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Add to NewsvineDon't look now, but peak oil might be staring right at us. According to the Times, increased demand and higher prices are not ramping up production, as you'd expect:
“According to normal economic theory, and the history of oil, rising prices have two major effects,” said Fatih Birol, the chief economist at the International Energy Agency, which advises industrialized countries. “They reduce demand and they induce oil supplies. Not this time.”
More:
Analysts at Barclays Capital said last week that non-OPEC supplies were “seemingly dead in the water.” Goldman Sachs raised similar concerns last month, saying that growth in non-OPEC supplies “can no longer be taken for granted.”At the same time, oil consumption keeps expanding at a faster clip than production. Demand is forecast to increase this year by 1.2 million barrels a day, to 87.2 million barrels a day. In the United States, the world’s most oil-thirsty nation, consumption has actually fallen a bit because of the economic slowdown.
But that drop is being offset by growth in other countries. World consumption is projected to rise 35 percent, to around 115 million barrels a day, in the next two decades. Most of the growth will come from China, India and oil-producing countries in the Middle East, where retail fuel prices are subsidized, encouraging wasteful consumption.
“What is disturbing here is that things seem to get worse, not better,” an analyst at Goldman Sachs, David Greely, said. “These high prices are not attracting meaningful new supplies.”
To be sure, the report points out that man-made problems are to blame in some oil-exporting countries (Irwin Stelzer expands on that point here). Still, it says we could be looking at $7 a gallon gasoline by 2012, because it will take a long time to bring new oilfields being discovered into production, and demand will even then outstrip supply.
We really do seem to have turned a corner in modern life. We've built an entire modern civilization on cheap petroleum. And now that's leaking away.
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Except for one problem.
World usage isn't 10 million barrels a day. US usage alone is 20 million barrels a day, and the entire store at ANWR, at that level of usage is good for... less than ONE year, for us alone.
Even the continental shelf adds in only a couple of years more, and again, just for us.
It'd be closer to adding in, at that 9 million barrels a day (reducing the true level exponentially) another couple of barrels.
We don't have an oil production crisis. We make more than enough oil, though eventually the oil will run out.
What we have NOW is.. commodities traders are using the current political situation and the knowledge that the oil companies have used the crises (both the war and Katrina) as an excuse to boost prices as a means to boost the prices even more by buying, and STOCKPILING oil.
They are trying to get prices to ridiculous heights so that they can then release and sell the oil they have accumulated to make a mint.
This doesn't mean there is no crisis, but the crisis isn't about how much oil we produce. It is about how much oil is LEFT. And how long will it last.
How easily we fall prey to such manipulations of the market, whether by commodities traders now, or by OPEC back in the 70's, and how the best way to both deal with the inevitable (unless you know of a way nature is making more oil.. then feel free to share) depletion of natural oil sources and independence from foreign oil for our own security, both economic and political.
It will take 10 YEARS to get ANWR up and running even if we started today. That's how long it will take to make the pipeline. By then, who the heck knows what the oil situation will be.
We could, instead, just in the interest of long term planning, use that 10 years and that money TO develop those other sources. Because, not even as a small boost, ANWR isn't the answer to anything. It is, at best, like offering a raging alcoholic one shot of booze. Not even enough to satisfy the current DT's, much less to fill his needs for any significant amount of time.
Posted by: Karen Brown | May 1, 2008 11:18 AM
You know, MI, that's very good information on the fertilizer front. I did not realize that natural gas was the sole feedstock or the only process for making it. That's good news, and it gives me hope. I have no doubt that as natural gas becomes more expensive, manufacturers will start turning to these other techniques. On the other hand, that does not obviate the harmful impact NPK chemical fertilizer has on soil life or water quality. It's also somewhat analogous to "build more refineries" argument, or ANWR, or nuclear power. Yes, we should do all of these things. But we should have done them 10 years ago, and it will take awhile for any of them to come on line if we start the process now. And even then, these are only short-term fixes for a much bigger problem.
Posted by: Houghton | May 1, 2008 12:31 PM
I was just reading a report from an i-bank yesterday that pointed to conventional statistical measures used to measure the phenomenon and they concluded that speculative buying of oil was withn normal bounds and was NOT the cause of the price spike.
pyrrho is making the argument that, because certain prices have gone up rapidly only to sink later, oil would follow this pattern. That's not an argument; it's an extrapolation. And oil-rich countries aren't choosing not to produce enough extra oil to satisfy demand; they are unable to do so.
Posted by: jult52 | May 1, 2008 1:05 PM
The point really is.. the amount of oil is minute. If any oil is being stockpiled, it likely would have more immediate impact on oil prices than the ten year drive to drill ANWR would.
The answer is still going to be... the hard ones. Not the quick fixes. Reduce demand, and find alternatives. I mean REAL work on both fronts.
In the end, as everyone knows, nature isn't making any more oil. This is, by definition, a non-renewable resource. Whether today, ten years from now or a hundred years from now, we're going to run out. If it were water, nobody would be procrastinating about how to solve the problem because it isn't going to happen today. And given our oil dependent our entire way of life is at the moment, we can't afford to putz around finding alternatives for oil. That includes the ANWR and continental shelf oil bandaids.
Posted by: Karen Brown | May 1, 2008 1:14 PM
If it were water, nobody would be procrastinating about how to solve the problem because it isn't going to happen today.
Karen, I think you give our fellow humans too much credit. :-(
I also think "procrastination" is too polite a descriptive. They fail to act because they don't want to spend today's profits on tomorrow's resources. Personally, I think "greed" is much more accurate...
Posted by: Franklin Evans | May 2, 2008 2:03 PM
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