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Blog: Science Petroleum: Why We'll Never Run Out
Michael Asher (Blog) - August 14, 2006 6:34 PM
Print E-mail del.icio.us 70 comment(s) - last by chasch.. on Aug 18 at 4:14 PM
There's no shortage of scare stories about looming oil crises -- Don't believe 'em

[Washington] ...The President has signed legislation creating the Federal Oil Conservation Board, to ration dwindling supplies of petroleum...a recent report from the US Geological Survey has indicated oil supplies may be gone entirely within six years...

Last week's newscast? Actually, it was 1924, and the President was Calvin Coolidge. An interesting story that proves little, except that scare stories about oil shortages have been around longer than any of us.

My first experience with oil scares was in grade school in the mid 1970s, where legions of well-meaning teachers taught us the planet had "30 years" of oil remaining. Those years have come and gone, and oil reserves have actually grown larger -- fifty years worth or more. So much, in fact, that doomsayers have been forced to fall back on discredited old theories such as "Peak Oil." -- a topic I'll save for another blog.

But we will eventually run out, won't we? After all, oil is a limited resource, made slowly from limited organic materials. Or is it? Not according to physicist Thomas Gold, author of The Deep Hot Biosphere.  His view is that oil is made deep within the earth by inorganic processes.  If true, the planet may have many thousands as times as much oil as first thought. The theory-- known as abiogenic petroleum, is still highly controversial. However, NASA's recent Cassini mission to Saturn's moon Titan gave it a boost, as evidence there shows its atmosphere is essentially a gigantic oil refinery, filled with the same hydrocarbons that make up petroleum here on earth.  

Abiogenesis may push back the date we run out of oil, but it doesn't change the fact that eventually we will, right? Actually, no. Natural petroleum is a limited resource, but producing synthetic petroleum in the lab is easy. The Germans were making synthetic diesel for military use in WW2. With enough cheap energy, it can be done with no raw materials but water and carbon dioxide.  Best yet -- the process is carbon neutral... the CO2 generated when the oil is burned is equal to the CO2 used to produce it.  At current electricity prices, such a process is much too expensive... but we're talking about the far future, when natural petroleum is scarce, and therefore pricey.

But today, oil remains cheaper than bottled water. Cheaper than any possible alternative. And thats the real reason we keep using it. Not because alternatives don't exist, but because oil is plentiful. And will be for the foreseeable future.

Remember that the next time someone tries to sell you a scare story.

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why the high price then?
By Serifan on 8/15/2006 2:22:23 AM , Rating: 2
well if oil is not running out then why am I forced to pay $1.50au litre for fuel?? last year I was only paying $.98au




RE: why the high price then?
By Hokum on 8/15/2006 5:38:58 AM , Rating: 3
Marketing... make people think its running out/limited due to war and people will pay more... Also dont forget petrolium is the biggest price fixing scam/tax income maker in the world...


RE: why the high price then?
By rrsurfer1 on 8/15/2006 8:56:27 AM , Rating: 2
Supply. Oil-bearing countries set prices by artificially limiting the suply of oil, driving prices where they want them.


RE: why the high price then?
By TheBaker on 8/15/2006 11:23:23 AM , Rating: 4
Actually, to just say "supply" is a little misleading. The real answer is capacity. As the article said, the supply of oil is plentiful. What drives the cost up is how much of it the oil companies actually pull out of the ground and how much they can refine. Since OPEC controls most of the oil, they are the "effective" supply, while the oil in the ground is the "actual" supply.

In the US, there hasn't been a new refinery built in thirty years because of government regulations. That means there is essentially no way to increase our capacity. Throw in the number of special blends all the states require and you have massive amounts of downtime and added expense. Remember when Katrina went through and prices went up, then almost immediately came back down? They went up because we lost some refineries, then went back down because the federal government allowed refineries to ship their single winter blend in the summer. Without the added expense of making 30+ blends, the price came down almost immediately, until the time limit the govt. set ran out.

And don't forget the wonderful world of taxes. ALWAYS REMEMBER that in the US, the oil companies profit is ~$.10/gallon. The federal government takes ~$.30. State governments take between ~$.10 and $.20. The situation in the UK is even worse. They pay twice what we pay, SOLELY because of governmental regulations and taxation.


RE: why the high price then?
By rrsurfer1 on 8/15/2006 1:07:46 PM , Rating: 2
True. An important distinction.


RE: why the high price then?
By Furen on 8/15/2006 6:22:34 PM , Rating: 2
Also don't forget that their extraction costs for crude are around 10 bucks a barrel yet they turn around and sell it to us at 70+ a barrel, so margins on extraction are HUGE.


RE: why the high price then?
By Sahrin on 8/17/2006 1:10:21 AM , Rating: 2
Cost of Crude Oil is determined by the Future Commodity markets in Chicago, New York and London. Don't get me wrong, I'd love to blame the Saudis as much as the next guy, but it's not "price fixing" on the part of the suppliers - it's the sheer idiocy of the buyers who drive the prices to ridiculous heights.


By The Boston Dangler on 8/17/2006 8:24:59 PM , Rating: 2
2nd biggest. The diamond market dances to LeBeers' fiddle.


Oil Supply
By rrsurfer1 on 8/15/2006 8:54:21 AM , Rating: 2
The problem I see with oil is really quite simple. We rely too much on unstable areas of the world for our supply. If we could get all our oil from home sources it wouldn't be the issue it is today. The fact is, the oil we buy supports people we'd rather not support, and there is no way around it (as of yet).

The other problem I have with oil is the pollution. Say all you want about pollution-based global warming not being "real" (which noone can say for certainty), the fact of the matter is, to make energy from oil requires that you pollute the air, or use efficient processes to clean the exhaust, which are expensive. The exponential growth of our world is accelerating the pollution as countries burn more and more fossil fuels. Many of these countries don't have the resources to make their energy cleanly.

I worry that the trade-off for this "cheap-energy" of oil in the present is going to cost us much, much more in the future to clean up our mess. And it's going to force us to continue supporting countries with radical agendas.




RE: Oil Supply
By Garreye on 8/15/2006 10:42:44 AM , Rating: 2
I agree with this completely. Just because we may never run out of oil doesn't mean we should continue to increase our usage of it. Even if the coming oil shortage is just a scare tactic, it's fine with me as long as it pushes research into more environmental friendly alternatives.


RE: Oil Supply
By chasch on 8/15/2006 6:35:11 PM , Rating: 3
quote:
Even if the coming oil shortage is just a scare tactic, it's fine with me
So its ok to lie in the name of the "cause"? What a disgusting attitude.


RE: Oil Supply
By Garreye on 8/18/2006 11:56:17 AM , Rating: 2
Ya it is pretty horrible that this has to happen to make changes. Do you think people are going to try and cut down their oil use if they thinks there's an unlimited amount of oil left? I doubt it, most people don't actually care that much about the environment, for the most part all they care about it convenience and costs (I realise this is a bit cynical, but this is how I see it). So unless we continue to put money into researching alternatives until the they are cheaper than using oil, then people won't use them (for the most part anyway).

Alos, in the past the oil company have been known to buy the alternatives and just scrap them so there's no competition. So now if the people coming up with the alternatives won't sell their ideas as easily because there is a higher demand for alternatives due to the scare tactics then so be it.


RE: Oil Supply
By chasch on 8/18/2006 4:14:35 PM , Rating: 2
quote:
in the past the oil company have been known to buy the alternatives and just scrap them so there's no competition
I call BS.


RE: Oil Supply
By TheBaker on 8/15/2006 5:02:49 PM , Rating: 2
quote:
The other problem I have with oil is the pollution. Say all you want about pollution-based global warming not being "real" (which noone can say for certainty), the fact of the matter is, to make energy from oil requires that you pollute the air, or use efficient processes to clean the exhaust, which are expensive. The exponential growth of our world is accelerating the pollution as countries burn more and more fossil fuels. Many of these countries don't have the resources to make their energy cleanly.


While I agree in principle, your assumptions are a little skewed. If more oil were being drawn out of the ground and refined as the demand from developing countries went up, then your premise would be correct. That hasn't happened, though. The amount of oil refined per year has not risen at the same rate as oil demand in the world. That is one major reason why the price is so high right now. So, (to dramatically simplify the argument) oil usage hasn't gone up, just demand for what's available. Therefore, pollution due to oil usage also hasn't gone up. Actually, pollution per barrel has actually gone down due to advanced refining processes generating cleaner, less wasteful blends. The major by-product of oil consumption is CO2, which is really classified as a greenhouse gas, not a pollutant.

Just to make the the conversation that much murkier.


RE: Oil Supply
By rrsurfer1 on 8/15/2006 5:18:15 PM , Rating: 2
This is not exactly true. Production IS rising, as is consumption. Energy consumption of oil is up 50 quadrillian BTUs since 1970, as of 2001. It's projected to be at 250 quadrillian BTUs by 2025. (Source: US Gov) That's a 5X increase. A lot of extra pollution. Take a look at the wikipedia article on world oil consumption.


RE: Oil Supply
By theaerokid on 8/16/2006 8:29:29 AM , Rating: 2
People in the know who aren't out to scare you will confidently tell you that there's plenty of petroleum available right here in our own backyard (including Canada, Mexico, etc.). It's just that it exists in different forms that are not very profitable for the oil companies to develop the new techniques and systems to extract. The implications for them are huge; they only make a paltry $9.5billion per quarter in profits instead of $10billion.

Plus, it's long been U.S. energy policy to use up Middle Eastern oil first before we get around to using ours. It's just that theirs doesn't seem to be running out fast enough. Maybe we should INCREASE our consumption, right? Right? Seriously, though, our own shortsightedness has left us without alternatives. And I mean viable alternatives that have the economies of scale pushing them along. So we will keep consuming Middle Eastern oil, paying more than $70 for a barrel that costs them less than $10 to extract and transport.


RE: Oil Supply
By Kuroyama on 8/16/2006 12:10:35 PM , Rating: 2
We rely too much on unstable areas of the world for our supply.

I always get a kick of the huge SUV at the gas station with a "Support our troops" sticker. If they really wanted to support the troops they wouldn't be sending so much money to the mid-east supporters of terrorists. My Prius does more to support our troops than 100 of your stickers. Until we have ready access to the oil masher2 dreams of, the fact remains that our huge appetite for oil is fueling the people who hate us.

And don't say "only 10% of US oil comes from the mid-East", because it doesn't really matter; if we buy the oil in ????istan then the previous customers of ????istan will buy the Saudi oil. The only way to decrease the money going to our enemies is to lower the price of oil -- either through decreased consumption or through finding alternative sources of energy (including alternative sources of oil).


Misleading people about synthetic fuels
By 1337n00blar on 8/15/2006 11:15:11 AM , Rating: 2
This article talks about the Germans making synthetic fuels in World War II, implying that we could do the same thing for a renewable fuel source. However, they did this using the Bergius process, which uses large amounts of.... coal! A non-renewable resource! So does the other process of making synthetic fuel, Fischer-Tropsch. But despite this oversight, the main gist of the article is correct, that oil will be around for a while. People interested in this topic should read the works of the economist Julian Simon, who argues that no resource is non-renewable because resources can only be counted as the service they provide, and other resources can be found to provide these services.




RE: Misleading people about synthetic fuels
By ttowntom on 8/15/2006 11:26:39 AM , Rating: 2
The point is that we don't have to use coal to make oil, we can make it directly out of carbon and hydrogen.

Anyway, we have a LOT more coal than we do oil.


RE: Misleading people about synthetic fuels
By 1337n00blar on 8/15/2006 1:04:26 PM , Rating: 2
Right, but I'm not sure the amount of electricty required is possible. Remember, you can't get something out of nothing, so you need to add more energy to the equation than you get out in the form of gasoline. And considering just under half the electricity in the US comes from coal, we're again tapping a non-renewable resource. And if you want to say "Oh, what about nuclear?" then again, we're using up uranium. In the end, no matter how you cut it, entropy bites you. However, I'm still with the article all the way about fuel not running out for centuries.
P.S. In 1947 the New York Times (worst paper ever, IMHO) ran an article that claimed that soon synthetic fuels would be available for 11 cents a barrel, one cent lower than the actual price.


By 1337n00blar on 8/15/2006 1:05:26 PM , Rating: 2
And by actual price, I mean current market price of oil obtained from the ground


RE: Misleading people about synthetic fuels
By ttowntom on 8/15/2006 3:31:28 PM , Rating: 2
quote:
" if you want to say "Oh, what about nuclear?" then again, we're using up uranium."
except for the fact we have enough uranium for thousands of years, and thats even without using breeder reactors.


RE: Misleading people about synthetic fuels
By lewisc on 8/15/2006 5:34:12 PM , Rating: 4
So instead of trying to curb an insatiable desire for more oil, you are recommending that we pour money into producing a far less economically efficient alternative? This whole article is ridiculous. Oil is a finite resource, when being used to make products or fuel that is economically viable.

If it were possible to make cheap fuel, do you not think that oil companies would try to do so, to avoid being at the mercy of OPEC nations, unstable middle eastern climates or even simple maintenance problems, such as those demonstrated by BP last week? The fact is that the production capacity in the US in '03 was estimated to be 73 million tons, rising to 117 in 2005. To supply at any realistic quantity would require huge investment, with prices undoubtably rising for consumers.

The article also doesn't even begin to address the other indistries apart from fuel that rely upon hydrocarbons, such as plastics.

Finally, as many others have mentioned, what about the environmental costs? Do you really want to continue to burn fuel at the current rate, despite the problems caused by global warming? Or are they just hype and myth too, because everyone likes a good scare story?


RE: Misleading people about synthetic fuels
By masher2 (blog) on 8/15/2006 6:00:33 PM , Rating: 1
> "instead of trying to curb an insatiable desire for more oil..."

You just stated one of the primary reasons environmentalists use oil scare tactics. To curb what they consider an insatiable, improper desire for more energy. Not just oil...but energy of any sort. In their minds, cheap energy enables lifestyles of excessive consumption.

In reality, cheap, plentiful is a good thing. It determines our standard of living more than any other metric. Industrialization and cheap energy freed us from a lifestyle of backbreaking toil from sunup to sundown, a life that was short, dangerous, and unrewarding. A lifestyle most of the world's population is still forced to live.

You phrase the debate in terms of a false dilemma-- one side being greater production and supply of energy, and the other being more conservation and efficiency in its use. But we don't need to choose between these options...we can and will do both.

> "If it were possible to make cheap fuel..."

On the contrary, I stated just the opposite. That its possible to produce synthetic petroleum...but that its not economically feasible as long as natural oil is so incredibly cheap.

> "The article also doesn't even begin to address the other indistries apart from fuel that rely upon hydrocarbons, such as plastics. "

Because its not relevant. Obviously if we have sufficient supplies of oil, be they natural or artificial, then we are free to use them for energy, plastic production, or anything else.


By KristopherKubicki (blog) on 8/15/2006 8:32:57 PM , Rating: 2
I am going to take Mr. Buffett's words on finances and adapt them for energy:

We should give people enough energy to do anything, but not enough to do nothing.

Has anyone mapped out energy consumption usage per capita since like the 1800s? I'd honestly like to see if there are convergences for such data.


By Ringold on 8/15/2006 8:53:45 PM , Rating: 2
http://earthtrends.wri.org/searchable_db/index.php...

That was a very lazy google search. Only 1990 and up though.

I'm not sure what you're looking for it to converge with -- wealth, exactly? If so you could be pretty assured that it does. I'll even roll the dice and say they both look like exponential explosions.. at least, for most of the world.

Going along with my own thesis or world view though, they'll decouple a bit. Wealth will march onward, higher, faster, and energy will stop rising nearly so fast. I've seen no evidence to prove otherwise that supply and demand arent going to, in the long run, crunch oil demand, and dont know how renewable energy could do a lot more than grow only slowly. Combine it with efficiency, and we can have energy efficiency, reliable energy, and oustanding growth.

Besides, historically we're overdue for a growth sector anyway. Tech has had its day and its done, and we dont need a revolution in, say, toilets.


Two news stories I believe to be apropos
By masher2 (blog) on 8/16/2006 8:55:22 AM , Rating: 1
quote:
[Illinois Senator Barack Obama]says part of the blame for the world's higher temperatures rests on gas guzzling vehicles. Obama says consumers can make the difference by switching to higher mileage hybrids.

...After the meeting... Obama left in a GMC Envoy after admitting to favoring SUV's himself...
And:

quote:
Gore isn't quite as green as he's led the world to believe...Public records reveal that as Gore lectures Americans on excessive consumption, he and his wife Tipper live in two properties: a 10,000-square-foot, 20-room, eight-bathroom home in Nashville, and a 4,000-square-foot home in Arlington, Va. (He also has a third home in Carthage, Tenn.) For someone rallying the planet to pursue a path of extreme personal sacrifice, Gore requires little from himself.

Then there is the troubling matter of his energy use. In the Washington, D.C., area, utility companies offer wind energy as an alternative to traditional energy. In Nashville, similar programs exist. Utility customers must simply pay a few extra pennies per kilowatt hour, and they can continue living their carbon-neutral lifestyles knowing that they are supporting wind energy. Plenty of businesses and institutions have signed up. Even the Bush administration is using green energy for some federal office buildings, as are thousands of area residents.

But according to public records, there is no evidence that Gore has signed up to use green energy in either of his large residences...< quote>

http://www.usatoday.com/news/opinion/editorials/20...







RE: Two news stories I believe to be apropos
By Kuroyama on 8/16/2006 11:40:06 AM , Rating: 2
What does this or anything in this blog have to do with anything? First the blog says that there is a controversial theory that somewhere deep down in the earth there's more oil (it won't help unless we can get it soon), then that Saturn has lots of oil (not that it'll help us), then that we can make synthetic fuel (not that anyone ever claimed otherwise), and now it's about hypocrisy of some liberals. This has been a very long winded way of saying nothing at all.


RE: Two news stories I believe to be apropos
By masher2 (blog) on 8/16/2006 12:06:41 PM , Rating: 1
> "it's about hypocrisy of some liberals"

The issue isn't hypocrisy-- its credibility. If Gore and others really believed that burning oil and other hydocarbons was dangerous and shortshighted, they wouldn't be doing it.

> "somewhere deep down in the earth there's more oil (it won't help unless we can get it soon).."

If the theory is correct (and I'm not claiming it is), then we're already "getting it" on a daily basis. They also claim it explains the known phenomena of some oil reservoirs "refilling" after exploitation.


RE: Two news stories I believe to be apropos
By Kuroyama on 8/16/2006 12:22:15 PM , Rating: 2
If Gore and others really believed that burning oil and other hydocarbons was dangerous and shortshighted,

That is a topic for the Global Warming blog, not a petroleum blog. In any case, I don't know how easy it is to sign up for alternative energy in VA, but here in Boston I haven't heard anything about such sources. Until someone who lives in VA near Arlington posts about it then I'll reserve my judgment; the behavior of Obama on the other hand is certainly problematic.

If the theory is correct (and I'm not claiming it is), then we're already "getting it" on a daily basis.

Maybe you could have said that in the original posting, because as it is the blog doesn't say anything about the secret oil being useful any time soon.

the known phenomena of some oil reservoirs "refilling" after exploitation.

If I squeeze out one corner of a sponge, a few minutes later it will be wet again. It could just be oil in nearby rock is leaching into the reservoir. That's so obvious I'm sure the authors already addressed it, but just a thought.


By masher2 (blog) on 8/16/2006 12:40:28 PM , Rating: 2
> "Maybe you could have said that in the original posting"

A valid point, however there are space constraints in a blog. I could have easily written 50 paragraphs instead of five...but then, no one would have read it :)


RE: Two news stories I believe to be apropos
By chasch on 8/16/2006 12:47:29 PM , Rating: 2
quote:
that is a topic for the Global Warming blog, not a petroleum blog.
Dude, Gore's been calling cars more dangerous than nukes for years. Because they burn petroleum. Theres a pretty obvious connection there.


By Kuroyama on 8/16/2006 12:53:36 PM , Rating: 2
Gore's been calling cars more dangerous than nukes for years. Because they burn petroleum

Because Gore says that burning petroleum causes global warming.


By Ringold on 8/16/2006 2:58:47 PM , Rating: 2
People smoke, they know it'll kill them, but they do anyway.

Obama uses an SUV, he knows its emissions aren't good for the Earth to some unknown degree, but he does it anyway.

Free choice, what a beautiful country of self-determination.

Perhaps a better article would've been the economic study out a couple weeks ago stating the best thing for the environment for a human to do is drive an SUV, eat fast food, smoke and watch TV. We die young, and when we're dead, we stop polluting. The dozen or more years we're not polluting, 'cause we're dead, more than makes up for an extended lifetime thanks to riding a bike and eating salads.

So guys, light it up. :)


One More Thing
By vanka on 8/15/2006 1:34:54 AM , Rating: 2
There is actually one more method of producing synthetic petroleum using animal wastes. I recall reading recently about a process in which turkey waste was converted to petroleum when the waste products were mixed with water and subjected to moderate pressure. If I recall correctly, the process took onlyh several hours.




RE: One More Thing
By bob4432 on 8/15/2006 12:00:31 PM , Rating: 2
i read the same article. they should put those plants up everywhere, but the fat cats won't let that happen :(


RE: One More Thing
By Schadenfroh on 8/16/2006 9:34:30 AM , Rating: 2
One of my friends is working on his grad work with this. Yes, you can make fuel from crap, but it is not sh!toline, it is just diesel fuel, at least from what he says.


RE: One More Thing
By Kuroyama on 8/16/2006 12:01:25 PM , Rating: 2
CNNFN has an article on a related idea of converting manure to ethanol. A nice bonus of this is that it would eliminate the methane emissions from manure, which as pointed out in the Global Warming blog is a much worse greenhouse gas than is CO2. Imagine, we can eat beef, wear its skin, and drive using its sh*t. Cows are quite an all purpose animal!

http://money.cnn.com/2006/08/01/news/companies/bc....


RE: One More Thing
By Jellodyne on 8/17/2006 9:45:06 AM , Rating: 2
Who runs Barter Town?


RE: One More Thing
By VooDooAddict on 8/17/2006 1:59:39 PM , Rating: 2
Blaster Master


Oh dear
By Merry on 8/15/2006 2:37:05 PM , Rating: 1
I cant help but laugh at the title of this blog.

You state that there is no fuel shortage, well regardless of how much oil left it first has to be extracted and therein lies the problem. A lot of the supply is dictated by countries in somewhat unstable areas therefore prices will fluctuate of follow a general rising trend, given the troubles in the middle east. OPEC is also responsible for this.

Anyway, i'll move on to your point, regarding the synthetic oil, as has been stated before in the above comments, this simply isnt possible, indeed a better alterative would be bio fuels such as ethanol etc.

Moving on.. the point about oil being produced in a different manner. Well i'm on shaky ground here (if you'll forgive the pun) if there was such quantities of a liquid material (well the amounts that that you are suggesting) surely this would affect the way various waves travel through the earth after earthquakes, although this is just a wild guess and I would like someone to try and prove otherwise.

You raise some good points in your blog, however, i think suggesting that it is some type of conspiracy and it is certainly the case there is plenty of oil left is a little far fetched, indeed, as is suggesting you pay too much for petrol, indeed, in the UK we pay twice this amount for a gallon. There is also the fundemental problem of global warming. Any means of combustion from a renewable source can only be a short term stop gap measure until something better comes about. Truth is we have to change our lifestyles, reagardless. Indeed any alternatives could be beneficial in the long term as said alternative could, indeed probably would be cheaper than oil, as these oil reserves may not be economically viable to extract.




RE: Oh dear
By masher2 (blog) on 8/15/2006 3:28:55 PM , Rating: 2
> "regardless of how much oil left it first has to be extracted and therein lies the problem"

Very true. Capacity issues will certainly continue to cause price volatility in the marketplace. However, these are short to mid-term issue, and long indicative of long range problems.

> "i think suggesting that it is some type of conspiracy ...is a little far fetched"

In no manner did I mean to suggest any form of conspiracy. Doomsaying is popular for the same reason as Steven King novels. People love a good scare.


RE: Oh dear
By Merry on 8/15/2006 6:32:38 PM , Rating: 2
In no manner did I mean to suggest any form of conspiracy.

this is, however, debatable.

You say supply is only a short term issue. So you really believe we will still rely on oil in 50-100 years time? I wouldnt think so. As i also said in my post these new reserves may not be able to be tapped, indeed more than 50% of oil is left at any one reserve after extraction as it isnt commercially viable, or, indeed possible to extract. You make no mention of whether any such new reserves can be used. Its all well and good saying its there but it isnt worth much if it cant be got at.

Unfortunatly you've got to face it, the number of viable reserves will decrease and eventually there will be none. Same is true of coal (needed for synthetic oil) and gas. Whether this be in 30, 60, or 150 years time we must develop alternatives now and put them into use now. Its no good us sitting back (if you are correct in your assumptions) and not doing anything for the sake of future generations, if anything.

You also cannot deny global warming. I know i have done but recent data has changed my view. Maybe this should be taken into account.

I would also like to know who rated down my post as i would really love to hear their reasons for doing so.


RE: Oh dear
By Ringold on 8/15/2006 6:58:20 PM , Rating: 3
I think the real truth here Merry is that Masher will be right, just not for the reasons he thinks. :)

Taking what you said about reserves, and throwing in increasing demand, prices will shoot up. Alternatives will never bring prices down as far as they were in the 90s, but we'll switch anyway 'cause 45 or even 80 bucks per equivalent oil from a steady, non-interruptable nearly-eternal flow of renewable alternative energy will be much more preferred in the long run than volatile oil that is finite and could be $75 today and $200 tomorrow when terrorists blow a Saudi facility. So in 100 years, Masher will be right, we'll still be using oil, but only after a huge and continous drop in demand.


RE: Oh dear
By Merry on 8/15/2006 7:52:03 PM , Rating: 2
although he hasnt said this...


Why we will never run out
By Kansas Crude on 8/15/2006 4:14:45 PM , Rating: 3
Technically you may be correct the world will never totally run out since 100% extraction of all the worlds oil is not possible. Beyond that the article is borderline laughable The worlds core and mantle is a creamy nougat of oil oozing to the crust is almost as good as spinning straw into gold. Your premise that people like to be scared (ok) and therefore they cling to a Peak Oil hypothesis is not the experience I encounter when discussions lead to this topic. My experience is they prefer to live in denial of the worlds realities (oil is finite) and thus prefer to the absurd arguments i.e. the creamy nougat theroy..denial trumps reality and joy of being scared.
You toss some wet blankets on the Peak Oil Phenom and then defer to a future blog to detail your arguments.... I will look forward to your future blog as it appears you are not fully engaged with the facts at this point. When you have reviewed the actual discovery and production data thats available (especially those of the worlds great oil fields), as well as spend some time with the critical works of Simmons & Deffeyes, and finally when you have have assimilated the great data based discussions at sites like The Oil Drum we will look forward to your ability to factually discuss this subject. At this point your arguments are mostly conjecture and most deniably so




RE: Why we will never run out
By chasch on 8/15/2006 6:32:04 PM , Rating: 3
I'm surprised more of the Peak Oil loonies haven't checked in here. Usually attacking their sacred cow brings them out in droves.


RE: Why we will never run out
By Ringold on 8/15/2006 6:50:45 PM , Rating: 4
I've got to generally agree with you, Kansas.

I wont pretend to know the details of oil extraction and various methods and alternatives, but I was rather forced to do a 'light' study on the whole issue last November.

Pollution, social views, everything but dollars, demand and supply are irrelevant.

1) There is, and, barring the change of hearts of tens or hundreds of thousands of ideological radicals and dictators the world over, always will be a 'terror premium' baked in to the forward-looking price.

2) Production is only rising now, and more so in the coming 5-10 years, thanks to a mad rush by the industry to pluck every last low-hanging fruit. Scores of low daily production fields coming online which will peak in a few short years then fade to nearly nothing just as quickly. Meanwhile, older fields, like those of Mexico and Saudi Arabia (btw, more or less accepted knowledge that OPEC massively overstates reserves) are in irreversible decline. New technology merely slows this decline.

3) New fields are not enough. We can tap the Artcic National Wildlife Refuge at a torrent pace and it'd halt domestic US production for just a few short years. Then back to decline.

4) The premise of your article is correct, but we don't have to run out to have economic shocks. $200 dollar a barrel oil would destroy the world if sustained long enough, simple as that. Prices *are not* determined by the cost of production (not *currently* and not again until the economy changes fundamentally), they're determined by supply, which in this case is almost "an act of god" and not traditional economic factors which can be changed, and demand. Gasoline is the same boat. With dwindling supply, a gas station should never run out of gasoline. Ever. If they did, the owners should go back to business school. One charges as much as one can. If priced perfectly, prices would be high enough to force just enough people to not buy gas such that the last gallon of extremely high priced gas is sold at the exact same moment the truck comes to top off the stations tanks. Never has supply RUN OUT, merely supply becomes tight and demand remains high, because oil is one of the most inelastic items in the whole global economy, forcing prices up. People still have to get to work an move about, so they pay it until they can't any more. Paying more for gas means less retail or "want" purchases. That creates store closings, which leads to less factory demand, meaning high-paying jobs get dumped around the globe. Global recession. At that point, demand would evaporate, but with nobody working, who can afford it if you don't have any income?


---------

All that being said, ethanol is widely qouted to be price competitive down to $45 a barrel of oil. Some process and business are more efficent than others, and they'll get weeded out. Tech will also improve. Apply odd principles of quantum physics to solar panels could save the day. Anyway, as oil goes higher, alternatives will siphon off demand.

Those alternatives won't come online immediately, it takes years even once the technology is mature, and in the end I wasn't able to even guess how to model it, but its a safe assumption that the difference between supply and demand will create a serious headache, followed by a generation of different methods.. afterwhich we'll all look back and think "wow, can't believe that was even a problem!" as we pump a bio-fuel, fill a hydrogen tank, or charge our capacitors. No where near a disaster. IMHO, the Fed shouldn't start to lower the overnight rates but should hold them steady. Loosening and trying to spur the economy would only make the headache worse when the time comes.

I guess my main beef was the suggestion production will keep charging higher and higher to keep it in its current equilibrium. That equilibrium has marched higher for the last couple years and the rate isn't about to slow. True, doomsday people are just looking for an excuse to cry "The sky is falling!" when really all they need to be concerned about is if they have enough in their savings account to ride out a short stint of unemployment, making sure both husband and wife are working, and looking in to going back to college. There WILL be supply-side shortages though, I don't know how anyone whose studied the issue could determine otherwise. Mostly a question of "what year" between 07 and 2010.

It's a mistake to fall hook line and sinker for 'peak oil' blowhards, but just as bad to fall under the sway of its ardent opponents. The truth, as always, is somewhere in the middle.

Good god that was too long a post.


By occams razorclam on 8/15/2006 1:09:38 PM , Rating: 2
The turkey guts operation that is mentioned here, was closed down months ago. It was a pilot for a process called, 'thermal depolymerization.' It produced horrible smells, and very low quality oil. Read about it at biodieselnow.com .... there is a huge thread on "TDP,' as the site calls it. Not a solution.
The PROBLEM isn't that oil supply will dissapear, go to zero.
The PROBLEM is that we've based our entire societal existence on the abundance of CHEAP OIL.. Peak oil just means we will have less oil, probably lower quality, and much, MUCH higher priced oil... think about it. If oil is $150 to 200 bucks a barrel, or 12 to 18 dollars a gallon... how do you think it would affect life in the US? Think you'd still car commute? Think the millions of people that car commute would have to find another way of doing business? What about the millions of people that live in suburbs without mass transit?
The point is, expensive oil means serious and dramatic economic and societal disruption. Even the DoD and the DoE's reports say so. Google, 'The Hirsch Report, DOE"
Idiots. Oil isn't going to run out. Nobody says that. You don't even understand the basic argument. Read a freakin' book, for god's sakes. Try, "Twilight in the Desert," "Hubbert's Peak."
THEN we can discuss something. Otherwise, it's not even an argument!





RE: Try theoildrum.com for ACTUAL information...
By rrsurfer1 on 8/15/2006 1:36:38 PM , Rating: 2
I agree that the price of oil will continue to increase until it is not sustainable for the wasteful uses we employ today.

As the price of oil goes up, the switch to alternative energy will be welcome. The only question is, who will make money on the technology. (Spoken from a U.S. viewpoint) - If we continue to allow oil companies and a largely oil-controlled government to control research dollars for alternative energy, you can bet that we will not be the country supplying this alternative.


By PeakEngineer on 8/15/2006 4:52:29 PM , Rating: 2
You seem confident that as oil increases in cost we will turn to other solutions, and I agree. I do however have concerns about the quality of those solutions, particulary if the production peak occurs in the near future. Let me also emphasize here quite strongly as a scientist, an engineer, and someone trained at critically analyzing data, that oil is with 100% certainty a finite resource. The longer we use such a resource, the more difficult it becomes to extract. In addition, there are no processes for producing oil with an Energy-Returned-on-Energy-Invested (EROEI) significantly greater than one.
So what are we going to do? We have to transition to sustainable society at some, so why not now? Most readers here are technically oriented, and if would be great if you would come help flesh out ideas for sustainable design at http://peakoildesign.blogspot.com


By masher2 (blog) on 8/15/2006 3:23:49 PM , Rating: 1
> "If oil is $150 to 200 bucks a barrel, or 12 to 18 dollars a gallon... "

Raw petroleum cost accounts for 40-48% of the cost of refined gasoline. Oil at $200 a barrel would therefore raise gasoline from $3 up to perhaps $5/gallon. A far cry from the $12-18 range.

> "Idiots. Oil isn't going to run out. Nobody says that. "

Not lately...primarily because oil reserves keep expanding faster than consumption. The next time oil reserves drop slightly, however, expect to see the doomsayers drop their 'peak oil' arguments, and return to the claim.

> "Read a freakin' book, for god's sakes. Try, "Twilight in the Desert," "Hubbert's Peak."...

I'm well familiar with Hubbert's work...that'll be the topic of a later blog, however.


By therealnickdanger on 8/15/2006 4:56:07 PM , Rating: 2
quote:
I'm well familiar with Hubbert's work...that'll be the topic of a later blog, however.

Excellent! One of my good friends follows the "Peak Oil" frenzy with religious ferver - despite its erroneous conclusions. More ammo is always good.

A couple things I was hoping too see in this blog or possibly even future blogs is information regarding the absolutely MASSIVE oil and oil shale deposits we have right here in the USA - so far estimated at well over 1 trillion barrels; and also details regarding the efforts to open new refineries in the USA.


Hmm?
By gramboh on 8/15/2006 2:27:24 PM , Rating: 2
Many of my clients are oil & gas producers and my experience in the industry is that conventional deposits are being found less and less, even with the high price of oil and increased drilling (globally).

The other problem is finding/lifting costs are increasing per barrell as E&P companies have to go to less conventional places to extract it.

Also look at tarsands, the production costs are astronomical and only sustainable by a very high price.

As to the people saying oil is price fixing, how can you price fix an internationally produced/traded commodity across many free markets? OPEC's share of production is falling, look at how much oil is imported from Canada to the US (US is largest global consumer by far).




RE: Hmm?
By Ringold on 8/15/2006 8:40:43 PM , Rating: 2
Price fixing reminds me of people that cry "price gouging!" when a hurricane comes through, knocks out power to the water pumping stations, and intelligent business men show up on the street corners hawking $30 bottles of water. Sorry, liberal hippies, but demand is demand and supply is supply! This guy has water, because he was smart enough to stock up. You have none, 'cause well, you weren't that smart! There's fifty people on this street wanting his water, but only enough for ten people. Obviously he's going to charge a high enough amount to maximize his profit!

I don't think people that say price fixing understand that oil futures contracts are traded, like you said, on an electronic international commodity exchange.. open to anybody! I think even the common joe can trade commodities, I don't myself but I think peopel can. It's easier to blame some huge, faceless company though than ones self for high demand for oil or to accept tough truth.


RE: Hmm?
By Xenoterranos on 8/17/2006 2:25:14 AM , Rating: 2
You know, he's absolutely right. That guy would have been retarded for giving that water away.

More people should be smart enterprising buisnessmen. For example, why spend millions of dollars waging political campaings to have your political party gain power in the middle east so as to declare war on the U.S. when 16 guys and some boxcutters can do it for the cost of a few plane tickets? And on top of that, the U.S. will come to you! Now that's good buisness sense.

Or that guy with the water could have just been being an asshat. Honestly, if someone would have tried that in Louisiana during Katrina, they would have probably been shot.


Its true that
By Dfere on 8/17/2006 10:28:06 AM , Rating: 2
Filling up your car with water would cost, much much more (and we buy the stuff, hey we are responsible).

And yes, synthetic petroleum (and butter and other things) were made by the Germans (There have been many 70's Nazi fictional books written with that as a backplot).

But I'd like to draw a distinguishment between the war time economics of Germany during WW2 and today. I don't think it is responsible to say we can feasibly produce it today, until someone actually produces a large scale operation. There are so many different environmental factors (including ones that concern the "environment" as used today to discuss biological and floral and global impacts of production) that never were even considered back then.

For now, the only issue synthetic production addresses is probably the circumvention of the most drastic effects of petroleum shortage. In other words, we could probably still continue to produce the fertilizers we need for foods, and possibly synthetic fibers and plastics in needed industries (at potentially a huge increase in cost), but don't on cheap gas if it ever comes to this.




RE: Its true that
By TomZ on 8/17/06, Rating: 0
RE: Its true that
By Dfere on 8/17/2006 3:08:50 PM , Rating: 2
Okay- Loose definition of feasible so how about "A plant operating in a free market not supported by any government subsidy, and also not supported by a parent company as a large test scale. As a corollary to this, the plant would have to be generating a net cash outflow from the production and sales of its products to unrelated third parties while being in compliance with the strictest in force regulations regarding pollution in the country in which it operates".

We can call this the Dfere Feasibility Standard....

BTW I want to use a cash flow, not a stock market, analysis here p`````````````````.


RE: Its true that
By masher2 (blog) on 8/17/2006 4:20:13 PM , Rating: 1
> "As a corollary to this, the plant would have to be generating a net cash outflow from the production and sales of its products "

As I point out in the blog, such operations will remain infeasible as long as oil remains dirt cheap....the few operations we see here and there are, as you point out, special cases supported by government subsidy or other factors.

Should oil hit $200/barrel, we'll see these alternatives coming out of the wooodwork though.


yea riiight...
By interl0per on 8/15/2006 8:32:45 AM , Rating: 2
We should all be glad that oil will continue to be produced as we use it by the process of 'abiogenesis.' I am now making an 'abiogenic reactor' that will fit in an ordinary kitchen and produce gasoline directly and skip the messy oily step altogether. Eventually I hope to fit the device IN the gas tank of my auto so it will produce gasoline AS I DRIVE.

I think there may be a market for it.




RE: yea riiight...
By shadowzz on 8/15/2006 8:53:29 AM , Rating: 2
There was an episode of Nova recently about this where some scientists could take a titanium mesh, poor water over the mesh and combined with sunlight you get pure hydrogen. However, the episode said this technology isnt really ready yet and you have to put way more energy in than you get out, and that the titanium mesh was not fine enough yet. If you could get hydrogen easy enough though, it really wouldn't be a far step to combine those nice hydrogen molecules into hydrocarbons.

Of course if you have free hydrogen floating around why wouldn't you just use it for fuel cells?


Never?
By Griswold on 8/15/2006 10:19:34 AM , Rating: 2
Which is it? "Never" or "foreseeable future"?




stop pollution?
By TheDoc9 on 8/15/2006 11:09:33 AM , Rating: 2
What happens to other countries when we start using hydrogen cars or whatever the future form of travel is? Do you think that Africa, mexico, the middle east, India, ect. will follow suit? Maybe eventualy. It will almost certainly be at least 50 years away for the world to get off of oil.

My point is, even if we get off of it, the pollution won't stop anytime soon. And I don't believe that it's that big of a problem anyway, unless your driving behind an old clunker.




By Kuroyama on 8/15/2006 7:09:28 PM , Rating: 2
There's no shortage of scare stories about looming oil crises -- Don't believe 'em

The blog is not really about oil or normal usage of the world "petroleum", it is about energy. No one denies that we can produce almost anything we want synthetically, even diamonds, if we put enough energy into it; the discussion about an oil crisis is a suggestion that an energy shortage could be forthcoming.

I don't really buy the "we have lots of coal" argument that a few people posted, because I am fairly sure that if all energy worldwide switched from oil to coal, and if we factored in the rate at which energy use increases each year, then the "200 years of coal" type claims would suddenly become far from the truth.

Nuclear power, well that is a different story. Certainly should be more widely used, and probably play a big role in solving potential energy troubles, but again it seems this blog claims to be about something other than whether we should worry about an energy crisis. And don't count your chickens before they hatch. If nuclear is the solution then we should not be suggesting to people that there is no energy problem to worry about, instead we should say "Yes there will be an energy problem given current practices, but we can solve it if we switch to nuclear power, so quick, let's get our act together!"

I'm well familiar with Hubbert's work...that'll be the topic of a later blog, however.

Well, once that's posted I guess I'll no longer be able to use this in statistics class as an interesting application of using statistics to "predict the future". Will be curious to see what you have to say (perhaps one problem is the dependence of the calculation on a prediction of total oil reserves?).




Knowledge and its use
By EarthsDM on 8/15/2006 10:37:11 PM , Rating: 2
God, I'm glad I got 'A's in American Foreign Policy and Economics. Otherwise I might have to read all of the comments above this.
*don't flame, I'm just poking fun*
I'm sure that cheap oil will power my Honda sub when I commute to work 20 years from now. ;P




Todays News
By chasch on 8/17/2006 1:12:50 PM , Rating: 2
Oil falls to lowest price in 8 weeks:

http://today.reuters.com/news/articlenews.aspx?typ...




RE: Todays News
By TomZ on 8/17/06, Rating: 0
By VooDooAddict on 8/17/2006 2:20:35 PM , Rating: 2
While I agree that reducing out dependence on foreign energy would reduce the political needs to keep certain regions "stable." Hopefully reducing our military commitments and allowing us to focus more on other issues and advancements that could "advance" health, culture, and social justices.

I disagree with the blanket statements that buying oil fuels the people that hate us. National policies and relationships that we form with other nations are the fuel for people who hate us. Oil wealthy individuals/nations/companies may supply funding to those that hate us or those we have allied with ... but I think a direct link to our buying oil => funding hate groups/enemies is a bit of a stretch.

I'm going to be buying a scooter/small motorcycle soon to cut down on my gas usage in the metro area... my reasons aren't completely altruistic though. While it will be more environmentally friendly, that’s not the motivator. It just makes better economic sense for me as the monthly parking/insurance/gas cost for a scooter is a fraction of the cost of my car. It also looks to be a fun little hobby to have and will get me to go out a little more and experience a boarder range of my city.




Dang, someone else gets it!
By Saist on 8/15/2006 12:24:39 PM , Rating: 1
I read that entry, and my first thought was WHOO HOO!!

It's nice to see others calling B.S. on oil scares.




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