Peak Oil News: Oil drying up as world remains unaware

Sunday, January 11, 2009

Oil drying up as world remains unaware

By William Marsden

For more than a century it has been cheaper than coffee and as constant as ocean waves.

Getting it is simple. You select the grade, insert the nozzle, squeeze the handle and gasoline comes out. There seems no end to it.

Until now.

On top of the other problems plaguing the world, such as global warming and the current financial meltdown, there's a third pressing issue that threatens to bring the good life to an end: The world is fast running out of oil.

Given that crude oil makes up 36.4 per cent of the world's energy consumption, the seriousness of shortages cannot be underplayed. Our reliance on oil is almost total. It fuels 100 per cent of air and sea transport and most of our land transport. Without oil there is no petrochemical industry.

Agriculture, manufacturing, building materials, the clothes we wear, the food we eat and the medicines we take depend on oil.

Running out of oil is a question of when - not if.

Normand Mousseau, a physics professor at Universite de Montreal who has written a book on the end of oil, says the beginning of the end struck last summer. "This is why the prices jumped to $147 a barrel," he said. "As soon as the economy comes back, they will be right back up."

However, others say the crunch will come in three to 10 years depending on our rate of consumption.

"I hate being an alarmist about it, but our entire lifestyle is dependent on cheap oil and there just isn't very much left in the ground," Andrew Miall, professor of geology at the University of Toronto, said in an interview.

Most petroleum geology experts contend that we have already discovered the world's giant fields and what's left over will not keep the age of oil alive much longer.

"It's safe to say we have pinpricked the Earth thoroughly enough that it is very unlikely we have missed any Middle Easts," Miall said. "There may be another North Sea or two, but nothing that is going to really change the energy scene."

Matt Simmons, chairman and CEO of Simmons and Company International, which is a private energy investment banker based in Texas, said he believes the world's oil reserves have already peaked and we are on the downward slide.

"I think basically we are now in the early days of a very serious pending scarcity of oil and natural gas," he said. "Because we don't know we are, we are not putting any clamps on demand."

Simmons has been studying world oil production and reserves for decades. His company helps finance exploration and production.

He predicted - accurately as it turned out - that the North Sea fields would peak between 1998 and 2000.

Now he has turned his attention to Mexico, Kuwait and Saudi Arabia, warning that their fields also have hit the downward slide.

"All the major oilfields of the world have peaked and we are going to see soon some precipitous collapses," he said.

Because production flows can still keep pace with demand, the price has remained deceptively low, giving the impression there's still lots of oil out there. Even at its record high of $147 a barrel, crude oil was still only 22 cents a cup, which is a fraction of the cost of a regular coffee.

Simmons called the price of oil absurdly low: "Let's say you and five fat friends run out of gas and you see a guy coming down the street riding a donkey and pulling an old messy cart and you say, ‘Hey pull over here. Can you take me and my five fat friends a couple of miles for 22 cents,' which is what that much gas will get you. And the guy's going to flip you the bird: ‘Are you stupid?'"

Our recent consumption rates are the most voracious in history. By the end of 2007, the world had consumed about 1.1 trillion barrels of oil. Half of this was consumed over the last 25 years alone. So far, we have consumed about 50 per cent of the total recoverable oil, according to the World Energy Council.

Chris Skrebowski, a London-based member of the Energy Institute in Britain and consultant editor of the Petroleum Review, which is considered the oil industry bible, said he believes world oil reserves will peak "no later than 2012."

He paints a doomsday scenario of a world blithely unaware that in a few years its oil-based lifestyle will begin to end.

"Peak oil is when delivery flows can't meet the demand," Skrebowski said. Demand will outstrip production primarily because of a lack of sufficient reserves. Once that happens, we are on an unbroken downward slide.

For Skrebowski, signs of the approaching peak are clear. High oil prices as well as the enormous price fluctuations we're seeing are ultimately the result of emerging bidding wars over oil by oil-deficit countries.

Despite dwindling reserves, demand for oil is expected to continue to rise in China, India and other Asian countries. This will only hasten the moment of peak oil.

And new important discoveries are doubtful.

Canada's conventional oil production peaked in about 1995. U.S. production peaked in the 1970s. North Sea wells peaked in 2000. Mexico peaked in 1997 and Venezuelan production is peaking.

In all, Skrebowski said, about 28 significant producers are in decline. This represents about 35 per cent of global production. Once that figure reaches 51 per cent, "we reach global peak oil," he said.

The only place where production continues to hold up is in the Persian Gulf.

But the elephant wells of Saudi Arabia are showing signs of exhaustion and the Saudis are indicating that they want to begin preserving their oil for their children.

Yet politicians have not addressed the issue.

"They are terrified of it," Skrebowski said. "They don't know what to do. There are no pat solutions."

Montreal Gazette


At 11:08 AM, January 22, 2009, Blogger Jacques Swanepoel (South-Africa) said...

As a Elliott Wave proffessional in South-Africa we see oil in the WXY wave structure. We are presently in downward wave X and we all know that the upward wave Y lying ahead will have no end until it dissapears. It will be the first time in History that the WXY laws according to Elliott will be proven wrong as there will be no downturn.Since Elliot waves are based on fibonacci and the rules of balance in the universe, this could bring an end to modern civilization and a 3rd world war. As 1 third of the world's population (China) goes to war to get the few drops that's left, Armaggadon might actually realy happen. We make oil out of coal down here. Presently almost half of our daily needs are supplied by SASOL.So my tip to you is to buy coal. Hundreds of thousends of tons of it. It might be well worth the best investment presently available on the Planet.All my money is in SASOL shares. I might just retire a wealthy man with enough horses to pull my cart from town to town... when the coal reserves are also depleted! Jacques Swanepoel. South-Africa.


Post a Comment

<< Home