[Marxism] Experts fear day when oil runs low

Macdonald Stainsby mstainsby at resist.ca
Thu Mar 24 20:36:22 MST 2005


Experts fear day when oil runs low - The Sacramento Bee

http://www.sacbee.com/content/politics/story/12600826p-13455194c.html

Experts fear day when oil runs low
Recession, famine and war seen if demand outstrips supply.

By Greg Gordon -- Bee Washington Bureau

Published 2:15 am PST Monday, March 21, 2005

WASHINGTON - Within a couple of hours last week, crude oil prices hit a
record $56 a barrel, President Bush fretted publicly over world oil
shortages and the Senate voted to open an Alaskan wildlife refuge to
drilling.

The converging events drew attention to what administration officials call a
temporary global energy crunch. But bigger worries also are bubbling to the
surface - fears of a day of reckoning over world oil reserves.

Even as China and India are joining the grab for oil, most experts agree
that world production will peak sometime in the next several decades - more
likely in the next couple of years, a gaggle of outspoken academics say.
If rising petroleum demand meets falling supply before new energy sources
are ready, government officials say, a world that runs on oil could face
cataclysmic consequences ranging from recessions to famine and even war.
Peaking oil production "will result in dramatically higher oil prices, which
will cause protracted economic hardship in the United States and the world,"
a team of Energy Department consultants warned in a report last month. "The
challenge of oil peaking deserves immediate, serious attention if risks are
to be fully understood and mitigation begun on a timely basis."

The most obvious step is to transform into a fuel-efficient fleet the 200
million cars, sport-utility vehicles and trucks that guzzle two-thirds of
America's 21 million-barrel-a-day oil consumption, consultant Robert Hirsch
and colleagues wrote. They said it would take 10 to 15 years and cost
consumers $1.3 trillion to replace half the fleet with vehicles that run on
alternative fuels. Hydrogen, diesel oil or ethanol made from corn are among
leading options.

How much time the United States and the rest of the world have to change
their ways before oil output peaks has been the grist for a sharp debate
between government energy experts and a loose network of critics.

Government geologists estimate the Earth still contains plenty of oil - as
much as 2 trillion barrels of proven oil and liquid natural gas reserves and
another 939 billion barrels in yet-to-be-discovered reservoirs. The Energy
Department's scenarios call for a production peak somewhere between 2021 and
the start of the next century, with 2037 the most likely date.

After the peak, said senior Energy Information Administration petroleum
geologist David Morehouse, the rate of production drop-off from declining
oil fields would likely be "pretty quick."

"We don't want the world oil peak to sneak up on us," said John Wood, who
heads a Dallas-based unit that projects oil supply and demand for the EIA.
Kenneth Deffeyes, a Princeton University geology professor, says it might be
too late to plan. Deffeyes worked previously in Shell Oil's research
laboratory alongside M. King Hubbert, who gained fame when he accurately
predicted in 1956 that oil production in the continental United States would
peak between 1965 and 1970.

Using a similar formula, Deffeyes predicts that the global peak will occur
by next Thanksgiving. But like a number of scientists making similarly dire
forecasts, he has had to push back his date a couple of times.
"I'm not the least bit embarrassed," he said in a telephone interview.
"There's a year-to-year jitter - a strike in Venezuela or a
warmer-than-average winter in the Northeast. But any year between 2003 and
2007 may end up in the Guinness Book of World Records." If Deffeyes is 
right, Morehouse said, "our goose is cooked."

"If things get bad enough, and somebody gets desperate enough," he said, an
oil peak scenario could lead to war.
Amos Nur, a Stanford University geophysicist, all but predicts a war with
China over oil. He notes that Americans consume a per-capita average of 25
barrels of oil each year, while the Chinese average 1.3 barrels and the
people of India less than a barrel. If Chinese and Indian consumption
reached one-quarter or a third of U.S. consumption, he writes, it would
require 50 percent more oil worldwide and tensions could "slide into a
military conflict."

Bush told a news conference that new oil demand "from countries like China"
is "outracing supply" and driving up prices.
Ed Porter, a research manager for the American Petroleum Institute, also
blamed U.S. policies that have barred drilling in attractive offshore sites
and the Arctic National Wildlife Refuge.

Environmentalists say that even if the Arctic refuge holds the hoped-for 15
billion barrels of oil, it would meet just 2 percent of U.S. crude oil
needs.

The recent oil price surge could have a positive side: making alternatives
such as ethanol more cost-competitive, said Ralph Groschen, a marketing
specialist with the Minnesota Department of Agriculture.

Bush urged Congress to pass an energy bill that funds continued Energy
Department research into other fuels - research that has focused on
converting coal to hydrogen or liquid fuels.

"All of the research is under way," Morehouse said, "but the question is, is
it going fast enough?"
That depends partly on the accuracy of peak oil forecasts. The Energy
Information Administration's varying scenarios are based on a comprehensive
2000 U.S. Geological Survey assessment in which 40 scientists raised the
estimate of global oil reserves and undiscovered reservoirs by hundreds of
billions of barrels - enough to meet current demand for two decades or more.
Retired USGS senior scientist Warren Hamilton said he looked over the
study's methodology and found it "erred seriously in the overestimation
direction." It relied heavily on guesses to calculate new oil discoveries,
he said, and doubled the usual 30 percent recovery rate from reserves "with
no technology in mind capable of doing that."

The EIA's Wood defended the USGS assessment as "somewhat conservative." He
said enhanced recovery techniques are raising yields at Alaska's Prudhoe Bay
and elsewhere. And, he said, the USGS report intentionally left out 1.6
trillion barrels of heavy oils found in Canadian tar sands and another 1.6
trillion in Venezuela's Oronoco "tar belt."

Those resources could significantly delay an oil peak, Wood said, but the
peak would move a decade nearer if China's economic boom pushes world oil
demand to a 3 percent growth rate instead of the usual 2 percent.

The U.S. government's projections also hinge on continued strong Middle East
output - especially from Saudi Arabia, which boasts more than 250 billion
barrels of recoverable reserves.

Matthew Simmons, chairman of a Houston-based oil industry investment bank,
contends in a forthcoming book that the Saudis damaged their oil fields by
overproducing in the early 1970s and again after Iraq invaded Kuwait in
1990. That changed the subsurface pressure, creating huge water problems
that will make it harder to recover oil, he said.

Simmons said Congress had evidence in the 1970s that the Saudi oil fields
had only about 30 years of sustained production left but kept it secret.
Energy Department officials concede they have only the kingdom's assurances
that it can ramp up output from about 8 million barrels to 10 million or
even 12 million a day. If it turns out that the Saudis can't boost output,
Wood said, "that has significant implications."

About the writer:
The Bee's Greg Gordon can be reached at (202) 383-0005 or
ggordon at mcclatchydc.com.

Copyright ) The Sacramento Bee

-- 
Macdonald Stainsby
http://lists.econ.utah.edu/mailman/listinfo/rad-green
In the contradiction lies the hope
	--Bertholt Brecht.




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