Oil Crash...

I found this to be an interesting read... though very long.

http://www.lifeaftertheoilcrash.net/Index.html

 

can't we ever learn from the past. Doomsayers waist no opportunity.

The gulf of mexico is producing more oil than it ever has before, high tech deep water is discovering massive fields, like Thunderhorse, Atlantis, Maddog, to name a very few. And they haven't even gone on production yet. New technology is enabling us to find what no one thought imaginable.

 

Wow. I read the entire article and this is quite a scenario. Of course I have no idea if anything this guy says is true, but I did a quick google search on "Peak Oil" and there are tons of sites about it. Looks like I'll be doing a little reading over the few weeks.

 

Exactly what I thought... I don't believe it completely... but every paragraph had a link to another story on where he got the information from....

 

I've looked at several sites this morning, and while they vary slightly with their predicitons, they share a common theme: the world consumes roughly 4 barrels for every 1 produced. They all also fix the date for peak production sometime between 2000 and 2010. Many of these sites were put up around 2000-2001, when oil prices were in the $40-45/barrel range, and they predicted that by 2005 it would start to rise dramatically, reaching the $60 range. Guess where we are now?

 

The oil companies have not yet begun to process the "heavy crude." They are in love with the light crude because it processes so easy. Saw an article on this not long ago. Alaska has a wealth of heavy crude that is sitting there because the refineries are not yet ready to handle the heavy stuff, and because there is still an abundance of light crude.

Also, the US refining capacity runs at about 96% all the time, and we haven't built a new refinery since the 60's. Some of these old refineries could use a little room under the collar, but the environmentalists don't want any new refineries built. Any of the big oil would jump at the chance to build a new refinery, but siting is critical, and next to impossible in our suit-friendly state.

[EDIT] Also, forgot to mention that they are beginning to find more fields in deep water off the coast of China. There is more oil out there than we think or know.

 

The problem isn't quite so simple. Yes, they are mainly talking about light sweet crude that is easy to extract, but what most of the articles address is the fact that these heavier and deepwater deposits are much more expensive and energy consuming to extract. As it is, oil prices today are right below $60/barrel. When it is determined that we must start extracting these more expensive deposits (which also cost more to refine), what will happen to the price then?

The point is not that we are about to completely run out. The point is that we are on the decline of the cheap, easy stuff. The world's economy (and the US in particular) is based on the assumption that we have cheap oil. When prices continue to climb, it will have a profound effect onthe economy. You think $2.00 a gallon for gas is bad? I'm afraid we haven't seen anything yet. People who commute 10 miles or more to work everyday will feel the pinch first, but realize that the price of oil is the one thing that can potentially affect everything in our daily lives. Food price will go up due to transportation and production cost increases. Electricity rates will go up. Manufacturing costs will go up.

China is currently trying to turn itself into a fully industrialized nation. They are coming to the table a bit late in the game. Do you think they would sit back and allow any significant oil reserves within or near their borders to go elsewhere? I'm not saying this WILL happen, but the potential for conflicts is very real if it is perceived that the supply is running out, so everyone better grab what they can.

On the point of refineries, no new ones have been built in the US since 1976. Yes, the greenies have made it very difficult for the oil companies to build more, but I don't think for one minute that it would stop them if they really wanted to. I think it is more a case that they (oil companies) realize that with the supply dwindling, it is not cost effective to build new production facilities that cannot produce the desired returns of profit in the long run. If there is less oil to produce, then new refineries will not be operating at anywhere near capacity. It is a simple rule of business that you want to stay slightly overloaded, so you don't have capital that is sitting idle, not turning a profit.

 

This site is one of the absolute best in that regards, at least from what I've seen:

http://www.dieoff.org

It's basically a conglomerate of essays/theses from all sorts of experts in that field. It takes a much broader look at oil scarcity and what, exactly, that means with respect to things like population dropoffs. I find a lot of the material to be very insightul, as it often presents very non-traditional angles on the subject. It'll keep you busy for quite some time.

 

The situation is basically the complete opposite of one of CLM's best quotes: "The future is very bright."