By Dave Stancliff/For the Times-Standard
Posted: 04/03/2011 09:12:51 AM PDT
While filling my car's gas tank the other day I had a sense of foreboding. Watching the dollars add up as each gallon registered, I suspected $4.25 a gallon was going to look good by this time next year.
What's happening? Why are prices steadily going up? You can thank oil speculators for that. Those daring, greedy gluttons are making us dance like puppets at the pumps. But there are other things going on that drive up oil prices.
Have you ever heard of Peak Oil? I won't attempt to go into the whole subject in this limited space, but I will share some points on this controversial subject with you.
M. King Hubbert, a Shell geoscientist, correctly predicted in 1956 that the United States would pass its peak oil production between 1965 and 1970. Since then, U.S. production has dropped steadily, and we've become more dependent on foreign oil.
Fast forward to an April 2009 meeting in Washington where Department Of Energy (DoE) bigwigs discussed the growing demand for liquid fuels. Glen Sweetnam, who heads the publication of DoE's annual International Energy Outlook, told his peers the decline of liquid fuels production between 2011 and 2015 could be the first stage of the “undulating plateau” pattern, which will start “once maximum world production is reached (Peak Oil).”
A hint of worry there, but the DoE dismissed the controversial Peak Oil theory, which assumes that world crude oil production should irreversibly decrease in the near future.
Lauren Mayne, responsible for liquid fuel prospects at the DoE, recently told the French newspaper Le Monde, “Once maximum world oil production is reached, that level will be approximately maintained for several years thereafter, creating an undulating plateau. After this plateau period, production will experience a decline.” The Obama Administration goes along with this line of thought.
Sweetnam's warning was followed by warnings from The Wall Street Journal, The Houston Chronicle (main daily newspaper of the world capital of crude oil trade), the CEO of Brazilian oil company Petrobras, former Saudi national oil company Aramco and an International Energy Agency (IEA) “whistleblower” on Nov. 9, 2009.
The whistleblower was a senior IEA official who claimed the U.S. was influential in encouraging the watchdog to underplay the rate of decline from existing oil fields and overplay the chances of finding new reserves.
Today, the U.S. fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices from rising. In a Feb. 8 article in the Guardian, U.K., cables released by WikiLeaks urged Washington to take seriously a warning from a senior Saudi government oil executive, al-Hussenini, that the kingdom's oil reserves have been overstated by as much as 300 billion barrels -- nearly 40 percent.
The U.S. consul warned Washington, “While al-Hussenini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered.”
Here's the thing: Everyone agrees we will run out of oil someday. It's when we will run out that predictions vary. Now I'm going to throw in another factor. It's not just how much oil is left -- it's also how much oil can be extracted at a significant energy profit. The bottom line.
Howard Odum wrote in the early 1970s, “The true value of energy to society is net energy, which is that after the energy costs of getting and concentrating that energy are subtracted.”
That net energy is what powers our world, from cars to planes and everything in between. In 2005, the DoE commissioned a report to examine the impact of Peak Oil. The Hirsch Report, named for its lead author, energy advisor Robert Hirsch, put the problem in stark terms. It recommended 10 to 20 years of “accelerated effort” to implement alternative fuels before Peak Oil hits and causes a “major economic upheaval.”
The general consensus is we will have big problems in an undetermined future, starting in 10 to 50 years (depending upon who you talk to), unless we change our fuel habits quickly and convert our economy to alternative energies. So who should we believe? How close are we to reaching Peak Oil and economic disaster?
As It Stands, it doesn't take a seer to see $4.25 a gallon will actually seem cheap sooner rather than later.
Websites carrying this column:
Energy Shortage – World Wide Energy Shortages
The PowerSwitch Peak Oil Daily – scroll down to Business
Peak Oil News - Exploring Hydrocarbon Depletion