild winter. Higher temperatures mean Siberia's icy ground is less stable, making it harder to move drilling rigs between oil wells. "Instead of the six to seven months we normally have to work in, we had only 1½ months," said Mr. Fedun.

He acknowledged that the fall also reflects a longer-term trend -- the depletion of Siberia's older fields. "Western Siberia is repeating the fate of Prudhoe Bay, with a time lag of five to six years," he said. "When the well's productivity falls, you have to keep drilling more and more. You've seen it in Alaska and the Gulf of Mexico, and now you're seeing it in Siberia."

Oil companies are dealing with the depletion of reserves in western Siberia by diversifying. Lukoil, for example, is focusing on new provinces like the North Caspian Sea, and expanding abroad in places like Turkmenistan.

But even new developments are failing to offset the decline. Sakhalin 1, a huge project off Russia's east coast led by Exxon Mobil Corp., accounted for much of Russia's production growth in 2007. But output there will drop by more than 25% this year, according to OAO Rosneft, the state-run oil giant that is a partner in the project. In a statement, Exxon said it "has met and continues to meet or exceed the project production targets approved by the Russian authorities."

In a bid to kick-start investment, Russia's government recently unveiled a $4.2 billion tax cut for the sector. It was broadly welcomed in the industry. "It's a very important point that the Russian government has realized that with cost growth and inflation, there needs to be additional relief for companies to develop fields," said Bob Dudley, chief executive of TNK-BP.

But it may not be enough. Lukoil's Mr. Fedun says Russia's oil industry needs $1 trillion of investment during the next 20 years just to maintain production of 10 million barrels a day. Analysts worry the tax cut is inadequate to achieve that. "We still do not see it generating enough free cash flow to the support higher investment levels," Citigroup wrote in a recent report.

Citi says it still expects Russian oil volumes to increase by 1.5 million barrels per day between now and 2012, largely thanks to the ramp-up of new projects in eastern Siberia. But it cautioned: "Russian oil production growth is no longer to be taken for granted."

Fading Russian production would put an even greater weight on projects elsewhere in the world, despite troubling signs even in the oil-rich Middle East. Most forecasts predict that liquid fuel demand world-wide will hit 100 million barrels a day by 2015, up from around 86 million barrels a day now.

But to get there, producers will first have to keep abreast of steep declines in existing fields. That decline rate now subtracts an estimated 4.5 million barrels a day from annual output. Many big producers like Saudi Arabia, however, are now looking to preserve some fields for longer-term gain, instead of pumping to meet rising world demand. Saudi news reports quoted King Abdullah over the weekend saying that new oil finds in the kingdom should be left in the ground. "With grace from God, our children need it," he said.

Spiraling costs and a shortage of manpower and equipment has hampered production growth in OPEC and non-OPEC production. With much of the output growth in recent years coming from deep offshore drilling, oil companies have seen the cost of offshore rigs triple in the past five years. The most expensive drilling ships can now fetch more than $700,000 a day.

Former big producers like the U.K., Norway and Mexico are also fighting to squeeze oil from once mighty but now increasingly old and tired fields. In Canada, where output is increasing thanks to massive investments in Alberta's oil sands, production costs now top $65 a barrel, by some estimates.

There are bright spots on the production front that could ease tightness in global supplies starting later this year. Analysts point to big projects in the Caspian as well as deep-water projects off Australia, Brazil and in the Gulf of Mexico, including BP's long-delayed Thunderhorse platform. The U.S. also expects ethanol production to hit 550,000 barrels a day this summer, up from 418,000 barrels a day last year.

Energy In America - Living In A State Of Denial

Financial Sense Online

By Tony Allison

The nature of humans is to assume everything is okay until the day it isn’t. Then of course it’s too late and we all look for someone to blame, except ourselves of course. Americans started the “age of petroleum energy” in 1859 in Titusville, Pennsylvania, and have come to expect cheap and abundant energy ever since. Even today, a quart of oil is cheaper than milk, or even bottled water. However, the earth’s one-time gift of oil is at or near its peak of giving, and most Americans are not even remotely aware or prepared for the changes ahead.

The level of awareness for most of us only extends to grumbling at the gas pump and blaming the “greedy” oil companies for the inconvenience. Most are unaware that “Big Oil” controls about 17% of world oil production. The other 83% is controlled by national oil companies, representing countries such as Saudi Arabia, Russia, Iran and Venezuela.

Fifty years ago, America easily supplied its own energy needs, and much of the rest of the world as well. Today, we import nearly 70% of our energy from outside our boarders. As much as we would like to believe in alternative energy sources, they currently represent only 2-3% of our energy needs. We are a carbon-based society, and will likely remain so for the next few decades.

For many years our politicians have spoken confidently of once again becoming energy independent. However reality seems to be gradually creeping into the halls of government. The Assistant Energy Secretary Alexander Karsner recently was quoted that “the places where oil can be found and extracted and brought to bear in the world are decreasing. It will get harder, and demand will outstrip supply for probably the rest of my lifetime.” The government realizes there is no magic bullet right around the corner, but is reluctant to call for dramatic action unless a crisis is at hand.

Global Demand- Why it will not level off

According to the CERA Report, world oil depletion is approximately 4 million barrels per day, per year. That amount must be discovered every year just to replace what we’ve lost. Excess capacity, mainly in Saudi Arabia, is also shrinking, and it would clearly not be in OPEC’s best interest to max out their oil fields just to keep the world oil price stable.

The larger problem is demand, however. The CERA Report also projected global demand to grow to an additional 59 million barrels per day by 2017. That means adding the equivalent of six Saudi Arabia’s in one decade! This does not appear remotely feasible given the decade lead times between discovery and production, even if enough oil had been discovered, which it hasn’t.

Ultimately it comes down to mathematics. The global population was roughly one billion people when the oil age began in the 19th century. Today the global population is 6.6 billion, and rising rapidly. As long as the world population keeps expanding and developing, it will be very difficult to curtail demand without much higher prices.

Developing World- demand growing rapidly

Currently new oil demand is coming from China (390 thousand barrels per day growth in 2008), India (140 kbpd), Saudi Arabia (150 kbpd) and other Middle Eastern countries (330 kbpd). India and China consume only a third as much oil as the US. If the Chinese and Indians ever consumed as much oil per capita as Americans, world oil demand would rise from the current 86 million barrels per day to 200 million barrels per day. For some perspective, ConocoPhillips CEO James Mulva was quoted in November that he doubted world oil producers would be able to meet forecast long-term energy demand growth. Also, Total SA CEO Christophe de Margerie said in October it was "optimistic" to expect oil production to ever surpass 100 million barrels a day.

What these developing countries have in common are young populations, rapidly expanding economies and incomes, and heavily subsidized oil prices. Even with the world oil price hovering around $110 per barrel, it is unlikely these countries will risk social unrest by removing the massive oil subsidy. These are all creditor nations with large trade balance reserves, and each can afford to stimulate domestic oil demand for the foreseeable future.

In addition, other subsidized countries such as Venezuela, Mexico and Russia are exhibiting soaring domestic demand growth and are beginning to cannibalize oil exports. That is indeed the crux of the issue. If this rapidly growing demand in the developing world continues, then demand must fall rapidly in the developed world, or shortages will be upon us.

Food prices rise with energy

The industrial food supply system is one of the biggest consumers of fossil fuels. Massive amounts of oil and gas are used in the manufacture of fertilizers and pesticides. All stages of food production use fossil fuels; from planting, to irrigation, feeding, harvesting, processing and distribution. As the demand for energy and food continues to rise, the price to deliver both is likely to rise as well.

As of this month, there are food riots in over 30 countries, as basic food costs around the world have skyrocketed in the past year. This phenomenon may be relatively short term in nature, but it should serve as a shot across the bow as one of the critical issues related to the peaking of global oil production. The potential for future widespread geopolitical strife is very real.

Mexico’s declining production

Mexico, the second largest supplier of crude oil to the US after Canada (1.5 million barrels per day), is facing a crisis with no easy solutions. Mexico’s proven oil reserves are expected to run out in approximately 9 years with the rapid depletion of the Cantarell oil field. Pemex, the government controlled oil company, is on the verge of bankruptcy and has neither the resources nor the technology to carry out critical exploration for new oil discoveries.

According to the Inter Press Service News Agency (IPS), the government of Mexico continues to siphon off nearly all of the Pemex revenues, which finance 40% of the government budget. A new draft law has recently been introduced to allow Pemex greater freedom with respect to making decisions on its budget, re-investing earnings and contracting out to private companies. The early debate was met by threats of social uprising by the left wing opposition. The bill has an uncertain fate, according to the IPS.

Time is running short, and the implications of Mexico as a net importer of energy will directly affect the US. Mexican oil output now stands at 2.9 million barrels per day, down 300,000 barrels per day in just two years. As Mexico’s production declines, the US will look to Canada to fill the gap. However, the extremely high production costs of the Canadian oil sands will make oil available, but at high prices that will likely stay that way.

Time to get started

As Europe, China and Japan have done, the US needs to expand nuclear power capacity. It will still likely take a decade from start to finish per nuclear plant, but the longer we delay, the more dependent we become. How many refineries, nuclear power plants and new drilling rigs are on the drawing board in the US? China is planning to build 2-3 nuclear power facilities every year for the next 20 years. Wind power, solar and Biofuels have roles to play as well, but they cannot come close to replacing fossil fuel in a decade, and certainly Biofuels can’t power all our trains, planes and automobiles anytime soon.

If we don’t move beyond the “denial stage” as a country to the “realization stage” and begin to transcend politics and take action, we are likely to move directly to the “panic stage” with very little preparation. America will not run out of energy, but it will likely be less abundant and considerably more expensive in the future.

As the world’s largest debtor nation that borrows $2.5 billion per day from foreign sources to pay our bills, and imports 70% of our energy needs, the US can’t afford the luxury of waiting for technology to eventually save the day. We must begin to take steps immediately.

Even the White House is admitting the hour is growing late. Edward Lazear, chairman of the White House Council of Economic Advisers recently stated: “We could have been thinking about all of this 10 or 15 years ago when it comes to alternatives or new exploration, and we weren’t.” Look for massive conservation efforts in the future. But since so much of our energy use revolves around transportation, conservation will not be the silver bullet, unless we resort to draconian measures such as mandatory gas rationing.

Living in a state of blissful denial is only a viable strategy until the day reality pulls into town. Realization and preparation are strategies that make more sense in dealing with the waning of the Petroleum Age.

Make the best of it as an investor

As the lifeblood of global commerce, energy will be in great demand, even as the price rises. I have had my clients in the energy sector for many years, and continue to see great opportunities in the years ahead. Investors should focus on high quality exploration and production companies, oil service companies, as well as uranium, solar and wind producers for the long term. Capital will continue to flood the critical global energy sector. The best companies, with the best prospects, in relatively stable geopolitical areas, will be extremely profitable in the years ahead.

Today’s Markets

U.S. stocks on Monday finished the session slightly lower with investors still digesting the poor results from General Electric, while receiving further evidence of the ailing financial sector from Wachovia Corporation.

The Dow Jones Industrial Average fell 23.36 to close at 12,302.06. The S&P 500 Index closed down 4.51 to close at 1,328.32. The Nasdaq also closed lower, ending at 2,275.82, down 14.42.

In another sign of trouble in the embattled financial sector, Wachovia said that it would raise $7 billion in capital and slash its dividend after posting a $350 million first-quarter loss.

Crude-oil futures were up more than a dollar to close above $111 a barrel on Monday, propelled by the dollar's decline against other major currencies. Also pushing crude prices higher were supply disruptions in both a US pipeline and in Nigeria. Gold futures finished slightly higher Monday, as weakness in the US dollar underpinned demand for the precious metal.

Sunday, April 13, 2008

Now survivalism isn't just for eccentrics

Idea of 'extreme preparedness' heads to the mainstream

By Alex Williams

The traditional face of survivalism is that of a shaggy loner in camouflage, holed up in a cabin in the wilderness and surrounded by cases of canned goods and ammunition.

It is not that of Barton M. Biggs, the former chief global strategist at Morgan Stanley. Yet in Biggs' new book, "Wealth, War and Wisdom," he says people should "assume the possibility of a breakdown of the civilized infrastructure."

"Your safe haven must be self-sufficient and capable of growing some kind of food," Biggs writes. "It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc. Think Swiss Family Robinson. Even in America and Europe, there could be moments of riot and rebellion when law and order temporarily completely breaks down."

Survivalism, it seems, is not just for survivalists anymore.

Faced with a confluence of diverse threats - a tanking economy, a housing crisis, looming environmental disasters and a sharp spike in oil prices - people who do not consider themselves extremists are starting to discuss doomsday measures once associated with the social fringes.

They stockpile or grow food in case of a supply breakdown, or buy precious metals in case of economic collapse. Some try to take their houses off the electricity grid, or plan safe houses far away.

The point is not to drop out of society, but to be prepared in case the future turns out like something out of "An Inconvenient Truth," if not "Mad Max."

"I'm not a gun-nut, camo-wearing skinhead; I don't even hunt or fish," said Bill Marcom, 53, a construction executive in Dallas.

Still, motivated by a belief that the credit crunch and a bursting housing bubble might spark widespread economic chaos - "the Greater Depression," as he put it - Marcom began to take measures to prepare for the unknown over the last few years: buying old silver coins to use as currency; buying GPS units, a satellite telephone and a hydroponic kit; and building a simple cabin in a remote West Texas desert.

"If all these planets line up and things do get really bad," Marcom said, "those who have not prepared will be trapped in the city with thousands of other people needing food and propane and everything else."

Interest in survivalism - in either its traditional hard-core version or a middle-class "lite" variation - functions as a leading economic indicator of social anxiety, preparedness experts said: It spikes at times of peril real (the post-Sept. 11 period) or imagined (the chaos that was supposed to follow the so-called Y2K computer bug in 2000).

At times, a degree of paranoia is officially sanctioned. In the 1950s, civil defense authorities encouraged people to build personal bomb shelters because of the nuclear threat. In 2003, the Department of Homeland Security encouraged Americans to stock up on plastic sheeting and duct tape to seal windows in case of biological or chemical attacks.

Now, however, the government, while still conducting business under a yellow terrorism alert, is no longer taking a lead role in encouraging preparedness. For some, this leaves a vacuum of reassurance, and plenty to worry about.

Esteemed economists debate whether the credit crisis could result in a complete meltdown of the financial system. A former vice president of the United States informs us that global warming could result in mass flooding, disease and starvation, perhaps even a new Ice Age.

"You just can't help wonder if there's a train wreck coming," said David Anderson, 50, a database administrator in Colorado Springs who said he was moved by economic uncertainties and high energy prices, among other factors, to stockpile months' worth of canned goods in his basement for his wife, his two young children and himself.

Popular culture also provides reinforcement, in books like "The Road," Cormac McCarthy's novel about a father and son journeying through a post-apocalyptic wasteland, and films like "I Am Legend," which stars Will Smith as a survivor of a man-made virus who is left wandering the barren streets of New York.

Middle-class survivalists can also browse among a growing number of how-to books with titles like "Dare to Prepare!" a self-published work by Holly Drennan Deyo, or "When All Hell Breaks Loose" by Cody Lundin (Gibbs Smith, 2007), which instructs readers how to dispose of bodies and dine on rats and dogs in the event of disaster.

Preparedness activity is difficult to track statistically, since people who take measures are usually highly circumspect by nature, said Jim Rawles, the editor of a preparedness blog ( Nevertheless, interest in the survivalist movement "is experiencing its largest growth since the late 1970s," Rawles said in an e-mail message, adding that traffic at his blog has more than doubled in the past 11 months, with more than 67,000 unique visitors per week. And its base is growing.

"Our core readership is still solidly conservative," he said. "But in recent months I've noticed an increasing number of stridently green and left-of-center readers."

One left-of-center environmentalist who is acting is Alex Steffen, the executive editor of a Web site ( devoted to sustainability. With only slight irony, Steffen, 40, said he and his girlfriend could serve as "poster children for the well-adjusted, urban liberal survivalist," given that they keep a six-week cache of food and supplies in his basement in Seattle (although they polished off their bottle of doomsday whiskey at a party).

He said the chaos following Hurricane Katrina served as a wake-up call for him and others that the government might not be able to protect them in an emergency or environmental crisis.

"The 'Where do we land when climate change gets crazy?' question seems to be an increasingly common one," said Steffen in an e-mail message, adding that such questions have "really gone mainstream."

Many of the new, nontraditional preparedness converts are "Peakniks," Rawles said, referring to adherents of the "Peak Oil" theory. This concept holds that the world will soon, or has already, reached a peak in oil production, and that coming supply shortages might threaten society. While the theory is still disputed by many industry analysts and executives, it has inched toward the mainstream in the last two years, as oil prices have nearly doubled, surpassing $100 a barrel.

The topic, which was the subject of a U.S. Department of Energy report in 2005, has attracted attention in publications like the New York Times Magazine and the Wall Street Journal, and was a primary focus of "Megadisasters: Oil Apocalypse," a recent History Channel program.

Another book, "The Long Emergency" (Atlantic Monthly Press, 2005) by James Howard Kunstler, an author and journalist who writes about economic and environmental issues, argues that American suburbs and cities may soon lay desolate as people, starved of oil, are forced back to the land to adopt a hardscrabble, 19th-century-style agrarian life.

Such fears caused Joyce Jimerson of Bellingham, Wash., a coordinator for a recycling-composting program affiliated with Washington State University, to make her yard an edible garden, with fruit trees and vegetables, in case supplies are threatened by oil shortages, climate change or economic collapse. "It's all the same ball of wax, as far as I'm concerned," she said.

Scott Troyer, an energy consultant in Sunnyvale, said he was spurred by discussions of peak oil - "it's not a theory," he said - and other energy concerns to remake his suburban house in anticipation of a petroleum-starved future. Troyer, 57, installed a photovoltaic electricity system, a pellet stove and a cool roof to reflect the sun's rays, among other measures.

Troyer remains cautiously optimistic that Americans can wean themselves from oil through smart engineering and careful planning. But, he said, "The doomsday scenarios will happen if people don't prepare."

Some middle-class preparedness converts, like Val Vontourne, a musician and paralegal in Olympia, Wash., recoil at the term survivalist, even as they stock their homes with food, gasoline and water.

"I think of survivalists as being an extreme case of preparedness," said Vontourne, 44, "people who stockpile guns and weapons, anticipating extreme aggression. Whereas what I'm doing, I think of as something responsible people do.

Saturday, April 12, 2008

Scientist Seeks Ways To Squeeze More Oil Out Of Existing Wells


Lewis Brown continues to devote much of his more than 40 years in petroleum microbiology figuring out how to squeeze more petroleum out of abandoned or soon-to-be-abandoned oil fields.

The Mississippi State researcher already has extended the life of one field by 17 years. That may sound far-fetched for those unfamiliar with his ongoing research that involves the forced growth of oil-chasing microbes used to redirect injected water that, in turn, sweeps once-inaccessible oil from old wells into production.

Brown said two-thirds of all U.S. oil remains in the ground because it's not economically feasible to remove with existing technology. "We've now developed a method to get some of that oil out of the ground," he added.

The veteran microbiology professor long ago proved his method in a Northwest Alabama field experience sponsored by the U.S. Department of Energy, along with a Jackson-based oil company. The demonstration reinforced what he had discovered in laboratory experiments.

Before Brown began his Alabama experiment, analysts had predicted those wells would stop producing in 1998. After Brown had applied his method, follow-up analysis indicated the wells could still produce--and might continue to do so until 2015.

To date, the Alabama project has recovered more than 400,000 additional barrels. "This process has us talking about potentially recovering much of the now unrecoverable oil," Brown said. "This will help give us more time to develop replacements for our major energy source."

It's no surprise petroleum industry insiders from around the world have been contacting Brown about his research. Through private and public funding, more than $7 million has been devoted to Brown's research related to his oil recovery method. He currently is negotiating with companies from the Middle East to Great Britain interested in applying his process.

Historically, few in the industry had expertise related to microbiology, Brown explained. While much field research had focused since the 1940s on "microbial enhanced oil recovery" --known commonly by the acronym MEOR--few in the industry accepted the associated methodology for fear of plugging the wells. The few trials that were conducted didn't last long enough to determine any long-term effects associated with the process, he explained.

The difference between Brown's method, called microbial permeability profile modification, and most MEOR methods is that Brown only injects plant nutrients. Most MEOR processes involve injecting microorganisms.

By feeding only indigenous microbes in the oil-bearing formations, Brown avoids problems that can plug the wells. While limiting the amount of environmentally friendly nutrients limits their growth, it successfully alters the paths of injected water used to sweep the hiding oil from previously untouched areas.

In addition to being environmentally friendly, the process is cost-effective, Brown observed. In a recent field trial, the additional cost of the process was just $1.32 per barrel of new oil.

Though there are limits to the depths at which microbes can be expected to grow, Brown has been able to isolate microbes at depths of more than 14,000 feet, and some can even grow at temperatures above 100 degrees Celsius.

"This certainly extends the number of oil fields where this methodology could be applied," Brown said proudly.

While Brown continues to work with petroleum industry leaders in removing additional oil from the ground, he has launched a second project in Wyoming to revive depleted natural gas wells located in coal beds. As with the liquid product, he's using indigenous microflora in these wells to produce more methane.

Brown's methods for recovering the oil have earned him accolades from within the petroleum industry and from the federal government. As then-U.S. Secretary of Energy, Bill Richardson (now New Mexico's governor) wrote several years ago to thank him for his contributions after the field process proved successful. Also, the method earned a 1999 "Best of the Gulf Coast" certificate in the advanced recovery project category from the magazine Hart's Oil and Gas World.

Adapted from materials provided by Mississippi State University.

Friday, April 11, 2008

The Peak Oil Crisis: The First Shortages

Falls Church News-Press

By Tom Whipple

Fuel prices alone are unlikely to bring America to its senses.

It clearly will take outright shortages with lines at the pumps, curtailed deliveries and many other misfortunes before serious measures to deal with declining oil supplies –- speed limits, rationing, mandatory car pools, improved mass transit -- are taken. Thus the question becomes: how soon?

Gasoline and diesel are two different animals in America. Most gasoline is used for personal travel and much of that for convenience and, as we shall find out shortly, is not essential to the economy. Diesel in America is, for the most part, an essential fuel in that it is used to perform money-making work or, in its heating oil form, keep us from freezing. If diesel becomes too expensive, and those expenses cannot be passed on, then the consumption of diesel will be cut back. This in fact is already happening -- the government is reporting that distillate consumption of diesel and heating oil currently is down by 3.1 percent as compared to the same four week period last year. This is undoubtedly due to the price of diesel and heating oil which is now around $4 a gallon, an increase of $1.17 a gallon since last year.

The word “distillates” encompasses both diesel and heating oil which are about the same thing; except that the clean air rules in the U.S. require most of the sulfur be removed before burning it in a motor. Currently there is a world-wide shortage of distillates which is most severe in China where long lines of trucks waiting for fuel are appearing across the country.

Before examining what might lead to shortages in the U.S., it is useful to get some understanding of distillates and the role they play in American life. Few appreciate that diesel is one of the best of the liquid fuels, for it will move your car further than the same quantity of gasoline. As a result, the gasoline-powered car is fast disappearing in Europe and is being replaced by small diesel-powered ones that are delivering 40, 50 and even 60 miles per gallon. In some European countries, diesel-powered cars are now approaching 80 percent of new car sales.

In America, about 77 percent of our daily consumption of about 4 million barrels of distillates is used in diesel engines. Three quarters of this is used in trucks and the rest is used “off highway” on farms or boats or at construction sites, etc. As we only use heating oil for about 6 months in the winter, consumption of distillates in the U.S. is highly seasonal with consumption building to a peak in January and February and then dropping off to the end of April when the heating season is largely over.

Distillate stockpiles in the U.S., therefore, vary by season with a buildup in the late spring, summer and fall followed by a rapid drop from late December to May as oil burners across the northern U.S. are cranked up. The severity of the winter too has lot do to with how much heating oil is consumed each year and there is always a danger unusual cold will deplete stockpiles to the point where shortages exist.

This seasonal pattern suggests that when distillate shortages come to the U.S. they first will arrive during the heating season, either as a result of unusually cold weather or simply insufficient increases in stockpiles during the warmer months. As a 42 gallon barrel of oil will make only abut 10 gallons of diesel and heating oil, the U.S. must import about 6 percent or about 250–350,000 barrels of refined diesel and heating oil each day. Most of this comes from “safe” places like Canada and the Virgin Islands, but some must come from the world market.

It is these imports that may become our Achilles heel, for we are now facing increasingly stiff competition as we purchase distillates abroad. Within the last year China has started to import large quantities of refined diesel. A new source of demand is the power shortage that is developing all over the world. As there is no quick solution to inadequate electricity being available on national grids, the demand for imported diesel to fuel emergency small local generators is already growing rapidly. The bottom line is that world diesel prices have nowhere to go but up.

U.S. imports of diesel appear to be dropping. For most of 2006 we were importing about 350,000 barrels a day. In the first quarter of 2007, we imported an average of 360,000 barrels a day but by last fall this had dropped to 260,000 barrels and was the same for the first quarter of 2008. This could of course turn around, but given growing demand and lack of an increased supply worldwide, it is likely that it will become harder and much more expensive to find diesel and heating oil to import.

In recent years, U.S. stockpiles usually peaked at around 135-145 million barrels in December and then declined to a low of 100-110 million barrels at the end of April.

So far this year seems about normal. Our stockpile at the end of March was 109 million barrels, a little low, but still in the acceptable range.

The two new factors this year, however, are the high prices and slowing economy which already is cutting demand by 3 percent or 130,000 barrels a day and the rapidly increasing demand for imported diesel around the world.

This balance bears close watching. In another two weeks, U.S. stockpiles should start rising again so that we can start accumulating enough heating oil for next winter. If demand continues to stay below normal, we will know that the use of diesel for industry and transport is causing at least some of the drop in demand. If demand returns closer to normal in a couple of months, then it would suggest that drop in the use of costly home heating was behind at least some of the recent decline in demand.

It is a little too early to panic. However, if stockpiles do not start increasing at something approaching normal rates, there could be trouble just ahead. If we should have a mild winter, then we may be able to escape for another year. If, however, we do not build adequate stockpiles this summer or next and winter turns out to be unusually cold, prices will spiral even higher and the first serous U.S. shortages in the last 25 years could easily develop.

Wednesday, April 09, 2008

The Last Straw

A new generation of biofuels turns out to be another environmental disaster

By George Monbiot

Now they might start sitting up. They wouldn’t listen to the environmentalists or even the geologists. Can governments ignore the capitalists?

A report published last week by Citibank, and so far unremarked by the media, proposes “genuine difficulties” in increasing the production of crude oil, “particularly after 2012.”(1) Though 175 big drilling projects will start in the next four years, “the fear remains that most of this supply will be offset by high levels of decline”. The oil industry has scoffed at the notion that oil supplies might peak, but “recent evidence of failed production growth would tend to shift the burden of proof onto the producers”, as they have been unable to respond to the massive rise in prices. “Total global liquid hydrocarbon production has essentially flatlined since mid 2005 at just north of 85 million barrels per day.”

The issue is complicated, as ever, by the refusal of the OPEC cartel to raise production. What has changed, Citi says, is that the non-OPEC countries can no longer answer the price signal. Does this mean that oil production in these nations has already peaked? If so, what do our governments intend to do?

Nine months ago, I asked the British government to send me its assessments of global oil supply. The results astonished me: there weren’t any(2). Instead it relied exclusively on one external source: a book published by the International Energy Agency. The omission became stranger still when I read this book and discovered that it was a crude polemic, dismissing those who questioned future oil supplies as “doomsayers” without providing robust evidence to support its conclusions(3). Though the members of OPEC have a powerful interest in exaggerating their reserves in order to boost their quotas, the IEA relied on their own assessments of future supply.

Last week I tried again, and I received the same response: “the Government agrees with IEA analysis that global oil (and gas) reserves are sufficient to sustain economic growth for the foreseeable future.”(4) Perhaps it hasn’t noticed that the IEA is now backtracking. The Financial Times says the agency “has admitted that it has been paying insufficient attention to supply bottlenecks as evidence mounts that oil is being discovered more slowly than once expected … natural decline rates for discovered fields are a closely guarded secret in the oil industry, and the IEA is concerned that the data it currently holds is not accurate.”(5) What if the data turns out to be wrong? What if OPEC’s stated reserves are a pack of lies? What contingency plans has the government made? Answer comes there none.

The European Commission, by contrast, does have a plan, and it’s a disaster. It recognises that “the oil dependence of the transport sector … is one of the most serious problems of insecurity in energy supply that the EU faces”(6). Partly in order to diversify fuel supplies, partly to cut greenhouse gas emissions, it has ordered the member states to ensure that by 2020 10% of the petroleum our cars burn must be replaced with biofuels. This won’t solve peak oil, but it might at least put it into perspective by causing an even bigger problem.

To be fair to the Commission, it has now acknowledged that biofuels are not a green panacea. Its draft directive rules that they shouldn’t be produced by destroying primary forests, ancient grasslands or wetlands, as this could cause a net increase in greenhouse gas emissions. Nor should any biodiverse ecosystem be damaged in order to grow them(7).

It sounds good, but there are three problems. If biofuels can’t be produced in virgin habitats, they must be confined to existing agricultural land, which means that every time we fill up the car we snatch food from people’s mouths. This, in turn, raises the price of food, which encourages farmers to destroy pristine habitats - primary forests, ancient grasslands, wetlands and the rest - in order to grow it. We can congratulate ourselves on remaining morally pure, but the impacts are the same. There is no way out of this: on a finite planet with tight food supplies you either compete with the hungry or clear new land.

The third problem is that the Commission’s methodology has just been blown apart by two new papers. Published in Science magazine, they calculate the total carbon costs of biofuel production(8,9). When land clearance (caused either directly or by the displacement of food crops) is taken into account, all the major biofuels cause a massive increase in emissions.

Even the most productive source - sugarcane grown in the scrubby savannahs of central Brazil - creates a carbon debt which takes 17 years to repay. As the major carbon reductions must be made now, the net effect of this crop is to exacerbate climate change. The worst source - palm oil displacing tropical rainforest growing in peat - invokes a carbon debt of some 840 years. Even when you produce ethanol from maize grown on “rested” arable land (which in the EU is called set-aside and in the US is called conservation reserve), it takes 48 years to repay the carbon debt. The facts have changed. Will the policy follow?

Many people believe there’s a way of avoiding these problems: by making biofuels not from the crops themselves but from crop wastes. If transport fuel can be manufactured from straw or grass or wood chips, there are no implications for land use, and no danger of spreading hunger. Until recently I believed this myself(10).

Unfortunately most agricultural “waste” is nothing of the kind. It is the organic material which maintains the soil’s structure, nutrients and store of carbon. A paper commissioned by the US government proposes that, to help meet its biofuel targets, 75% of annual crop residues should be harvested(11). According to a letter published in Science last year, removing crop residues can increase the rate of soil erosion 100-fold(12). Our addiction to the car, in other words, could lead to peak soil as well as peak oil(13).

Removing crop wastes means replacing the nutrients they contain with fertiliser, which causes further greenhouse gas emissions. A recent paper by the Nobel laureate Paul Crutzen suggests that emissions of nitrous oxide (a greenhouse gas 296 times more powerful than CO2) from nitrogen fertilisers wipe out all the carbon savings biofuels produce, even before you take the changes in land use into account(14). Growing special second generation crops, such as trees or switchgrass, doesn’t solve the problem either: like other energy crops, they displace both food production and carbon emissions. Growing switchgrass, one of the new papers in Science shows, creates a carbon debt of 52 years(15). Some people propose making second generation fuels from grass harvested in natural meadows or from municipal waste, but it’s hard enough to produce them from single feedstocks; far harder to manufacture them from a mixture. Apart from used chip fat, there is no such thing as a sustainable biofuel.

All these convoluted solutions are designed to avoid a simpler one: reducing the consumption of transport fuel. But that requires the use of a different commodity. Global supplies of political courage appear, unfortunately, to have peaked some time ago.


1. Citi, 4th February 2008. Industry Focus: Oil Companies - International.

2. See

3. International Energy Agency, 2005. Resources to Reserves: Oil & Gas Technologies for the Energy Markets of the Future. Available electronically at:

4. Email from the Energy Desk, Department for Business, Enterprise and Regulatory Reform, 8th February 2008.

5. Dino Mahtani, 26th December 2007. Oil watchdog reworks reserves forecasts. The Financial Times.

6. Commission of the European Communities, 23rd January 2008.
Proposal for a Directive of the European Parliament and of the Council
on the promotion of the use of energy from renewable sources, p8.

7. Commission of the European Communities, 23rd January 2008.
Proposal for a Directive of the European Parliament and of the Council
on the promotion of the use of energy from renewable sources, Article 15.

8. Joseph Fargione, Jason Hill, David Tilman, Stephen Polasky, Peter Hawthorne, 7th February 2008. Land Clearing and the Biofuel Carbon Debt. Science. Doi 10.1126/science.1152747.

9. Timothy Searchinger, Ralph Heimlich, R. A. Houghton, Fengxia Dong, Amani Elobeid, Jacinto Fabiosa, Simla Tokgoz, Dermot Hayes, Tun-Hsiang Yu, 7th February 2008. Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land Use Change . Science. Doi 10.1126/science.1151861.

10. I am grateful to Jim Thomas from the ETC Group for putting me right.

11. US Department of Energy and US department of Agriculture, April 2005. Biomass as Feedstock for a Bioenergy and Bioproducts Industry: the Technical Feasibility of a Billion-Ton Annual Supply.

12. David Pimentel and Rattan Lal, 17th August 2007. Letter: Biofuels and the Environment. Science.

13. This term has been used by Alice Friedemann, 10th April 2007. Peak Soil: Why cellulosic ethanol, biofuels are unsustainable and a threat to America.

14. PJ Crutzen, AR Mosier, KA Smith and W Winiwarter, 1 August 2007. N2O release from agro-biofuel production negates global warming reduction by replacing fossil fuels. Atmospheric Chemistry and Physics Discussions 7, pp11191–11205.

15. Joseph Fargione et al, ibid.

Oil peak theorist warns of chaos, war

Veteran oil industry financier paints grim picture of resource scarcity, derailed global growth; others disagree

By Shawn McCarthy

Matt Simmons sounds the alarm like the Cassandra of the oil industry, warning that crude production has peaked and that looming energy shortages could derail global growth and even spark armed conflict.

As a prominent "peak oil" theorist, the veteran oil industry financier paints a grim picture of a world facing resource scarcity. Still, it doesn't take a "peak-ist" to conclude that the global oil producers will find it increasingly difficult to keep up with growing demand.

He squared off yesterday against other experts who argue that the world has yet to reach the physical limits of oil production. But while they disagreed on the extent of the problem, the panelists at a U.S. Department of Energy conference in Washington concurred that future crude production will be constrained by physical, economic and political factors that add up to tight markets and higher oil prices.

Despite oil prices that have topped $100 (U.S.) a barrel, there was little sense at yesterday's conference, put on by the Department of Energy's Energy Information Administration, that high prices would spark either a boost in oil output or a sharp fall in global demand.

Record pump prices - and a sharply slowing economy - have cut into U.S. demand, which represents 25 per cent of the world's total. But analysts who follow the emerging economies said there is no sign yet that triple-digit crude prices have seriously dented demand in China or India.

Global demand for oil will continue to grow, analysts forecast, even as the developed world reduces consumption in the face of high prices and environmental concerns. Economic growth and rising living standards in developing countries like China, India and the Middle East will more than offset reduced energy consumption in the mature economies of North America and Europe.

The views of Mr. Simmons, who runs Houston-based Simmons & Assoc. investment bank, bordered on apocalyptic.

Oil shortages "could lead to social chaos and war," he warned. "The issue is the most serious risk to sustaining the 21st century. Peak oil is real, and we have to take it seriously." He argued that production of conventional crude peaked in May, 2005, at 74 million barrels a day.

Since then, the world has met rising consumption - now at about 88-million barrels a day - by cutting inventories, tapping natural gas liquids that typically are included in crude production figures and using better refinery efficiencies.

Peter Jackson, a director at the Cambridge Energy Research Assoc., said Mr. Simmons was overstating decline rates of existing fields, was not taking into account the prospect for new discoveries, and played down the importance of unconventional resources such as Canada's oil sands.

Still, he said the industry faced "above ground" problems that would make it difficult to keep production growing fast enough to meet rising demand. About 90 per cent of existing conventional reserves are controlled by state-owned oil companies, many of which are not investing enough in capacity expansion, he said.

At the same time, the industry worldwide has seen construction costs explode, even as oil companies are forced to exploit smaller, more remote and more geologically complex reserves. The average cost of producing a barrel of oil has more than doubled in the past eight years, with most of that increase occurring in the past four, he said.

James Schlesinger, who was the United States' first energy secretary 30 years ago during the oil shock of the late 1970s, warned of a new crisis looming.

That 1970s shock was the result of supply disruptions caused by the 1973 Arab embargo and then the Iranian revolution. The current runup in prices reflects a more fundamental disconnect between constrained supplies and rising demand in the developing world, he said.

"At some point during the decade immediately ahead, we will hit a plateau, and this will have a tremendous shock both economically and politically," Mr. Schlesinger said.

The Big Picture: Resource Collapse


By Jamais Cascio

Truism #1: Human society’s continued existence depends on the sustained flows of a variety of natural resources.

Truism #2: What that set of natural resources comprises can change over time.

We (the human we) have pushed the limits of many of the resources our civilization has come to depend upon. Oil is the most talked-about example, but from topsoil to fisheries, water to wheat, many of the resources underpinning life and society as we know it face significant threat. In many cases, this threat comes from simple over-consumption; in others, it comes from ecosystem damage (often, but not always, made worse by over-consumption).

The most obvious cause of over-consumption is population. Long a contentious issue for environmentalists, the argument that “we have too many people,” logical in theory, faces serious ethical questions when turned to practice. One example: how do we decide who gets to continue living? Over-consumption is compounded by rising standards-of-living allowing more people to consume even more than before, and by a historically-rooted assumption that the Earth is big and can always provide.

But some resources simply have limits—there’s a maximum amount of oil to be extracted, or copper to be dug up. Some resources (topsoil, fisheries) can renew themselves, but a a rate far slower than our use. Unfortunately, what we’ve seen from other dwindling resources is that humans have a tendency to try to grab the last bits for themselves, even at the expense of others. This is the so-called “tragedy of the commons,” and its most visible present-day manifestation has to be ocean fisheries. Many seafood species are the on the verge of total collapse, perhaps even extinction; official efforts to limit or halt fishing of certain species face desperate communities dependent upon the industry.

The other driver for resource collapse, ecosystem damage, is somewhat more complex. In some cases, such as honeybees, we still have little certainty as to why the resource is in such danger. In the case of wheat, the risk comes from a combination of human and natural activity.

If you hadn’t heard that wheat is threatened, you’re not alone. It’s a relatively recent problem: a fungus known as Ug99. Emerging in Uganda in 1999 (hence the name), this black stem rust fungus seemed to be slowly moving north into the Middle East, not yet hitting locations dependent upon wheat as a primary food crop; this slow movement seemed to offer biologists time to come up with effective counters and to breed resistant strains of wheat, a time-consuming process. But that luck didn’t hold.

...on 8 June 2007, Cyclone Gonu hit the Arabian peninsula, the worst storm there for 30 years.

“We know it changed the winds,” says Wafa Khoury of the UN Food and Agriculture Organization in Rome, because desert locusts the FAO had been tracking in Yemen blew north towards Iran instead of north-west as expected [...]. “We think it may have done that to the rust spores.” This means, she says, that Ug99 has reached Iran a year or two earlier than predicted. The fear is that the same winds could have blown the spores into Pakistan, which is also north of Yemen, and where surveillance of the fungus is limited.

In Iran, the spore will encounter barberry bushes, which trigger explosive reproduction of Ug99 (and more potential for mutation). From Iran to Pakistan, and then to India (much more dependent upon wheat) and to China. From China, it can blow to North America (as dust and soot do already). The fungus ignores current strains of wheat with fungal resistance, because it initially faced monocultures of wheat with single markers for resistance, allowing for easy mutation and replication.

I’m just glad the Norwegian seed vault is now up and operating. But as disturbing as the potential for collapse may be, the second truism listed above offers cause for hope.

Ecosystem services is the term to remember this time around. It’s tempting to think of ourselves as dependent upon the resources we currently use, but that’s not quite right. What we depend upon are the services the various resources provide—the energy, for example, or the protein. In principle, if we can receive those service a different way, we may avoid the repercussions of the collapse of a particular resource. It’s true that, in some cases (like water), the resources effectively are the services, but even here, we have to be careful not to think of a particular source (e.g., aquifers) as being the only possibility.

Bird poop provides an instructive example. In the 19th century, guano from birds native to Peru offered the world’s best form of fertilizer—so good that guano became the subject of imperial ambitions, national laws, and international tension. In ”When guano imperialists ruled the earth,” Salon’s Andrew Leonard quotes from President Millard Fillmore’s 1850 state of the union address:

Peruvian guano has become so desirable an article to the agricultural interest of the United States that it is the duty of the Government to employ all the means properly in its power for the purpose of causing that article to be imported into the country at a reasonable price.

But by the end of the century, the market for guano had collapsed, along with Peru’s economy, because of the development of industrial “superphosphate” fertilizer. It’s worth noting that, even if superphosphate hadn’t been developed, Peru would have been in trouble—the supplies of guano were just about depleted by the time the market collapsed. That’s right: The world was facing “Peak Guano,” only to be saved by catalytic innovation.

Resource Collapse and… Climate Change

I addressed this in The Big Picture: Climate Change, but as I noted a week or so ago, a recent article by NASA’s James Hansen points to another point of intersection. In ”Implications of “peak oil” for atmospheric CO2 and climate” (PDF), Hansen and colleague Pushker A. Kharecha argue that the effort to keep atmospheric carbon levels below 450ppm (widely considered the seriously bad news tipping point) may be greatly helped by limitations on the amount of available oil. With a reasonable phase-out of coal, active measures to reduce non-CO2 forcings (including methane and black soot), and draw-down of CO2 through reforestation, limiting CO2 to 450ppm can be readily accomplished due to limits on oil reserves. This doesn’t require the most aggressive peak oil scenarios, either—simply using the US Energy Information Administration’s estimates of oil reserves is enough. Using more aggressive numbers, atmospheric CO2 peaks at 422ppm.

We may end up avoiding catastrophic climate disruption despite our own best efforts.

Resource Collapse and… Catalytic Innovation

The clearest connection between resource collapse and catalytic innovation is in the realm of substitution services. Nobody wants oil, for example, people want what can be done with oil. That can mean other forms of energy, such as electricity (for transportation), or it may mean other sources of hydrocarbons, such as thermal polymerization (for plastics), and so forth. The big concern: will the substitute technologies be ready by the time the resource is (effectively) gone?

Often, the issue really isn’t technology, but expense and willingness to change. Driving the cost of alternatives down to make them competitive with the depleting resource can be difficult; even more difficult can be getting people to accept a substitution service that isn’t exactly like the old one (even if it’s objectively “better"). Cultured meat would be far and away better than today’s meat processing industry—environmentally, ethically, health-wise—but, even if the product looked, tasted and felt just like “real” meat, a substantial number of people would likely avoid it simply because it was weird.

More important may be questions of culture and “ways of life.”

ubstitutions rarely mean the same workforce providing one resource shifts seamlessly over to its replacement; more often, the substitute comes from an entirely different region, or may require different kinds or numbers of workers.

It also means a change in mindset or interpretations of the world around us. I’ve commented before about the imminent emergence of photovoltaic technologies allowing us to make nearly any surface a point of power generation. To an extent, this seems superficially obvious, but try taking a walk or drive with your mind’s eye set on what would be different with a solar world. What rationale would we have, for example, for not giving any outside surface a photovoltaic layer? How would we design the material world differently? What would disappear—and what would suddenly become ubiquitous?

Or there may be larger issues of infrastructure delaying an otherwise “easy” transition. Take alternative power vehicles: in many ways, making the cars & trucks run on clean energy will be the easy part. Think of all of the gas stations that would have to change or go out of business; think of all of the jobs lost when old skills become less valuable; think of the thousands of car repair places needing to retrain and retool. If you take the scenario I posited in The Problem of Cars last year, imagine all of the elements of the present day that would have to change in order for it to become possible.

Resource Collapse and… Ubiquitous Transparency

As with the climate, the role of ubiquitous transparency is to keep a close eye on the flows of production and consumption that might otherwise be invisible (at least until it’s too late).

The scientific benefits would likely be the proximate driver. Whether the ultimate users are regulatory officials or participating panopticoneers depends on the balance of top-down vs. bottom-up power. Ultimately, it won’t just be the points of production being watched, it will be the points of consumption, as well.

Resource Collapse and… New Models of Development

This is both harsh and simple.

If the newly-developing nations persist in trying to follow a Western path of development, then the competition for dwindling resources will end up as a critical point of tension and, likely, warfare. The more powerful nations will scrape by, while the ones less-able to throw their weight around will suffer. The more that the newly developing nations emulate Western consumption, the more that they’re likely to face famine, economic collapse, and millions of casualties.

Conversely, if the newly-developing nations take a leapfrog-alternatives path, with a strong emphasis on efficiency and experimentation, they could find themselves the eventual winners of the century. The leapfrog concept is straightforward—the areas with less legacy infrastructure can adopt new systems and models faster—and emerging catalytic technologies and economic models seem custom-made for new adopters. But this isn’t without risk; the new systems and models are intrinsically unproven, and may not work as well as expected. Leapfrogging nations may find themselves facing famine, economic collapse, and mass deaths anyway, and probably compounded by the expenditure of resources needed by the leapfrog systems and the loss or weakening of the old systems.

Resource Collapse and… The Rise of the Post-Hegemonic World

Resource collapse isn’t the cause of the rise of the post-hegemonic world, but it’s an important driver. It weakens the powerful, and opens up new niches of influence. It triggers conflict, setting the mighty against the mighty. It reveals vulnerabilities.

Most importantly, it sets up the conditions for the emergence of new models of power, as ultimately the most effective responses to resource collapse will come from revolutions in technology and socio-economic behavior. Those actors adopting the new successful models will find themselves disproportionately powerful.

Right now, none of the leading great power nations seem well-suited to discover and adopt such new models. The same can be said of the leading global corporate powers. The climate and resource crises of the 2010s and 2020s will be compounded by a vacuum of global leadership.

Ultimately, I suspect that the identity of the pre-eminent global actors of the mid-21st century will surprise us all.

Jamais Cascio is a fellow of the IEET, and a professional futurist. He writes the popular blog Open the Future.