Thursday, July 31, 2008

Oil availability to drop like a rock.

From The London Times Online
June 30, 2008
Former President Bush energy adviser says oil is running out
Robin Pagnamenta, Energy and Environment Editor

The era of globalisation is over and rocketing energy prices mean the world is poised for the re-emergence of regional economies based on locally produced goods and services, according to a former energy adviser to President Bush and the pioneer of the “peak oil” theory.

Matt Simmons, chief executive of Simmons & Company, a Houston energy consultancy, said that global oil production had peaked in 2005 and was set for a steep decline from present levels of about 85 million barrels per day. “By 2015, I think we would be lucky to be producing 60 million barrels and we should worry about producing only 40 million,” he told The Times...

...Mr Simmons asserted that this, coupled with soaring global energy demand, meant that world oil prices were likely to continue rising. He said that even at present record highs of more than $140 a barrel, oil remained relatively inexpensive, especially in the US, the world's biggest market. “We are just spoiled rotten in the US,” he said. “It's still cheap.”

Rising prices will force a tectonic shift in the structure of the global economy by destroying the rationale for shipping many goods, such as food, over long distances, he said. “This is already happening. In the US, our local farms, ranches and dairies are booming. They are having a huge comeback.”

Mr Simmons set out a radical vision of the future, envisaging a society in which food and many other essentials are sourced and consumed locally and increasing numbers of people work from home. He claimed that the alternative was increasing political instability and conflict over the planet's diminishing resources. “We are living in an unsustainable society,” he said. “If we don't change we are just going to start fighting one another...So let's just start assuming the worst and plan for it...”

Those who disagree with the industry analysts usually are basing their arguments on assumptions that don't stand the logic test: productions rates are falling and the current yearly production simply cannot be sustained "another 40 years" as someone recently claimed. The stuff that's left in the ground is literally the "bottom of the barrel," meaning it is hard to get to, more expensive to get to, lower quality and lesser quantity than the good stuff "at the top" was. The stuff at the top is now gone forever. It is non-renewable, meaning it doesn't replace itself. Once it's gone, it's gone. What's left is cruddy sludge at the bottom nooks and crannies of the oil fields - hard to refine goop, not light sweet crude.

And even if some miracles occurred and we could prevent current production levels from dropping any further, it would still not be enough. Demand is increasing by leaps and bounds every year - the rest of the world is not going to continue to live in the dark ages just so Americans can drive their SUVs. The US is about 5% of the world's population and we're using 40% of the world's oil production every year. That simply can't go on. Other countries have no obligation to even sell us oil - and what makes anyone think they are going to tell their own citizens "too bad" and keep selling it to us? That's idiotic in the extreme. That's a denial of reality that is incomprehensible. The world owes us nothing. Even those countries that are inclined to export oil don't have to sell it to us - and why would they? All they get from us is depreciated US currency and arrogance. Rising manufacturing nations have real wealth. We are basically reduced to taking in each other's laundry, the so-called "service economy" wherein the vast majority of people are apparently supposed to make a living doing chores for rich robber barons whose factories and investments are overseas. Well, good luck with that.

But I digress.

To add insult to injury, the longer we hang onto the fantasy of private automobiles the faster we use up our own meager national oil production here in the US - meaning we are blowing the oil we will need later for ambulances, fire trucks, police, border guard, etc. on trips to the mall. We could have 100 years of emergency service still in the ground if we made immediate moves to secure national production for government and emergency services exclusively. But Americans are too short-sighted to plan ahead. They'd rather go to the movies now than have fire service later. The priorities are completely screwed up. What little oil we have left is being wasted for nothing.

Oil in all its forms - home heating oil, gasoline, diesel, etc. - is never going to go back to being "affordable" for the average family. That day has passed. The new reality has to deal with facts, not childish greed and wishful thinking. And those who refuse to see that and act accordingly to reposition themselves will have only themselves to blame.

UPDATE! More evidence US cannot contend with other nations for oil:

Oil? Ah, let Russia have it
State Department gives away 125,000 square miles of Alaskan ocean floor
Posted: July 29, 2008 9:52 pm Eastern
© 2008 WorldNetDaily

Even if Congress follows President Bush's lead in opening off-shore oil exploration, there exist over 125,000 square miles of sea bottom that won't be explored, because the State Department – amid controversy and against the will of Alaskans – has surrendered the land to Russia...

They had to give it away, because Russia would fight for it and we, no longer being a superpower since giving away our manufacturing base, are no longer in their league. They would nuke us, and we know it.

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