Oil economy is on slippery slope

[pupp1]

Monday, May 30, 2005

Jeff McIntosh / Canadian Press

Workers overlook the Suncor tar sands project in Fort McMurray, Alberta, Canada. Many scientists criticize a reliance on fossil fuels.

Oil economy is on slippery slope

Many doubt doomsday scenario of shortages, say other energy sources will ease post-petroleum age.

By Matt Crenson / Associated Press
Could the petroleum joyride -- cheap, abundant oil that has sent the global economy whizzing along with the pedal to the metal and the AC blasting for decades -- be coming to an end?

Some observers of the oil industry think so. They predict that this year, maybe next -- almost certainly by the end of the decade -- the world's oil production, having grown exuberantly for more than a century, will peak and begin to decline.

And then it really will be all downhill. The price of oil will increase drastically. Major oil-consuming countries will experience crippling inflation, unemployment and economic instability. Princeton University geologist Kenneth S. Deffeyes predicts "a permanent state of oil shortage."

According to these experts, it will take a decade or more before conservation measures and new technologies can bridge the gap between supply and demand, and even then the situation will be touch-and-go.

None of this will affect vacation plans this summer -- Americans can expect another season of beach weekends and road trips to Graceland relatively unimpeded by the cost of getting there. Though gas prices are up, they are expected to remain below $2.50 a gallon. Accounting for inflation, that's pretty comparable to what motorists paid for most of the 20th century. It only feels expensive because gasoline was unusually cheap between 1986 and 2003.

And there are many who doubt the doomsday scenario will ever come true. Most oil industry analysts think production will continue growing for at least another 30 years. By then, substitute energy sources will be available to ease the transition into a post-petroleum age.

"This is just silly," said Michael Lynch, president of Strategic Energy and Economic Research in Winchester, Mass. "It's not like industrial civilization is going to come crashing down."

Where you stand on "peak oil," as parties to the debate call it, depends on which forces you consider dominant in controlling the oil markets. People who consider economic forces most important believe that prices are high right now mostly because of increased demand from China and other rapidly growing economies. But eventually, high prices should encourage consumers to use less and producers to pump more.

But Deffeyes and many other geologists counter that when it comes to oil, Mother Nature trumps Adam Smith. The way they see it, Saudi Arabia, Russia, Norway and other major producers are already pumping as fast as they can. The only way to increase production capacity is to discover more oil. Yet with a few exceptions, there just isn't much left out there to be discovered.

"The economists all think that if you show up at the cashier's cage with enough currency, God will put more oil in the ground," Deffeyes said.

There will be warning signs before global oil production peaks, the bearers of bad news contend. Prices will rise dramatically and become increasingly volatile. With little or no excess production capacity, minor supply disruptions will send the oil markets into a tizzy. So will periodic admissions by oil companies and petroleum-rich nations that they have been overestimating their reserves.

Oil producers will grow flush with cash. And because the price of oil ultimately affects the cost of just about everything else in the economy, inflation will rear its ugly head.

Anybody who has been paying close attention to the news lately may feel a bit queasy at this stage. Could $5-a-gallon gas be right around the corner?

"The world has never seen anything like this before and so we just really don't know," said Robert L. Hirsch, an energy analyst at Science Applications International Corp., a Santa Monica, Calif., consulting firm.

Still, he added, "there's a number of really competent professionals that are very pessimistic." The pessimism stems from a legendary episode in the history of petroleum geology. Back in 1956, a geologist named M. King Hubbert predicted that U.S. oil production would peak in 1970.

His superiors at Shell Oil were aghast. They even tried to persuade Hubbert not to speak publicly about his work. His peers, accustomed to decades of making impressive oil discoveries, were skeptical.

But Hubbert was right. U.S. oil production did peak in 1970, and it has declined steadily ever since. Even impressive discoveries such as Alaska's Prudhoe Bay, with 13 billion barrels in recoverable reserves, haven't been able to reverse that trend.

A few years ago, geologists began applying Hubbert's methods to the entire world's oil production. Their analyses indicated that global oil production would peak some time during the first decade of the 21st century.

Deffeyes thinks the peak will be in late 2005 or early 2006. Houston investment banker Matthew Simmons puts it at 2007 to 2009. California Institute of Technology physicist David Goodstein, whose book "The End of Oil" was published last year, predicts it will arrive before 2010.

The exact date doesn't really matter, said Hirsch, because he believes it's already too late. In an analysis he did for the U.S. Department of Energy in February, Hirsch concluded that it will take more than a decade for the U.S. economy to adapt to declining oil production.
Source

[saturnsteve]

What is this, boring post day! Memorial day must mean no good posts today

[mjd1001]

This chart is conservative compared to some of the others I have seen. I think the write of this article is actually being conservative.

[Globalist]

I've heard two peak dates from knowledgebale people at major global oil companies. The most pessimistic one was 2020, and the optimistic one is 2050. So I guess the truth is in between.

[Parkwood60]

They have been predicting the end of oil for years. And based on their best research, the date keeps getting further away. If you read articles from the first oil crisis of the 70's, we were supposed to have run out already.

Scientist have been revising their theories of where oil comes from and now some of them think it may be seeping out of the mantle at a constant rate. At the moment I can't find the article I read to this effect, but its true. Wells thought to have dried up years ago, have suddenly been found to have oil in them again.

On the other hand, that is no excuse for cars to be getting worse mileage than they did 20 years ago. Don't believe me? I can't find the info on the web, but Car and Driver reprinted a 1983 sport sedan comparison last month, and they all got phenominal mileage. (And the Pontiac 6000 finished pretty high in the compro as well) New cars, despite CAFE are getting 1960's level of MPG. I should say, cars and SUVs, cause the SUV has replaced the old family station wagon, and the full sized land yatchs of yore.

Why is this? Well I keep telling people that it is because, though you can see it on the sticker, you can't feel fuel economy when you test drive a new car. The typical test drive is why GM usually tunes their cars for good torque. That way they feel snappy when you test drive it with the automatic for the few blocks around the dealer's lot.

Wanna help the US with oil consumption? Make light trucks meet the same CAFE standards as cars, or revise the definition of a truck. The PT cruiser should be a car, the Highlander should be a car, the Magnum should be a car, all the minivans should be considered cars, most SUVs should be considered cars. What's a truck? The problem with trying to define truck for government reasons is that it then allows the car companies to monkey around and make things that meet the letter of the law. I think any "truck" less than a 3/4 ton ought to be lumped in with the cars, since they are driven just like cars, by mostly the same people.

[yoblues]

There is no real shortage of oil. There will be a shortage in a century or so from now BUT how do they get the lemmings to live with 2 or 3 or 5 dollar a gallon gasoline. SIMPLE: Convince you there is a shortage of oil and we have no choice but to charge you that much. Corperate America at it's finest and like lemmings you will eat it.

[01Sunfire]

Originally Posted by saturnsteve

What is this, boring post day! Memorial day must mean no good posts today

I was just thinking the same thing!!!

[nota]

Worth a look imo

http://www.lifeaftertheoilcrash.net/

[saturnsteve]

Oh my god people, we will all be dead of boredom before this happens, might be today!!!

[SSrevolution]

Lets face it. We are going to keep using oil until its all gone. It's much easier than paying alot more money for hydrogen.

[1BadPig]

I think I'm going to start working on dilithium crystal powered engines...

[pupp1]

Originally Posted by saturnsteve

What is this, boring post day! Memorial day must mean no good posts today

Well,you know you can dig for information yourself.
If you don't like the post being made, may I suggest you troll somewhere else.
I hear there are plenty of sites that love people who have nothing better to do than to complain about what others have tried to do.If you find articles here boring,that is your misfortune.Sorry about your luck.

[Dutchman]

Originally Posted by yoblues

There is no real shortage of oil. There will be a shortage in a century or so from now BUT how do they get the lemmings to live with 2 or 3 or 5 dollar a gallon gasoline. SIMPLE: Convince you there is a shortage of oil and we have no choice but to charge you that much. Corperate America at it's finest and like lemmings you will eat it.

I think most lemmings live in Europe! SIX dollars and they all have to accept it!

[bksavs]

PUPP1,
The point is "today is a holiday to remeber the people who paid the ultimate price so we could waist our holidays worrying about gas prices".

Is there any part of you that can be appreciative of others sacifices?
I hope so.

I've spent today enjoying the freedom others have paid for....with many breaks to remeber those who sacrificed for my families liberties........

YOBLUES, Buy a freaking clue.... it should be world corporations....don't limit greed to America. The rest of the world can be(and usually is) as bad as us....

[dindak]

Oil production in the US peaked in the 1970's, it's about to peak world wide. There is no shortage true, but prices are sure to slowly rise over time as demand from China, India and others continue to grow quickly while supply is maxing out. $30 oil is gone forever, get used to it. That said, in real dollars, oil is still relatively cheap so go ahead and buy that Trailblazer.

;-)