I try to sidetrack myself with Georgia Tech basketball, golf, fly-fishing, economics, books on the civil war, and any other hobby which I may indulge....however, those of you who know me best will not be surprised to see I am back on the subject of peak oil once again. I simply can't get it off my mind - I can't shake it!
Last week, we had the second CEO of a major oil company (Royal Dutch Shell's van der Veer; the first being CEO Jim Mulva of Conoco Philips) predict oil demand will outstrip supply by 2015:
These are unprecendented statements by a CEO of one of the world's largest oil companies! It was made even more surprising as they were spoken at the World Economic Forum in Davos, Switzerland.
Was anyone listening? Really listening and understanding the implications of this man's words? Neither in the State of the Union address last night, nor in the never-ending Presidential campaign do we here any of our "leaders" really address the issue of peak oil, let alone mumble the phrase "peak oil" out loud in public. In the words of the Grateful Dead, we're doin a "9 mile skid on a 10 mile ride".
Bush recently made a big deal request for his buddies in Saudia Arabia to "turn on the spigot". Of course Bush more than anyone but perhaps Cheney knows that the so-called "spigot" is already fully open and has been since we invaded Iraq. In fact, despite a massive drilling campaign the last 4 years, Saudi oil production in 2006 (and likely 2007) was not able to match their peak production reached in 2005. Basically the Saudis, like so many oil producers, are running to stand still. That is, it's all they can do to for their new oil-well production increases to match the declines of their tired old wells (3 of their largest reservoirs have reached "peak oil" production and thus their production is declining rapidly).
In addition to the two CEO's mentioned above, expert Houston oilman Matt Simmons, investment guru Stephen Leeb, and amateurs such as myself and Aaron Wissner (see the WSJ article on him a couple days ago) are making efforts to educate our leaders and policymakers. That said, I can definitely say that my efforts have so far fallen on deaf ears.
I first tried contacting the members of Congress and the Energy department. I got polite responses, but no agreement (and no debate). Last week, I adopted a new strategy. I sent emails to Warren Buffet, Bill Gates, the "Google Guys", and former GE CEO Jack Welch (through his Business Week column). Each of these people are well respected on Wall Street and have announced very large charitable foundations to help mankind in some capacity. I made the argument that all their iniatives would likely fail if the biggest threat to mankind (peak oil) was not addressed in an urgent manner. I was asking nothing for myself. I was asking them to use the power of their name recognition, their easy access to government officials at all levels, and yes, their money to help the US media and government understand the nature of the challenge facing us. I also listed the basics of my energy policy, wish should begin immediately:
1) Government incentives for a massive buildout of wind, solar, and nuclear energy.
2) Government incentives for auto companies to design and manufacture electric and other non-gasoline powered automobiles with high range capability.
3) Immediate punitive taxes on all gas guzzling cars and trucks (Hummers, SUV's that get 11 mpg, etc), with the revenue going directly to 1) & 2) above (not to Congress).
4) Buildout of the infrastructure to deliver energy to non-gasoline powered transportation, including massive research, development, and manufacturing of battery technology.
5) Federal government assistance to support either COP's or TransCanada's proposal for a massive natural gas pipeline from Alaska through Canada to the midwest US gas hub.
6) The ethanol initiative should be rolled back - it is a misguided policy. First, it takes quite a bit of energy to produce ethanol. Second, it takes huge amounts of water, which we are increasingly at supply risks due to the effects of global warming on large areas of the continental US. Lastly, it is causing large inflation in food prices. A bad policy all around, but what Bush policy isn't?
7) STOP the huge tax breaks given to the oil companies that are keeping the price of gasoline in the US artificially low. This is insanity and must stop now.
8) Lastly, and most importantly, we need the US media and US government to be as knowledgable and conversant about peak oil as they are (finally) about global warming. The solutions to address peak oil are also the solutions to help address global warming. The difference is in the urgency. Peak oil is far and away the most urgent threat to human civilization. The media and government need to be educating the American public at large about the issue so we can get the public mandate to use government funds to address the issue. The money needed is far too large to address the problem without the involvement of the government.
I got no response except from Jack Welch, who would only agree that we need to build new nuclear energy plants. Who knows if the underlings who read these people's email even forwarded them up the ladder. I doubt it.
I still bombard the WSJ, Business Week, local and national news papers with my opinions on peak oil in the hope that somewhere out there, sometime soon, a person of fame, national exposure, and respect on Wall Street will begin the effort of preparing our nation for what is coming. I rarely even get my letters published. Lord do I wish I was a billionaire. I'd buy the USA Today, publish only articles on energy (with colour photographs of nude women) and give the papers away for free.
Sure, the world will continue to produce oil after 2015. However, let no one fool themselves, the production at some point around that year will fail to keep up with demand (I actually think it will be sooner than 2015, especially when I saw the cheap car TaTa Motors is making for the Indian market) and the price of oil will just sky-rocket. No country is more at risk than the US due to its inefficient cars, lack of mass transit, and a suburban lifestyle based on these inefficient gasoline powered automobiles which must travel large distances for work, food, and day to day life.
So, I spend alot of time wondering why the government is not addressing this issue. Could it be I am wrong about it? I have been wrong before (once I think). Oil production data is not that complicated an equation. The theory of peak oil has been proven in Alaska's Prudoe Bay, the North Sea, the huge oil reservoirs in Texas, Oklahoma, and the Gulf of Mexico. The man credited with the theory of oil reservoir peak production correctly predicted continental US oil peak production (Hubbert predicted in 1956 the US would peak out in 1965-70, which it did):
Sure, there have been two "elephant" fields in recent years: the Jack well (Chevron, CVX) in the Gulf of Mexico may have as much as 15 billion barrels of oil. That said, it's located 5.3 miles below the surface of the sea and far away from existing pipeline infrastructure. The other monstrous find (estimated to be 8 billion barrels of light sweet crude) was discovered by PetroBras (PBR). But before we break out the chamagne, realize this find is 155 miles off the coastline and 4.5 miles below the surface of the sea. To reach the oil, Petrobras will have to run lines through 7,000 feet of water and 17,000 feet of rock, sand, and salt.
These two elephant fields are one of a handful discovered in the last 30 years. However, by the time they are brought online they will be needed just to meet the decline of the fields currently in production. Meanwhile, demand from China, India, Russia, and the middle east will continue to ramp up.
Currently, the the US's own EIA predicts worldwide oil demand of 135 million barrels a day in the not to distant future (currently, world demand is approx. 85 million barrels a day). Yet, two oil major CEO's have doubted if man will ever produce more than 100 million barrels a day.
The question I have is where is that other 35 million barrels A DAY going to come from?
I must be wrong since the issue is still underneath the radar of our "strategic thinkers" in Washington. Yet, no one has made an argument to me other than "well damn Mike, if we could just drill in Alaska and off the coast of Florida and California we'd have all the oil we would need for decades". Sorry, that is just so much BS and all one has to do is look at the data. I won't despute that oil exists in those locations. What I will debate is that their impact is in the low single digits as a percentage, and won't impact the overall trend of peak oil, nor the day of reckoning one iota. All it does is produce false hopes and again delay us in addressing the issue head-on with courage, determination, and yes, sacrifice. None of which attributes the people and government of the US seem to possess any longer. So, we la-de-da down the road and into the abyss. If ever I was wrong about something, I pray that I am wrong about peak oil and the effect on world civilization. That said, I am afraid I and other peak oil folks are dead right. Someone prove me wrong! Lord knows I could then concentrate on my next golf shot or landing my next trout without peak oil swimming around in my brain. OCD? On this issue, I'd hafta agree that I am.