Tuesday, September 29, 2009

The uneducated cry "alarmism," the educated are alarmed.

World governments, including Obama, recently agreed to stop subsidizing petroleum and natural gas production. They know, of course (and have known since the 70s) that it is pointless to continue investing in an infrastructure that has no viability as an affordable commodity for the masses. Rather than continue to coddle motorists who are paying far less in taxes and fees and product pricing than the gasoline and other petroleum products actually cost, world governments have instead decided to engage in a slow demand destruction by insisting that tax revenues from petroleum companies pay for the infrastructure they are used to getting at a greatly reduced rate.

As before, the "point" of the discussion was climate change - which is politically harmless to discuss. Peak Oil was not mentioned, but it is surely no coincidence that this action, and others like it to increase the cost of gasoline to spur the market to accept the demise of private automobiles, are the same actions any sane government would take to deal with Peak Oil. Nor is it a coincidence that since the original USGS studies came out in the 70s, by Hubbert and others, that no refineries have been built in the US by any petroleum company. Why would they, after all, sink billions into new refineries knowing they'd never get their money back? Neither petroleum companies nor any sane world governments are going to throw money down the drain, and giving tax breaks on petroleum products is now just that.

Slippery tactics: Obama declares war on oil
Calls to end 'fossil-fuel' subsidies, impose new tax
Posted: September 28, 2009 4:18 pm Eastern

President Obama declared war on oil and natural gas at the United Nations global warming summit, and he made the same pitch to the G20 meeting in Pittsburgh, Jerome Corsi's Red Alert reports.

"I will work with my colleagues at the G20 to phase out fossil fuel subsidies so that we can better address our climate challenge," he told the U.N...

...The Environmental Law Institute estimated that in the U.S., the biggest fuel subsidies are tax breaks, the foreign tax credit and the credit for production of nonconventional fuels that added up to $72 billion over the seven year period studied, 2002 to 2008.

"Should Obama succeed, the end result will be tantamount to imposing a new tax on oil and natural gas production, with the outcome being that U.S. energy consumers will see energy price increases," Corsi warned.

...Approximately 85 percent of the energy that drives the U.S. economy still comes from oil and natural gas...

And therein lies the problem. Even if oil production were not declining, which it certainly is, Americans use far more than their fair share of the world's resources each year (not just petroleum, of course), and the other nations are starting to wonder just what they got for their end of the bargain to give us all their people's natural wealth at ridiculously low prices. Basically, they got economic imperialism, and they're getting tired of it, class.

The fact of declining petroleum production isn't going away. We've excerpted numerous articles here showing data and graphs of declining production in all the major fields, and how the "new" fields being discovered are very small and have only a few year's worth of oil in them at current levels of usage - usage, however, continues to grow as developing nations increase in middle class households. Here are two recent articles on the subject:

Where we really stand with respect to oil and natural gas supplies
Posted by Heading Out on September 29, 2009 - 10:39am
Topic: Supply/Production
Tags: natural gas production, oil production

...And here let me briefly digress to point out that those who wave the [recent] NYT story [touting new oil field discoveries] have little clue of the time that it takes between discovery and full field production – nor do they understand oil field depletion, or that just because we have passed peak production does not mean that there is not a whole lot of oil out there that is still waiting to be discovered – only that it is going to be less than the huge volumes that we have already found and exploited...

The oil that is left is in small pools that will be quickly depleted, cost far more to get to and process than the old, giant fields, and will be of lower quality and therefore require more extensive processing, at much higher cost, than the light sweet crude that was at the tops of the declining giant fields. In short, these new "discoveries" are nothing but stop-gap measures, little plateaus on the big bell curve of decline.

Is the Global Oil Tank Half-Full, Is It Half-Empty …or Are We Running on Fumes?
Posted by Gail the Actuary on September 29, 2009 - 10:15am
Topic: Supply/Production
Tags: peak oil, richard heinberg [list all tags]

...First: The ten billion barrels of new discoveries reported so far do initially sound encouraging: if the second half of 2009 is as productive, that means a total of 20 billion barrels of new oil will eventually be available to consumers as a result of discoveries this year. But how much oil does the world use annually? In recent years, that amount has hovered within the range of 29-31 billion barrels. Therefore (assuming continued good results throughout 2009), in its most successful recent year of exploration efforts, the oil industry will have found only two-thirds of the amount it extracted from previously discovered oilfields...

So all your friends who reassure you that the "big" oil finds of late will "save" us from resource depletion of oil obviously have no idea just how much oil the US and the World uses every year.

And none of this addresses the issue of return on investment - sure, we CAN technologically extract all that hard to reach, low quality stuff. But will anybody be able to afford the end product? Even Time magazine admits that gas in Europe was, last year, over $8 a gallon - and that's WITH some government subsidies.

Time Magazine Online
Think Gas is High? Try Europe
By BRUCE CRUMLEY/PARIS Wednesday, May. 28, 2008

As American drivers groan over prices nearing $4 a gallon, the French are paying $8.67 for a gallon of super, compared to $7.10 in January, 2007. A gallon of diesel in French gas stations averages $8.54, up from $5.35 just a year ago. And in the U.K. diesel costs $11.50 per gallon, compared to around $3.90 in the U.S. Across the European Union, the average cost of a gallon of gas runs to about $8.70 — more than twice what Americans are shelling out to fill up...

...One big reason for the difference is that European governments put a much higher tax burden on fuel than the U.S. does. State and federal taxes currently make up just 11% of the pump price in the U.S., according to the Energy Information Administration; in France and the U.K., taxes account for an average of around 70%...

The amount they pay is a LOT closer to representing the REAL cost of automobile infrastructure and suburban sprawl - a cost Americans have NOT been paying. THEIR price is what we SHOULD be paying.

THEY can afford that price because THEY have an extensive network of electric mass transit, from neighborhood trollies to subways and commuter lines to regional rail to high speed corridors.

WE will have to suck up $10 a gallon gas because most of America has NO alternative to driving to work, school, and groceries. And peak oil isn't going to go away just because Americans have some sort of neurotic aversion to riding electric busses and trains. That's REALITY, not alarmism. Time to get a clue, class. Denial accomplishing nothing.

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