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#61 advancedatheist

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Posted 28 January 2004 - 04:06 PM


Analysts: U.S., China to vie for MidEast oil
By STEPHANIE MURPHY, Daily News Business and Real Estate Writer
Tuesday, Jan. 27, 2004 — The United States is heading into year three of a third world war, one that is driven more by oil than ideas, according to a presentation led by a think tank in Palm Beach Sunday. And by year 20 of the conflict, the United States economy will vie with China and India for diminishing reserves of black gold.

"Thinking outside the tank," a briefing on the relationship between threats to national security and the growing energy dependence of the U.S., drew about 50 people to CafŽ Boulud at the Brazilian Court. Several local residents hosted the program, which featured the founders of the Washington, D.C.-based Institute for the Analysis of Global Security.

Gal Luft, executive director, and Anne Korin, director of policy, say the goal of these informal "awareness raisers" is to offer practical solutions to America's dependence on foreign oil, which has become even more fraught with problems since the terrorist attacks of Sept. 11, 2001.

"The idea is to get people to see and hear a new story, to connect the dots of what we are facing in strategic issues over the horizon. If nothing changes in 20 or 30 years, our dependency on oil will increase, as will others',Ó said Luft, who has a doctorate in strategic studies from Johns Hopkins University. "China, especially, will end up on a collision course with the U.S."

"It is a world war. Terror is a tactic, not an enemy. But we know who the enemy is, where they live and where they get their money. What we don't know is their distribution, the number of radical fundamentalists," Luft said.

The longer the war goes on, several factors make the U.S. worse off than it is today, he said, including the fact that the U.S. imports 65 percent of its oil; that in 20 years, 95 percent of global reserves will be in the hands of OPEC; and that China now wants to use more energy.

"That means China has to be a player in the Middle East, sending weapons and so on. As it is, China is the main proliferator of weapons of mass destruction. We don't want China in the Middle East. But they will end up there, because they have nowhere else to go for oil," he said.

Currently, the U.S. is paying for both sides of the war, he said: the cost of a military presence on foreign soil, and the price paid for gasoline at home.

Korin, a doctoral candidate at Stanford University, said the short-term horizon will be full of attacks on oil supplies, "because the best way to hit our homeland is to hit our oil overseas. Without energy, our society grinds to a halt." She predicts attacks on oil pipelines will increase.

Korin said many attacks will target strategic straits where oil tankers travel, citing a recent incident on the border of Indonesia and Malaysia. She said the pirates were "breakaway units" of the Indonesian navy, very well armed with AK47 assault weapons and traveling in small, fast boats to outmaneuver the clumsy tankers. They boarded the tanker to "test-drive" the straits — causing analysts to see a pattern like Sept. 11.

"To us, that looked a lot like flight school," she said, referring to the World Trade Center attackers who learned to fly in Florida.

She and Luft hope to educate consumers about the true cost of U.S. oil imports and some potential alternatives. They talked about other energy sources — including cleaner coal, agricultural waste such as corn stalks and biomass such as recycled garbage.

"In every other buying experience, coffee or a mattress, you have choices. The only product with no choice is fuel. There is gasoline, and gasoline made from oil, and oil," she said. "If we decide to spend money to move beyond oil, we can do it."

Insurance executive Bruce Gendelman, an event host, said the premise is unique "because it really, truly offers an ideal long-term solution to oil dependency. The brilliance of their approach is to look at the technologies that are coal-based and biomass-based. If you really get into the numbers, you can have a negative cost to produce fuel."

The problem is getting it done politically, with leaders who push for fundamental change, Gendelman said: "Their message has zero to do with religion. The terrorist problem has to do with conflicting political systems and oppressive regimes, with non-democratic governments that control the oil, creating a large impoverished underclass."

— smurphy@pbdailynews.com

#62 advancedatheist

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Posted 29 January 2004 - 01:20 AM


For Immediate Release:
Thursday, 29 January 2004

140 Fortess Road, London NW5 2HP, England
+44 (0)20 7424 0049 odac@btconnect.com

Oil Supply Shortages Likely After 2007, New Report Shows

Global oil supplies could start to have difficulty meeting growing demand after 2007, according to a recent analysis of existing and planned major oil-recovery projects published this month in Petroleum Review.

While a flood of new production is set to hit the market over the next three years, the volumes expected from anticipated new projects thereafter are likely to fall well below requirements, the report says.

"There are not enough large-scale projects in the development pipeline right now to offset declining production in mature areas and meet global demand growth beyond 2007," said Chris Skrebowski, author of the report, editor of Petroleum Review and a recently appointed Board member of the Oil Depletion Analysis Centre (ODAC) in London.

"Since it takes, on average, six years from first discovery for a mega project to start producing oil, any new project approved today would be unlikely to come on stream until the end of the decade," Mr Skrebowski noted.

The report, 'Oil field mega projects 2004', analysed all known projects with estimated reserves of over 500 million barrels and the claimed potential to produce over 100,000 barrels of oil a day. Projects on that scale account for about 80 percent of the world's oil supplies.

The report found that just three such projects are expected to come on stream in 2007 and three more in 2008. No new projects could be identified for start-up in subsequent years.

"Ever-growing demand for oil means there is a ready market for additional supplies so substantial new discoveries tend to go into development in a very limited time," Mr Skrebowski noted. "But between a quarter and a third of the world's oil production is already in decline and it appears that giant new discoveries to replace lost capacity are becoming very scarce."

The rate of major new oil field discoveries has fallen dramatically in recent years. There were 13 discoveries of over 500 million barrels in 2000, six in 2001 and just two in 2002, according to the industry analysts IHS Energy. For 2003, not a single new discovery over 500 million barrels has so far been reported. [The falling discovery trend is confirmed by another recent report by energy consultant Wood Mackenzie, according to a January 23, 2004 article in The Wall Street Journal.]

Key findings of the Petroleum Review report are:

- Between 2003 and early 2007 some 8 million barrels of new capacity is expected to come on stream. This should be more than sufficient to offset global production declines of about 3-4 million barrels a day over that period and projected demand growth of around 3 million barrels a day.

- The peak year for new mega projects, predominantly offshore developments, will be 2005 when 18 projects with a potential peak capacity of 3 million barrels a day are due to come on stream.

- The development pace will slow in 2006 with 11 new projects starting up. Their combined peak capacity will be around 2 million barrels a day.

- Only three new mega projects are expected to come on stream in 2007 and a further three in 2008, adding less than 2 million barrels of potential new capacity at their peak.

- From 2007, the volumes of new production will likely fall short of the combined need to replace lost capacity from depleting older fields and satisfy continued growth in world demand.

- Some 23 other projects have been identified that could potentially be developed sometime in the future. All but two of these are in Russia and the Middle East but due to a range of political, legal and technical uncertainties, none is likely to add new supplies to the market before the end of this decade.

The report includes details of 54 approved projects, with their estimated reserves, expected start-up dates and projected peak flows, as reported by the oil companies. A number of the projected peak flows appear high
relative to the reported reserve base, which suggests that these peaks may be relatively short-lived, Mr Skrebowski noted.

Almost all of the projects listed are in offshore fields. Since the infrastructure and operating costs of offshore projects are much higher than onshore projects, they are usually developed so that peak flows are achieved quickly – within about a year of start-up – and maintained for as long as possible. Offshore fields deplete more rapidly as a result.

The International Energy Agency forecasts annual average growth in oil demand over the medium term of around one and a half percent. That alone would require increases in production on the order of one to one and a half million barrels a day each year. In 2002, total worldwide oil production was about 74 million barrels a day, but over 21 million barrels a day came from countries where production is already in decline.

"The results of this analysis suggest that with a shrinking pool of major new oil–recovery projects available, the world may be entering an era of permanently declining oil supplies in the coming decade," Mr Skrebowski said.

"A number of other analysts have forecast a global peak in oil production within roughly the same timeframe based on analyses of past production and estimates of reserves. This study takes a different approach but points to a similar conclusion."

# # #

For more information contact:
Jim Meyer
Tel: +44 (0)20 7424 0049
E-mail: odac@btconnect.com

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#63 advancedatheist

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Posted 29 January 2004 - 03:55 PM


World > Global Issues
from the January 29, 2004 edition

Has global oil production peaked?

By David R. Francis | Staff writer of The Christian Science Monitor

Today's civilization depends on an abundant and relatively cheap supply of oil. It fuels most of our vehicles, aircraft, ships, and trains. It provides the raw material for fertilizer, some clothing fabrics, most plastics, and many chemicals. Oil heats many of our homes and businesses.
So when experts discuss when oil production will begin to decline, the world pays heed. The question now making the rounds in energy circles: Has production already peaked?

If it has - or if a peak lies only a few years away - the repercussions would be huge. It could intensify a scramble by oil importers to tie up existing reserves. Decline could lead to scarcity and higher prices, possibly recession, while prompting an urgent push to alternative fuels and conservation.

For at least one analyst, the scenario has already begun to unfold.

"World production is flat now," says Kenneth Deffeyes, a Princeton University geology professor.

But that's a controversial view. Other pessimists talk about 2010; many analysts see no change until 2035.

Of course, various "experts" have been predicting the end of the oil age for more than 100 years. And even now, no one really knows how much oil is left in the ground. Estimates involve guesses of not only future oil finds but future world economic output and oil consumption. These numbers are typically highly imprecise.

Even calculating current reserves is tricky. The Royal Dutch/Shell Group, one of the world's largest oil producers, shocked the financial community earlier this month when it announced it had overbooked its proven reserves by 20 percent - an indication of the fragility of such estimates.

The United States Geological Survey (USGS) puts yearly world consumption of oil today at about 30 billion barrels. That comes out of known or proven world reserves of 1.1 trillion barrels, according to IHS Energy, an oil and gas information-gathering group in Tetbury, England. By adding in Canada's oil sands, the Oil and Gas Journal in Houston raises proven reserves to 1.266 trillion.

"It is not an issue in which there are absolute answers," says Robert Tippee, editor of the Houston trade journal. Much depends on advancing technology and the economics of production, as well as how much oil the ground really holds.

Advocates of a production peak coming soon offer several pieces of evidence:

• Total world oil production reached 68 million barrels per day in 2003, according to a count by the Oil and Gas Journal. That's not much above the 66.7 million barrels per day. in 2001. Oil reserves estimated at 1.266 trillion are up only a bit from 1.213 trillion a year earlier.

• Production has peaked for more than 50 oil-producing nations, including the US (1970) and Britain (1999). China, second to the US in the consumption of oil, was a net exporter of oil until five years ago.

• The Department of Energy predicts world demand will reach 119 million b.p.d. in 2025, with huge increases in China, India, and other developing nations.

• In 2002, the world used four times as much oil as was newly found.

• The rate of discovery of worldwide oil reserves, after declining for 40 years, has slowed to a trickle. In 2000, there were 16 large discoveries of oil, eight in 2001, three in 2002, and none last year, notes James Meyer, director of the Oil Depletion Analysis Centre in London.

• All the giant fields, such as those in the Middle East, have already been discovered, some experts say. These giants are relatively easy to find. The last major oil field, Cantarell, off Mexico's shore, was discovered in 1976.

"The oil companies are drilling fewer and fewer wells," says Colin Campbell, founder of the Association for the Study of Peak Oil, a network of scientists, professors, and government experts. "There are fewer worthwhile prospects to test."

But optimists see another picture.

For example, with scientific advances, oil companies have boosted their drilling success, which means they don't need to drill as many wells. Last year, nearly 40 percent of exploration and wildcat projects located oil, gas, or gas condensate, according to IHS Energy.

Besides conventional oil, there are huge amounts in Canadian oil sands, Venezuelan heavy oils, and Rocky Mountain shale. If oil prices skyrocket, oil in deep offshore fields and in polar regions would become economically feasible to extract. And there's oil from natural gas, which experts see as lasting longer than conventional oil, outside North America.

The USGS added the oil sands to the world's reserves recently, making Canada the second-largest holder of reserves after Saudi Arabia. These sands are already being exploited. But they require the injection of hydrogen to make their tar oil light enough to flow in a pipe.

Meanwhile, estimates of oil reserves keep growing. For example, world oil reserves now are five times as great as at the end of World War II, says Thomas Ahlbrandt, chief of the USGS World Energy Project. And they grew 15 percent in the past five years - without adding in the Canadian oil sands - mostly by upgrading the proven reserves in existing fields.

The world has used up about 930 billion barrels of oil since the 1800s, and has left some 3 trillion in the ground. That estimate includes about 732 billion barrels of not-yet-discovered oil and an assumed growth in reserves in already discovered fields, the USGS reckons. So by now, the world has used up about 23 percent of its total available petroleum resource, Mr. Ahlbrandt calculates. Most people using USGS numbers figure world oil output will flatten in 2036-37, he adds. But non-OPEC oil output could peak between 2015 and 2020.

"I can see no peak for the next 20 or 30 years," says energy consultant Michael Lynch. Since Mr. Lynch has been a keen critic of such early-peak advocates as Mr. Campbell, setting even such a not-so-far-away date is seen as a concession of sorts.

In any case, major oil importers aren't waiting around to find out who's right. The US, Japan, Europe, and China, are scrambling to tie down petroleum resources in the Caspian Sea region, Russia, West Africa, Iraq, Iran, and Libya.

Japan and China are competing for access to Russia's little-tapped Far East oil resources. China, which expects a quintupling of its oil needs by 2030, wants a new pipeline to go from Angarsk in Russia to inland Daqing in its northeastern industrial heartland. Japan proposes the pipeline go rather to Vostochny, on the shore near Vladivostok. One reason Japan is sending 500 soldiers to Iraq this month is to stabilize Middle Eastern oil, the source of 90 percent of Japan's oil, Japan's defense minister, Shigeru Ishiba, told the Financial Times last month.

Pundits say the US has been especially interested in the recent election in Georgia to replace President Eduard Shevardnadze because that nation, though not having reserves itself, is the corridor for a $3 billion pipeline through which huge supplies in Azerbaijan, Turkmenistan, and Kazakhstan must pass through to reach the West. A Chinese oil firm last month embarked on its first international venture by buying a 50 percent stake in a Kazakhstan oil field.

The US has just extended trade preferences to Angola, where oil giants ChevronTexaco and ExxonMobil are preparing to spend billions of dollars on deep-water developments. Other US oil firms, such as ConocoPhillips, Occidental Petroleum, Marathon Oil, and Amerada Hess are looking carefully at their prospects for returning to Libya should the US government lift sanctions on that desert nation.

According to a New York Times report, a step that put Russian oil mogul Mikhail Khodorkovsky in jail was his plan to sell a major stake in his oil company, Yukos, to ExxonMobil. US oil firms would like to invest more in Russia's oil and gas reserves, if they can negotiate that country's legal and political minefield.

The competition for oil resources not fully under contract is expected to get rougher. It could be especially crucial for consumers in North America, who on average use up more than their body weight in crude oil each week.

Many experts suspect that oil was one reason, among others, the US invaded Iraq. America's longstanding concern with its oil supplies is nothing new. Newly declassified British documents suggest that President Nixon was prepared as a "last resort" to launch airborne troops to seize oil fields in Saudi Arabia, Kuwait, and Abu Dhabi to end the 1973-74 oil embargo on the US by the Arab nations.

Some countries - even some oil firms - have decided to invest in solar and wind energy. "This reflects the realization that exploring for large new sources of oil is not a realistic way to go," says Mr. Meyer.

Mr. Deffeyes says the US should have stepped up its research on alternative energies 15 years ago. But others don't see a crisis looming just yet. Certainly nations should be researching better sources of energy, says Mr. Lynch. "But it should not be based on imminent scarcity."

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#64 advancedatheist

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Posted 31 January 2004 - 03:22 AM

Caltech Press Release, 01-20-2004:


The coming global peak in oil production is a grave concern, according to new book
PASADENA, Calif.--Ancient Persians tipped their fire arrows with it, and Native Americans doctored their ails with it. Any way you look at petroleum, the stuff has been around for a long time. Problem is, it's not going to be around much longer--or at least not in the quantities necessary to keep our Hummers humming.

To address the choices society will soon face in the inevitable peaking of worldwide oil production, California Institute of Technology physics professor David Goodstein has written a new book titled Out of Gas: The End of the Age of Oil. Goodstein argues that global production will peak sooner than most people think, possibly in this decade--a view held by a number of geologists--and that the peak itself will be the beginning of serious and widespread social and economic consequences.

"Some say that the world has enough oil to last for another forty years or more, but that view is almost surely mistaken," writes Goodstein, whose past forays into the world of science communication have included his award-winning PBS series The Mechanical Universe, as well as the best-selling book Feynman's Lost Lecture.

Goodstein writes that the worldwide peak will almost surely be highly disruptive, if not catastrophic, considering the difficult American experience of the early 1970s, when U.S. production met its own peak. Since then, U.S. production has been on a downslope that will continue until the tap runs dry.

But even the 1970s' experience would be nothing compared to a worldwide peak, Goodstein explains. Indeed, the country then experienced serious gas shortages and price increases, exacerbated in no small part by the Arab oil embargo. But frustration and exasperation aside, there was oil to buy on the global market if one could locate a willing seller. By contrast, the global peak will mean that prices will thereafter rise steadily and the resource will become increasingly hard to obtain.

Goodstein says that best and worst-case scenarios are fairly easy to envision. At worst, after the so-called Hubbert's peak (named after M. King Hubbert, the Texas geophysicist who was nearly laughed out of the industry in the 1950s for even suggesting that a U.S. production peak was possible), all efforts to deal with the problem on an emergency basis will fail. The result will be inflation and depression that will probably result indirectly in a decrease in the global population. Even the lucky survivors will find the climate a bit much to take, because billions of people will undoubtedly rely on coal for warmth, cooking, and basic industry, thereby spewing a far greater quantity of greenhouse gases into the air than that which is currently released.

"The change in the greenhouse effect that results eventually tips Earth's climate into a new state hostile to life. End of story. In this instance, worst case really means worst case."

The best-case scenario, Goodstein believes, is that the first warning that Hubbert's peak has occurred will result in a quick and stone-sober global wake-up call. Given sufficient political will, the transportation system will be transformed to rely at least temporarily on an alternative fuel such as methane. Then, more long-term solutions to the crisis will be put in place--presumably nuclear energy and solar energy for stationary power needs, and hydrogen or advanced batteries for transportation.

The preceding is the case that Goodstein makes in the first section of the book. The next section is devoted to a nontechnical explanation of the facts of energy production. Goodstein, who has taught thermodynamics to a generation of Caltech students, is particularly accomplished in conveying the basic scientific information in an easily understandable way. In fact, he often does so with wit, explaining in a brief footnote on the naming of subatomic particles, for example, that the familiar "-on" ending of particles, such as "electrons," "mesons," and "photons," may also suggest an individual quantum of humanity known as the "person."

The remainder of the book is devoted to suggested technological fixes. None of the replacement technologies are as simple and cheap as our current luxury of going to the corner gas station and filling up the tank for the equivalent of a half-hour's wages, but Goodstein warns that the situation is grave, and that things will change very soon.

"The crisis will occur, and it will be painful," he writes in conclusion. "Civilization as we know it will come to an end sometime in this century unless we can find a way to live without fossil fuels."

Goodstein dedicates the book "to our children and grandchildren, who will not inherit the riches that we inherited."

The book, published by W.W. Norton & Company, is now available.

Contact: Robert Tindol tindol@caltech.edu

#65 advancedatheist

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Posted 06 February 2004 - 01:22 AM



Saudi Oil Reserves May Limit
Global Role, an Expert Asserts


HOUSTON -- A prominent Houston energy analyst and investment banker is questioning whether Saudi Arabia will be able to continue playing the role of swing producer for the global oil market.

The kingdom, home to the world's largest oil reserves, has long provided a cushion of production that can quickly be called upon in times of tight oil markets. But Matt Simmons, a veteran energy expert best known for drawing early attention to North America's dwindling natural-gas supplies in the late 1990s, is preparing to publish research questioning Riyadh's ability to provide that cushion much longer.

"Any serious energy analysis should be cautionary that Saudi Arabia can always be the swing producer, let alone the biggest source of additional oil fueling global economic growth," said Mr. Simmons, the head of Houston-based energy investment bank Simmons & Co. "Saudi Arabia's oil production as we know it is remarkably fragile," he said in an interview.

Mr. Simmons warns that Saudi Arabia may face a production decline in the next five to 10 years as severe as Russia's early-1990s plunge. Mr. Simmons, a major political donor who informally advised George W. Bush in the 2000 presidential campaign, said his research grew out of his first-ever trip to Saudi Arabia last year.

The kingdom guards its production and geological data closely. But in addition to the limited body of public data available, Mr. Simmons said he reviewed more than 200 analytical papers written by engineers at Saudi Arabia's state oil company, Aramco, and concluded that some of the country's biggest fields may be declining far more quickly than people believe.

"It is impossible to prove that it will or it won't" be a major problem in the future, Mr. Simmons said. "But since it would be catastrophic if they did decline suddenly, it's a scenario we should take seriously."

Aramco officials weren't available to comment.

Aramco officials have acknowledged some decline, but they also have said they are investing heavily to replace lost production.

The company said late last year that capital expenditures were on track to total some $18 billion (€14.44 billion) between 2003 and 2007.

The company is expected to participate in a February forum with Mr. Simmons to be held at the Center for Strategic and International Studies in Washington.

The draft research has generated considerable interest in Houston and Washington. Several industry experts have praised the work for raising the right questions and underscoring the lack of public data available on Saudi production. But other industry insiders said Mr. Simmons likes to be provocative and tends to exaggerate the magnitude of a problem, even if his analysis is directionally accurate.

--Shai Oster contributed to this article.

Write to John M. Biers at john.biers@dowjones.com

Updated February 3, 2004

#66 advancedatheist

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Posted 06 February 2004 - 06:14 AM

This probably helps to explain Tony Blair's decision to commit the UK to President Bush's conquest of Iraq:


ANALYSIS-UK faces future without North Sea oil
Reuters, 01.14.04, 8:14 AM ET

LONDON, Jan 14 (Reuters) - North Sea oil, the precious resource that has contributed hundreds of billions of pounds to the UK economy, is slowly slipping into history -- so should Britain panic?

Oil output is set to halve in less than a decade from now if current rates of production continue. And when oilwells that produce over two million barrels per day (bpd) run dry, everything could be hit from big business to household heating bills.

"When the oil runs out, several areas -- tax revenues, the service industry, employment and trade figures -- will all be impacted," said Tony Wood, economist at Royal Bank of Scotland.

Industry group the UK Offshore Operators Association (UKOOA) said on Wednesday output would decline fast in coming years as extraction costs rise. It projected 2004 output atjust 3.7 million barrels of oil equivalent per day from over four million last year.

Since the late 1960s, North Sea energy has contributed over 200 billion pounds ($367 billion) to Britain's tax revenues, attracted the same amount in investment and cut Europe's reliance on Middle East imports.

Oil helps balance Britain's trade, buoys the pound and supports hundreds of thousands of jobs across the country.

So it was a nasty shock when a North Sea oil output dip in September handed Britain its first oil trade deficit since 1991. It usually runs a monthly oil surplus of about 400 million pounds.

The September deficit was later amended to a small surplus but the episode showed how oil buoys Britain's trade figures.

"By 2030 the swing from net exports to net imports will generate a major additional annual burden on the balance of trade of 20-25 billion pounds a year," said Peter Odell, Professor Emeritus at Rotterdam's Erasmus University. "This could add 65 to 85 percent to the level of deficit on trade."

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#67 advancedatheist

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Posted 07 February 2004 - 05:14 PM


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February 8, 2004
'Out of Gas': They're Not Making More

The End of the Age of Oil.
By David Goodstein.
Illustrated. 140 pp. New York: W. W. Norton & Company. $21.95.

If all you knew about David Goodstein was the title of his book, you might imagine him to be one of those insufferably enthusiastic prophets of doom, the flannel-shirted, off-the-grid types who take too much pleasure in letting us know that the environment is crumbling all around us. But Goodstein, a physicist, vice provost of the California Institute of Technology and an advocate of nuclear power, is no muddled idealist. And his argument is based on the immutable laws of physics.

The age of oil is ending, he says. The supply will soon begin to decline, precipitating a global crisis. Even if we substitute coal and natural gas for some of the oil, we will start to run out of fossil fuels by the end of the century. ''And by the time we have burned up all that fuel,'' he writes, ''we may well have rendered the planet unfit for human life. Even if human life does go on, civilization as we know it will not survive.''

He's talking about 100 years from now, far enough in the future, you might say, that we needn't worry for generations. Surely some technological fix will be in place by then, some new source of energy, some breakthrough. But with a little luck, many readers of these pages will live until 2030 or 2040, or longer. Their children may live until 2070 or 2080, and their grandchildren will easily survive into the 22nd century. We're talking about a time in the lives of our grandchildren, not some warp drive, Star Trek future.

And what about that technological fix? ''There is no single magic bullet that will solve all our energy problems,'' Goodstein writes. ''Most likely, progress will lie in incremental advances on many simultaneous fronts.'' We might finally learn to harness nuclear fusion, the energy that powers the sun, or to develop better nuclear reactors, or to improve the efficiency of the power grid. But those advances will require a ''massive, focused commitment to scientific and technological research. That is a commitment we have not yet made.'' Drilling in the Alaska National Wildlife Refuge, and scouring the energy resources of national lands across the West might help the constituents of Senator Ted Stevens of Alaska and Vice President Dick Cheney's friends in the energy industry, but it won't solve the problem.

Goodstein's predictions are based on a sophisticated understanding of physics and thermodynamics, and on a simple observation about natural resources. The supply of any natural resource follows a bell curve, increasing rapidly at first, then more slowly, eventually peaking and beginning to decline. Oil will, too.

It has already happened in the United States. In 1956, Marion King Hubbert, a geophysicist with the Shell Oil Company, predicted that oil production in the United States would peak sometime around 1970. His superiors at Shell dismissed the prediction, as did most others in the oil business. But he was right. Hubbert's peak occurred within a few years of when he said it would, and American oil production has been declining ever since. There was no crisis, because this country tapped the world's reserves, and the supply increased along with demand.

Now Goodstein and many others have shown that the same methods, when applied to global oil production and resources, predict a Hubbert's peak in world oil supplies within this decade, or, in the best-case scenarios, sometime in the next. Once that happens, the world supply of oil will begin to decline gradually, even though large quantities of oil will remain in the ground. The world demand for oil will continue to increase. The gap between supply and demand will grow. But this time the gap will be real; there will be no other source of oil (from the moon, Neptune or Pluto?) to flow into the system.

When the supply falls and the demand rises, the price will go up. That's no problem, economists say. With the high price, companies will go after more costly oil, and the market will take care of things.

Maybe not, Goodstein replies. ''In an orderly, rational world, it might be possible for the gradually increasing gap between supply and demand for oil to be filled by some substitute. But anyone who remembers the oil crisis of 1973 knows that we don't live in such a world, especially when it comes to an irreversible shortage of oil.''

In the best-case scenario, he writes, we can squeak through a bumpy transition to a natural-gas economy while nuclear power plants are built to get us past the oil crisis. In the worst case, ''runaway inflation and worldwide depression leave many billions of people with no alternative but to burn coal in vast quantities for warmth, cooking and primitive industry.''

President Bush has pointed to hydrogen as the ultimate answer to our need for transportation fuels, but Goodstein correctly points out that hydrogen is not a source of energy. It is a fuel produced by using energy. We can use coal to produce it, or solar power, or something else, but it is only a way of converting energy into a form that can be used in vehicles; it doesn't do anything to ease the transition away from oil....

Even nuclear power is only a short-term solution. Uranium, too, has a Hubbert's peak, and the current known reserves can supply the earth's energy needs for only 25 years at best. There are other nuclear fuels, and solar and wind power might help at the fringes. But ''the best, most conservative bet for ameliorating the coming fuel crisis is the gradual improvement of existing technologies,'' he writes. We can improve the efficiency of lights, tap solar power with cheap photoelectric cells and turn to nuclear power. The problem is that we have not made a national or global commitment to do so. ''Unfortunately, our present national and international leadership is reluctant even to acknowledge that there is a problem. The crisis will occur, and it will be painful.''

#68 advancedatheist

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Posted 07 February 2004 - 05:40 PM

North America's natural gas crisis has lead to a precipitous rush to build more plants for receiving liquified natural gas (LNG) from overseas:


LNG is a hot-button issue

By Diane Lindquist

February 7, 2004

A deadly explosion at an Algerian liquefied natural gas complex last month suddenly thrust safety to the top of public concerns about the growing number of LNG projects proposed for North America.

Energy companies have long insisted the fuel is risk-free. They cite a four-decades-long history without a major accident.

But the Jan. 20 explosion at Algeria's 230-acre Skikda LNG center, which killed 30 people and injured more than 70, altered that perception.

"The Algerian accident destroyed the industry's 40-year safety record," said Casi Callaway, executive director of Mobile Bay Watch, an Alabama environmental group challenging two proposed LNG terminals on the bay.

LNG might not even have caused the Algeria blast.

According to news reports, officials at Sonatrach, the country's state-owned gas and oil company, put the blame on a faulty steam boiler next to a liquefaction unit. Energy analysts say plant personnel were trying to restart the boiler when the blast occurred. It caused a fire that destroyed three of the complex's six liquefaction units and badly damaged a nearby berth for loading LNG tankers.

The incident has fueled a global debate over potential hazards associated with LNG, which can explode, catch fire or send up a vapor cloud that can float over a large area and then ignite.

Attention to the fuel already had heated up in the wake of 9/11. Last November, the Department of Homeland Security warned that LNG facilities might be targets of al-Queda terrorist attacks because LNG terminals and tankers are highly visible and easily identified.

"For nearly 50 years now, all discussions of risk and probability . . . have focused on how to account for human errors," said Jerry A. Havens, director of the Chemical Hazards Research Center at the University of Arkansas. "The new reality is that we must now consider malicious acts as well."

Only four receiving terminals currently operate in the United States. But companies have proposed as many as 30 additional projects for Canada, the United States and Mexico, including one at Long Beach and at least three in Baja California that would ship natural gas to Southern California.

#69 advancedatheist

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Posted 07 February 2004 - 08:21 PM


Oil shortages to hit world economy in 2007

By Brian O’Mahony
FROM 2007 onwards oil supplies will struggle to meet demand.

As we worry about the soundness of the US recovery, a far bigger crisis is, if the experts are to be believed, unfolding before our eyes.

Previously most of the future focus on oil and gas reserves was centred on when the wells would finally run dry.

More critical in the short term is when scarcity of supply will start to impact on the market.

Those who know about such complex matters warn that we have gone past the point where the amount of oil being discovered no longer meets the future global demand.

Peak Oil run by Colin Campbell in Ballydehob has been looking at this issue for some time.

His analysis is that the amount of oil being discovered has peaked.

He is not alone in this. Others point out that the number of major wells in the supply chain, about to go into production or being discovered, is not at the level it once was.

This ought not to be a major shock.

But then with concerns on the narrower issues of economic survival the broader picture gets shoved in the background.

As 2007 draws near and the issue comes into greater focus it could have the effect of pushing up the price of oil.

Previous experience shows that falling output, the reason for the 1973 oil crisis forced us into a long recession.

The frightening bit about this is that energy and its scarcity are critical to the future of the global economy.

The report “Oil field mega projects 2004” is the bearer of the bad news.

It has analysed all known oil projects with estimated reserves of over 500 million barrels of oil and their ability to provide 100,000 barrels of oil per day. These type wells account for 80% of the world’s oil supplies.

The report, to the consternation of many in the sector, found that just three such projects are due on stream in 2007 with three more to start piping the following year.

The point is that the amount of new discoveries has fallen dramatically. For instance there were 13 discoveries of over 500 million barrels in 2000, six in 2001 and just two in 2002.

As things stand the report says unambiguously that from 2007 the volumes of new oil production will fall short of the combined need to replace lost capacity from depleting older wells and satisfy continued growth in world demand going up at the rate 1% to 1.5% per annum.

That’s according to the International Energy Agency’s most recent survey of consumption.

In essence that amounts to the production of 74 million barrels of oil per day which has to continue to grow to meet increasing demand. What these guys are telling us is that from 2007 on the world will have hit the point where the amount of oil required to meet demand has finally started to run out.

⌛⇒ new years donation: support LE labs

#70 advancedatheist

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Posted 08 February 2004 - 08:19 PM


Growing China scouring world for oil
Soaring demand drives new deals in African nations
Associated Press

DAKAR, Senegal -- The West African nation of Gabon isn't one of the world's more high-profile countries. So why a full-out state visit by China's leader?

That's easy: oil.

Burning fuel at a record pace to run an economy in overdrive, China in late 2003 claimed the No. 2 spot in world oil imports, second only to the United States. And jostling with the world's other oil gulpers to keep their machinery moving, China's leaders are looking far afield for a secure oil supply, locking down tough-term deals with easy-term cash.

China, the United States, Japan, Europe and, increasingly, India - all growing leery of dependence on the volatile Middle East - are elbowing each other in a rush to nontraditional oil sources in West Africa, the Caspian Sea, Russia, South America and elsewhere.

Which is what brought Chinese President Hu Jintao to Gabon this week, welcomed by 3,000 dancing Gabonese women and a 21-gun salute. Hu opened the three-day state visit - his only sub-Saharan stop on a four-nation tour - pledging lasting, lucrative friendship between resource-rich Africa and resource-voracious China.

China's broadening drilling and mining in Africa come "with the aim of promoting development by the principle of 'win-win,' " Hu told Gabon's lawmakers Monday. He spoke in a parliament building being rebuilt by no-interest Chinese loans.

On the sidelines, China, Gabon and France's Total Gabon oil firm signed a multimillion dollar series of deals guaranteeing China a set, steady flow of Gabonese oil. Despite any rival bids or Gabon's own declining supplies, "it means that Gabon will always have to make oil available ... to sell to China," Oil Minister Onouviet explained proudly on Gabonese radio.

The Chinese leader moved on Tuesday to Algeria - a north African nation absorbed in its struggle against a bloody Islamic extremist group, and a no-go zone for most world leaders. But Hu has a particular reason to visit Algeria - the hundreds of millions of dollars China has invested in refineries there since last year.

And back in China, the economy - booming at 9.9 percent annually, with business and family-car ownership surging despite fuel supply-line kinks that had power plants sputtering - is waiting to see what Hu brings home from his oil trip.

China, with oil demand shooting up by 10 percent last year, and oil imports up by a record 30 percent, is driving global demand hard.

"It's sucking up a lot of the world's oil resources," said Antoine Halff, demand specialist at the International Energy Agency. "It's a large market and steep growth, and it's not getting the oil it's looking for."

Until very recently, China, like the West and Japan, largely had been looking for oil imports where everyone else was - the Middle East, source of 60 percent of Chinese oil imports. But increasingly, the world's powers are questioning the wisdom of leaving national economies to rest on the explosive region.

The result is an oil boom in places like West Africa. In Angola, Nigeria, Gabon and other oil-producing states, China and other Asian nations in 2003 competed aggressively with Europe and the United States for deals.

It can be easier for China, which doesn't have to worry as much as Western oil companies about criticism of foreign partnerships, said Galvin Hayman of London-based Global Witness, which calls for transparency in international oil deals.

For example, when a Canadian company pulled out of Sudan in 2002 amid complaints oil was helping fund civil war, in 2003 Asian partnerships led by China, India and Malaysia moved in.

"China has a willingness to go to places where others may have constraints - in the Sudan, for instance," said Halff, with the International Energy Agency.

"They have their agenda, and they are acting according to their agenda," Halff said. "Their primary concern is to ensure sufficient supply, and sufficient diversified supply."

But industry analysts say China today may be sinking some of its money into questionable sources of supply such as Kazakhstan, Peru and Gabon. Exploratory wells now increasingly are coming up dry - suggesting Gabon may soon be tapped out.

#71 advancedatheist

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Posted 10 February 2004 - 03:43 AM


Feb. 8, 2004, 7:03PM

China's thirst for oil poses a threat to U.S.

Sixty-seven years ago, oil-starved Japan embarked on an aggressive expansionary policy designed to secure its growing energy needs, which eventually led the nation into a world war. Today, another Asian power thirsts for oil: China.

While the United States is absorbed in fighting the war on terror, the seeds of what could be the next world war are quietly germinating. With 1.3 billion people and an economy growing at a phenomenal 8 percent to 10 percent a year, China, already a net oil importer, is growing increasingly dependent on imported oil. Last year, its auto sales grew 70 percent and its oil imports were up 30 percent from the previous year, making it the world's No. 2 petroleum user after the United States. By 2030, China is expected to have more cars than the United States and import as much oil as the United States does today.

Dependence on oil means dependence on the Middle East, home to 70 percent of the world's proven reserves. With 60 percent of its oil imports coming from the Middle East, China can no longer afford to sit on the sidelines of the tumultuous region. Its way of forming a footprint in the Middle East has been through providing technology and components for weapons of mass destruction and their delivery systems to unsavory regimes in places such as Iran, Iraq and Syria. A report by the U.S.-China Economic and Security Review Commission, a group created by Congress to monitor U.S.-China relations, warned in 2002 that "this arms trafficking to these regimes presents an increasing threat to U.S. security interests in the Middle East." The report concludes: "A key driver in China's relations with terrorist-sponsoring governments is its dependence on foreign oil to fuel its economic development. This dependency is expected to increase over the coming decade."

Optimists claim that the world oil market will be able to accommodate China and that, instead of conflict, China's thirst could create mutual desire for stability in the Middle East and thus actually bring Beijing closer to the United States.

History shows the opposite: Superpowers find it difficult to coexist while competing over scarce resources. The main bone of contention probably will revolve around China's relations with Saudi Arabia, home to a quarter of the world's oil. The Chinese have already supplied the Saudis with intermediate-range ballistic missiles, and they played a major role 20 years ago in a Saudi-financed Pakistani nuclear effort that may one day leave a nuclear weapon in the hands of a Taliban-type regime in Riyadh or Islamabad.

Since 9/11, a deep tension in U.S.-Saudi relations has provided the Chinese with an opportunity to win the heart of the House of Saud. The Saudis hear the voices in the United States denouncing Saudi Arabia as a "kernel of evil" and proposing that the United States seize and occupy the kingdom's oil fields. The Saudis especially fear that if their citizens again perpetrate a terror attack in the United States, there would be no alternative for the United States but to terminate its long-standing commitment to the monarchy -- and perhaps even use military force against it.

The Saudis realize that to forestall such a scenario they can no longer rely solely on the United States to defend the regime and must diversify their security portfolio. In their search for a new patron, they might find China the most fitting and willing candidate.

The risk of Beijing's emerging as a competitor for influence in the Middle East and a Saudi shift of allegiance are things Washington should consider as it defines its objectives and priorities in the 21st century. Without a comprehensive strategy designed to prevent China from becoming an oil consumer on a par with the United States, a superpower collision is in the cards. The good news is that we are still in a position to halt China's slide into total dependency.

Unlike the United States, China's energy infrastructure is largely underdeveloped and primarily coal-based. It has not yet invested in a multibillion-dollar oil infrastructure. China is therefore in a better position than the United States to bypass oil in favor of next-generation fuels.

The United States should embark on a frank dialogue with China, conveying to the Chinese the mutual benefits of circumventing oil and offering any assistance required to curb China's growing appetite for it. A shift from oil into other sources of transportation energy -- such as bio-fuels or coal-based fuels, hydrogen and natural gas -- could prevent future conflict and foster unprecedented Sino-American cooperation with significant economic benefits for both countries.

The Chinese would probably leapfrog oil if they could. Dependency of any kind is foreign to their culture. But without substantial American technological support, China is likely to follow the path of least resistance and become a full-fledged oil economy. Failure to address the issue with the utmost care would undercut all of today's costly efforts by the United States to reform and stabilize the Middle East.

This explosive, complex region cannot accommodate two major powers competing not only over a barrel but also over the hearts, minds and allegiance of its people.

Luft is executive director of the Institute for the Analysis of Global Security and publisher of the online publication Energy Security.

#72 advancedatheist

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Posted 10 February 2004 - 05:31 AM


10 Feb 2004, 06:18 AM 

Iraq and the Problem of Peak Oil
by F. William Engdahl

Today, much of the world is convinced the Bush Administration did not wage war against Iraq and Saddam Hussein because of threat from weapons of mass destruction, nor from terror dangers. Still a puzzle, however, is why Washington would risk so much in terms of relations with its allies and the entire world, to occupy Iraq. There is compelling evidence that oil and geopolitics lie at the heart of the still-hidden reasons for the military action in Iraq.

It is increasingly clear that the US occupation of Iraq is about control of global oil resources. Control, however, in a situation where world oil supplies are far more limited than most of the world has been led to believe. If the following is accurate, the Iraq war is but the first in a major battle over global energy resources, a battle which will be more intense than any oil war to date. The stakes are highest. It is about fixing who will get how much oil for their economy at what price and who not. Never has such a choke-hold on the world economy been in the hands of one power. After occupation of Iraq it appears it is.

The era of cheap, abundant oil, which has supported world economic growth for more than three quarters of a century, is most probably at or past its absolute peak, according to leading independent oil geologists. If this analysis is accurate, the economic and social consequences will be staggering. This reality is being hidden from general discussion by the oil multinationals and major government agencies, above all by the United States government. Oil companies have a vested interest in hiding the truth in order to keep the price of getting new oil as low as possible. The US government has a strategic interest in keeping the rest of the world from realising how critical the problem has become.

According to the best estimates of a number of respected international geologists, including the French Petroleum Institute, Colorado School of Mines, Uppsala University and Petroconsultants in Geneva, the world will likely feel the impact of the peaking of most of the present large oil fields and the dramatic fall in supply by the end of this decade, 2010, or possibly even several years sooner. At that point, the world economy will face shocks which will make the oil price rises of the 1970's pale by contrast. In other words, we face a major global energy shortage for the prime fuel of our entire economy within about seven years.

Peak oil
The problem in oil production is not how much reserves are underground. There the numbers are more encouraging. The problem comes when large oilfields such as Prudhoe Bay Alaska or the fields of the North Sea pass their peak output. Much like a bell curve, oil fields rise to a maximum output or peak. The peak is the point when half the oil has been extracted. In terms of reserves remaining it may seem there is still ample oil. But it is not as rosy as it seems. The oil production may hold at the peak output for a number of years before beginning a slow decline. Once the peak is past however, the decline can become very rapid. Past the peak, there is still oil, but each barrel becomes more difficult to exploit, and more costly, as internal well pressures decline or other problems make recovery more expensive for each barrel. The oil is there but not at all easy to extract. The cost of each barrel past peak is increasingly higher as artificial means are employed to extract it. After a certain point it becomes uneconomical to continue to try to extract this peak oil.

Because most oil companies and agencies such as the US Department of Energy speak not of peak oil, but of total reserves, the world has a false sense of energy supply security. The truth is anything but secure.

Case studies
Some recent cases make the point. In 1991 the largest discovery in the Western Hemisphere since the 1970's, was found at Cruz Beana in Columbia. But its production went from 500,000 barrels a day to 200,000 barrels in 2002. In the mid-1980's the Forty Field in North Sea produced 500,000 barrels a day. Today it yields 50,000 barrels. One of the largest discoveries of the past 40 years, Prudhoe Bay, produced some 1.5 million barrels a day for almost 12 years. In 1989 it peaked, and today gives only 350,000 barrels daily. The giant Russian Samotlor field produced a peak of 3,500,000 barrels a day. It has now dropped to 325,000 a day. In each of these fields, production has been kept up by spending more and more to inject gas or water to maintain field pressures, or other means to pump the quantity of oil. The world's largest oil field, Ghawar in Saudi Arabia, produces near 60% of all Saudi oil, some 4.5 million barrels per day. To achieve this, geologists report that the Saudis must inject 7 million barrels a day of salt water to keep up oil well pressure, an alarming signal of near collapse of output in the world's largest oil kingdom.

The growing problem of peak oil has been known among oil industry insiders since the mid-1990's. In 1995, the leading oil consulting firm, Petroconsultants in Geneva, published a global study, 'The World Oil Supply.' The report cost $35,000, written for the oil industry. Its author was petroleum geologist, Dr. Colin Campbell. In 1999 Campbell testified to the British House of Commons, 'Discovery of (new oil reserves) peaked in the 1960's. We now find one barrel for every four we consume ...'

No new giant discoveries
After OPEC raised oil prices in the 1970's, non-OPEC oil projects began to be profitable in the North Sea, Alaska, Venezuela and other places. Oil production increased markedly. At the same time, in response to the higher oil price, many industrial countries like France, Germany USA, Japan dramatically increased the energy from nuclear power plants. The combination gave the illusion that the oil problem had vanished. It has not, far from it.

If in fact many of today's major sources of oil have peaked, and are about to fall off drastically, and at the same time, if world energy demand continues to grow, and not enough oil is found even to replace existing depletion, the global economy faces a crisis of staggering dimension. This would also begin to explain the shift of US foreign policy in the direction of a crude neo-imperial military presence globally, from Kosovo to Afghanistan, from West Africa to Baghdad and beyond.

Obviously, the easiest, most economical solution is to find new giant or super giant oilfields where large volumes of oil can be extracted and brought to world markets at low cost. That is just what is not the case today. According to a recent report from the Colorado School of Mines, 'The World's Giant Oilfields,' the world's '120 largest oilfields produce close to 33 million barrels a day, almost 50% of the world's crude oil supply. The fourteen largest account for over 20%. The average age of these 14 largest fields is 43.5 years.' 1

The above study concludes that 'most of the world's true giants were found decades ago.' Over the past 20 years despite investment of hundreds of billions dollars by major oil companies, results have been alarmingly disappointing.

The world's major oil companies - Exxon-Mobil, Shell, ChevronTexaco, BP, ElfTotal and others - have invested hundreds of billions of dollars in finding enough oil to replace the existing oil supply sources. Between 1996 and 1999, some 145 companies spent $410 billion to find enough oil only to keep their daily production stable at 30 million barrels a day. From 1999 to 2002, the five largest companies spent another $150 billion and their production grew only from 16 million barrels a day to 16.6 million barrels, a tiny increase. With the collapse of the Soviet Union in the early 1990's, western oil companies placed high hopes on the oil potentials of the Caspian Sea in Central Asia.

Disappointing Caspian results
In December 2002, just after US troops took Afghanistan, BP, a major oil company announced disappointing Caspian drilling results which suggested that the 'oil find of the century' was little more than a drop in the ocean. Instead of earlier predictions of oil reserves above 200 billion barrels, a new Saudi Arabia outside the Middle East, the US State Department announced, 'Caspian oil represents 4% of world reserves. It will never dominate the world's markets.' PetroStrategies published a study estimating that the Caspian Basin contained a mere 39 billion barrels of oil, and of a poor quality. Soon after this news, BP and other western oil companies began reducing investment plans in the region.

Interest in West Africa
One of the most active areas of new exploration is in the offshore region of West Africa from Nigeria to Angola. President Bush made a high profile trip to the region earlier in the year, and the US Pentagon has signed military basing agreements with two small strategic islands, Principe and San Tome, insuring a military presence should anything threaten the flow of oil across the Atlantic. Yet, while the volume of oil is important, it also is hardly a new Saudi Arabia. Geologist Campbell estimates that if all deepwater oil, perhaps 85 billion barrels, were produced from fields off Brazil, Angola and Nigeria, it would meet global demand for 3-4 years.

Growing energy demand
Against the prospect that many of the largest oil fields today are in a marked decline in output, world demand for oil is rising ruthlessly, marked by the growing economies of China, India and Asia. Even at today's weak GDP growth rates, economists estimate that world demand for oil at today's prices will rise by some 2% per year.

Ten years ago, China was not a factor in world import of oil. It produced most of its limited needs domestically. Beginning 1993 however, China began to import oil to meet its economic needs. By end 2003 China has surpassed Japan to be the second largest oil importer next to the USA. China now consumes 20% of total OECD industrial country energy. China oil imports are rising now by 9% a year and this is predicted to rise significantly in the coming decade, as China emerges as the world's largest industrial nation. China currently is growing at 7-8% a year. India has recently emerged as a rapidly growing economy as well. Combined they account for some 2.5 billion of the world population. Little wonder that China vehemently opposed the US unilateral war against Iraq in the UN Security Council. The China National Petroleum Company had long sought to secure major oil supply from Iraq.

What Cheney knew in 1999
In a speech to the International Petroleum Institute in London in late1999, Dick Cheney, then chairman of the world's largest oil services company, Halliburton, presented the picture of world oil supply and demand to industry insiders. 'By some estimates,' Cheney stated, 'there will be an average of two percent annual growth in global oil demand over the years ahead, along with, conservatively, a three percent natural decline in production from existing reserves.' Cheney ended on an alarming note: 'That means by 2010 we will need on the order of an additional fifty million barrels a day.' This is equivalent to more than six Saudi Arabia's of today's size.

Perhaps it was no coincidence that Cheney, as Vice President, was given as his first major assignment the head of a Presidential Task Force on Energy. He knew the dimension of the energy problem facing not only the United States, but the rest of the world.

Cheney is also well identified as the leading Iraq warhawk in the Bush Administration, together with Defense Secretary Rumsfeld. Repeatedly it was Cheney pushing for military action against Iraq, regardless of which allies support it.

When we examine what is known about global oil reserves, and where they are, in light of the above 'peak oil' analysis of much of today's existing oil production, it becomes clearer why Cheney would be willing to risk so much in terms of America's standing among allies and others, to occupy the oilfields of Iraq. Cheney knows exactly what the global oil reserve situation is as former CEO of Halliburton Corporation, the world's largest oil services company.

The Achilles heel of the US?
The burning question is where will we get such a huge increase of oil? In the decade from 1990 to 2000, a total of 42 billion barrels of new oil reserves were discovered worldwide. In the same period, the world consumed 250 billion barrels. In the past two decades only three giant fields with more than one billion barrels each have been discovered. One in Norway, in Columbia and Brazil. None of these produce more than 200,000 barrels a day. This is far from 50 million barrels a day which the world will need.

Is the era of cheap, abundant oil to fuel the world economy about to end? One most important issue in the entire debate over why Washington went to war in Iraq is the question of how much oil remains to be found in the world at today's prices. The debate has been remarkably little over an economic issue of enormous consequences.

According to the estimates of Colin Campbell and K. Aleklett of Uppsala University, five countries hold the overwhelming bulk of the world's remaining oil and could potentially make up the difference as other areas pass their peak. 'The five major producers of the Middle East, namely Abu Dhabi, Iraq, Iran, Kuwait and Saudi Arabia (including the Neutral Zone), with about half the world's remaining oil, are treated as swing producers making up the difference between world demand and what other countries can produce...'2.

These five countries - Iraq, Iran, Saudi Arabia, Kuwait and the UAE - through circumstances of geology, contain the oil and gas reserves vital to the future economic growth of the world. In an article in the January 7, 2002 issue of Oil and Gas Journal by A. S. Bakhtiari of the National Iranian Oil Company, noted, 'The Middle East (is) simultaneously the most geostrategic area on the globe and the ultimate energy prize: Two-thirds of global crude oil reserves are concentrated in five countries bordering the Persian Gulf.'3

In a paper published in November 2001, eminent Princeton geologist, Kenneth Deffeyes wrote, 'The biggest single question is the year when world oil production reaches a Hubbert peak and then declines forever. Both the graphical and the computer fits identify 2004 as the probable year. The largest single uncertainty is the enormous reserves of Saudi Arabia.'4

If the peak oil analysis is accurate, it suggests why Washington may be willing to risk so much to control Iraq and through its bases there, the five oil-rich countries. It suggests Washington is acting from a fundamental strategic weakness, not from absolute strength as is often thought. A full and open debate on the problem of peak energy is urgently needed.


1 'The World`s Giant Oilfields', Matthew R. Simmons, M. King Hubbert Center for Petroleum Supply Studies, Colorado School of Mines, January 2002.

2 Aleklett, K. and Campbell, C.J., 'The Peak and Decline of World Oil and Gas Production,' published by the Association for the Study of Peak Oil and Gas, www.asponews.org .

3 Bakhtiari, A.M. Samsam, '2002 to see birth of New World Energy Order,' Oil and Gas Journal, January 7, 2002.

4 Deffeyes, Kenneth S, 'Peak of world oil production,' Paper no. 83-0,Geological Society of America Annual Meeting, November 2001. gsa.confex.com.

#73 DJS

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Posted 10 February 2004 - 11:46 PM

Great article AA. As the article mentions, there are certain "swing" states which can compensate for under productions by the rest of the world. My questions would be, 1) how long can they (UAE, Saudi Arabia, Iraq, etc) keep this up? 2) how long will the American public remain unaware of the true nature of the oil problem? 3) What will be the consequences of declining world oil production? 4) Couldn't we make lemonade out of lemons by using the sky rocketing price of oil as an incentive to look for new, cleaner energy sources?

#74 advancedatheist

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Posted 11 February 2004 - 01:31 AM


Posted on Tue, Feb. 10, 2004 

Production getting complicated, oil heads say
Associated Press

HOUSTON - Growth for major oil companies after megamergers in the last decade hinges on forays into untapped areas as production declines in mature basins, leaders of two oil and gas companies said Tuesday.

Rex Tillerson, executive vice president of Exxon Mobil Corp, told about 1,400 executives attending the annual Cambridge Energy Research Associates conference in Houston that frontier areas, such as untapped oil fields in Russia and offshore West Africa, often lack infrastructure necessary to extract crude and transport it to markets.

"New resources are in ever-deeper waters and more difficult environments," Tillerson said. These include the Caspian Sea, which is icebound for some winter months, and many thousands of feet of water in offshore West Africa.

Such challenges mean oil companies need to work with host countries to invest in improved technology to better reach crude in new geographic locations, he said.

Thierry Desmarest, chairman and chief executive of Paris-based Total, said the string of mega.m.ergers has helped oil majors cut costs in labor-intensive areas such as refining and marketing and in overhead. The combinations also have helped pump up exploration and production units so they are better positioned to meet challenges of finding new discoveries.

"Even if demand growth in our industry is relatively modest, we need, because of natural declines, to replace about half of today's production in the next 10 years, so there should be no shortage of projects for a well-placed company," Desmarest said.

Jim Mulva, president and chief executive of Houston-based ConocoPhillips, said demand for oil is expected to rise by 30 percent by 2030 as the natural decline of current basins is 11 percent in Europe, 9 percent in the United States and 4 percent to 6 percent in the Middle East.

"We have a very, very demanding job in front of us," Mulva said. Consumers "want it when they want it, and they want it at a price they can afford."

Desmarest said multibillion dollar investments are on the horizon to develop giant oil fields in Russia to build necessary infrastructure to get landlocked oil to world markets.

"The reserve potential is clearly there, but different companies have different ideas how to best proceed in what is a complex and fast-changing regulatory environment, either by forming alliances with existing Russian oil companies" or by developing other projects, Desmarest said.

Steven Theede, president of Russian oil giant Yukos, said his company's growth depends on its ability to increase export capacity.

He did not discuss company founder Mikhail Khodorkovsky's recent incarceration on charges of fraud, tax evasion and embezzlement for allegedly failing to pay millions of dollars in taxes, nor did Theede take questions from reporters.

Foreign investors have watched Russia in recent months after Khodorkovsky's arrest and the cancellation last month of a major oil tender off Russia's Pacific coast. Investors have also long complained that Russia needs to improve complicated licensing and natural-resource laws.

James Burkhard, director of the Cambridge Energy Research Associates, said that Russia will be the leader in oil production when its export capacity gets in line with its geological potential.

The incongruence of those two factors "is why we're seeing production slowing this year relative to rapid growth in 2003," he said.

#75 advancedatheist

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Posted 11 February 2004 - 05:37 AM

3)  What will be the consequences of declining world oil production?

We could very well starve to death, for one thing. Refer to "Eating Fossil Fuels." And look up Richard Manning's cover article, "The Oil We Eat," in the February 2004 issue of Harper's. Apparently American agriculture is burning about ten calories of fossil fuels energy to produce one calorie of grain energy.

4)  Couldn't we make lemonade out of lemons by using the sky rocketing price of oil as an incentive to look for new, cleaner energy sources?

What if there aren't any? Industrial societies rapidly adopted petroleum as a fuel about a century ago, de-emphasizing coal in the process, because petroleum has unique properties that apparently can't be replaced, especially since in its early days petroleum had a really high EROEI (energy returned on energy invested), something like 50+ joules returned on one joule invested. The fuels which require a lot of processing to become usable, like oil from Albertan and Venezuelan tar sands, have EROEI's more like 2:1, which hardly make them worth the effort.

#76 ddhewitt

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Posted 11 February 2004 - 01:59 PM

We have a "stocks watch" list here at Imminst. Maybe we should be investing in oil futures to make money.

Good idea, Mind.

For a good resource about the impending energy crisis from an investment perspective check out the Financial Sense pages.

A good starting place is the article on Hubbert's Peak.

IMO Immortalists need to be strategic and agressive in their investing in order to be able to support worthy projects.


#77 advancedatheist

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Posted 11 February 2004 - 03:44 PM



Published February 11, 2004

Will the next world war be over oil?


CHINA announced this week that it imported more than 100 million tonnes of oil last year, over 30 per cent higher than it did in 2002, underlying the extent of the country's demand for energy resources to fuel its booming economy, which grew 9.1 per cent in 2003.

The International Energy Agency (IEA), an intergovernmental body that monitors world energy markets, estimates that China consumed 5.46 million barrels per day (bpd) in 2003, just slightly ahead of Japan, with 5.43 million bpd. It predicts that this year China will convincingly replace Japan as the world's second largest consumer of oil by consuming 300 million tonnes. But this will still be far less than the United States, which consumes a billion tonnes a year. Although China is the world's fifth largest producer of crude oil and, little more than a decade ago, was an exporter of oil, it has become increasingly dependent on oil imports.

Interestingly, the three African countries visited by President Hu Jintao in late January and early February - Egypt, Gabon and Algeria - are all oll-exporting states. The trip's main purpose was to secure oil sources and to build up energy relationships with those countries. In Egypt and Algeria, the Chinese signed cooperation protocols on oil and gas exploration while in Gabon, the Chinese entered into an agreement to purchase Gabonese crude for the first time and also to gauge the potential of three oil blocks. These developments indicate that China, which imports 60 per cent of its oil from the turbulent Middle East - mostly from Iran, Saudi Arabia and Syria - wishes to diversify its sourcing to Africa and other parts of the world.

Just last week, the state-owned China National Petroleum Corporation agreed to buy 10 million tonnes of oil annually from Yukos, Russia's second-largest oil company. China is still hoping that an agreement with Russia to build an oil pipeline from eastern Siberia to northeast China will actually be implemented. Tokyo is vying with Beijing for a Russian pipeline to meet Japan's needs.

China's energy needs carry geopolitical implications. Some analysts believe that Chinese dependence on imported oil will turn the country into a partner in American efforts to bring peace and stability to the Middle East. Others, however, point to Chinese ties with oil-rich countries in the region that are not on friendly terms with Washington as a sign that Chinese and American interests do not converge where oil is concerned.

Certainly, the Chinese believe that the US is out to contain China while the US, at the very least, sees China as a competitor not only for global influence but also for global natural resources. The Chinese realise that they are late arrivals while the US already has secured its sources of oil, primarily in Saudi Arabia. China therefore feels that it has to compete aggressively with the US and Europe, and is willing to take the oil wherever it can be found.

While Western countries are sensitive to dealing with governments suspected of proliferation or of human rights violations, the Chinese are not deterred by such inhibitions. American companies, for example, are prohibited from doing business in Sudan because of the country's ties with terrorism. But China is one of the most important investors in the country's oil industry and the China National Petroleum Corp expects its project there to produce 60,000 bpd this year.

Earlier this month, China Petroleum and Chemical Corp, also known as Sinopec, the nation's second-largest oil company, complained that the American embassy in Beijing had attempted to persuade it to withdraw from bidding on the development of 16 oilfields in Iran. Washington is afraid that if Iran is successful in attracting foreign investment to exploit its natural resources, then Washington's attempts to quash its suspected nuclear weapons programme through economic sanctions could be thwarted.

Sinopec, which accounts for 80 per cent of China's imports and already has an exploration project in Iran, refused. It is inevitable that as China continues its phenomenal growth, it will increasingly find itself bumping up against the US in many areas, not least in the area of energy resources. Only last week, Gal Luft, executive director of the Institute for the Analysis of Global Security, declared that the US and China are on a collision course over oil, and warned that the seeds of what could be the next world war are quietly germinating.

This is certainly a warning that both countries should heed. Diplomats in both countries should be thinking seriously about this issue and talking to each other about it. The two countries should also cooperate as far as possible as they develop new technologies and alternative sources of energy so as not to be overly dependent on oil.

The writer is a Hong Kong-based journalist and commentator

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#78 rgvandewalker

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Posted 12 February 2004 - 07:15 AM

I find the doom hard to believe. France already gets 70% of its power from nuclear. So, industrial civilization will fall... except in France? The U.S. has more reactors on line than any other country, although we only get 20% of our power from them. So, U.S's industrial civilization will fall 80%?

A lot of the decrease in energy usage occurred because of conservation. Japan cut energy use by 2/3, supposedly without affecting comfort or convenience. I myself greedily installed fluorescent bulbs, better thermostats, showerheads and whatnot.

But fossil-fuel dependence is a problem. I think the crucial thing is to get more nuclear power on-line.

Ten years per nuclear plant is a business-as-usual estimate caused by site-unique licenses and estremely cautious licensing.

France has type-certified reactors, and a factory to build them. Type-certified means that the individual reactors don't need approval. Instead the design is safety-inspected and approved. Over quite short production runs, the defects are found out and fixed. If GE, Westinghouse or General Atomics saw a market, and the DOE had a fire lit under it by an administration, the U.S. could have type-certified reactors, too, because U.S. law explicitly permits it. Any of those organizations could easily make a factory to produce a certified design. If I remember rightly, GE has -several- mothballed advanced reactor designs.

Think we lack the will? Ask Gray Davis. California fired him because he put people in the dark.

Other countries, naturally, could simply buy from France.

Some people have said that nuclear power isn't sustainable. However, I've seen estimates that seawater has enough uranium to power our civilization for a few million years. See http://www.jaeri.go....f43/topics.html for the extraction process.

Seawater uranium is not enriched, but the Canadians have a natural-uranium nuclear reactor, CANDU. There's good info about CANDU at Dr. Jeremy Whitlock's site: http://www.nuclearfaq.ca/#toc

Then there's breeding U233 from thorium (which is several times as abundant as uranium), or plutonium from U238, or reprocessing wastes to extract usable plutonium and uranium.

Waste really is a problem, but mostly because the solutions are mired in nonsensical concerns. Right now the wastes in the U.S. are in cooling pools next to reactors, which is not safe at all. It's time to bury them. The nevada repository will do for the 600 years it will take for the wastes to decay to the radioactivity of ores. Also, we know that heavy nucleides don't migrate in ground water. If they did, most of the uranium mines wouldn't exist, and the Columbia and Savannah rivers would glow at night.

So we can have industrial power for light, heat and air-conditioning into the indefinite future. Transportation is a more subtle problem.

As for mass transit- Echhh. I think we should let mass transit die an unlamented death as the 19th century technology it is. Let's do something better.

Personal rapid transit run on electricity, has a price per trip like a moped, is (literally) a million times safer than a car, and moves nonstop at 40-100mph. That means no stop lights or traffic jams. Also, there's no waiting for a vehicle. Systems have been operating since 1975. There's a lovely tutorial at Doug Maliewicz's http://www.skytran.com, and the wikipedia has an article, too, with a picture, econmomic theory and lots of links.

Alas, PRT requries a government to innovate, so we'll probably only get hydrogen fuel-cell cars, but that will work as well as what we have.

To eliminate passenger aircraft, one could just take maliewicz's cute little maglev PRT vehicles, and run them in vacuum tubes at several thousand miles per hour.

Ships could easily go pure nuclear. There's a lovely (patented) design for a lightweight (type-certifiable) inherently-safe nuclear reactor at http://www.atomicengines.com/ (This is a really fun site, The proprietor maintains an archive of documents about things like past programs to develop nuclear rockets, nuclear aircraft. and portable reactors). Of course, this reactor could power trains, plane, spacecraft and submarines, as well. Even subdivisions of houses.

And, of course, electric trains are commonplace.

Civilization will survive. We might even keep the freeways.

Now, why am I down on Solar and Wind? It's not money. Without anyone much noticing, solar has become cheap enough to be placed in new construction. The trick is to use it for roofing, and realize that you don't pay income taxes on money you don't spend for solar-powered electricity. Wind is even cheaper, but although it works on the ocean and great plains, it doesn't work in most other places.

However, at this point, solar and wind are more hazardous than nuclear, and require more energy inputs per unit of production. The hazards occur in construction. The energy use is because wind and solar require things like aircraft-grade aluminum (wind-turbine blades), and super-pure chemcially-treated silicon.

Edited by rgvandewalker, 12 February 2004 - 08:53 AM.

#79 advancedatheist

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Posted 13 February 2004 - 01:25 AM


Public release date: 12-Feb-2004

Contact: David F. Salisbury
Vanderbilt University

Anthropologist proposes link between per capita energy use and fertility rate
As world reserves of oil and natural gas dwindle over the coming decades – a prospect predicted by many energy experts – the rate at which the people in most societies around the world have babies is likely to drop precipitously as well.
That is the prediction of anthropologist Virginia Abernethy, professor emerita of psychiatry at Vanderbilt University, speaking on Feb. 13 in the symposium "From the Ground Up: The Importance of Soil in Sustaining Civilization" at the annual meeting of the American Association for the Advancement of Science held in Seattle.

"The availability of energy has been a major factor in population growth," said Abernethy. "In the modern context, energy use per capita affects economic activity. So a prolonged decline in energy use per capita will tend to depress the economy which, in turn, will cause a decline in the fertility rate."

Abernethy's argument has two parts: the link between the availability of petroleum and the economy, and the link between changes in economic conditions and fertility rates.

Regarding the first link, she points out that oil and gas are "unparalleled" sources of energy. Not only does petroleum provide the fuel that powers modern vehicles and the natural gas that people use for home heating and cooking, but petroleum products are the source for hundreds of industrial and agricultural products, including fertilizer, pesticides and plastics. This means that petroleum cannot be easily replaced by other fuels and feed stocks.

Despite the fact that continuing low prices are encouraging Americans and the inhabitants of other industrialized countries to consume oil and gas at profligate rates, "numerous geologists, physicists and computer scientists have calculated that petroleum and liquid natural gas production will begin to plateau and then decline within five to 10 years," she said.

Such a downturn will have major economic effects, Abernethy expects. In the United States since World War II, rising oil prices have preceded most U.S. recessions and unemployment rates have risen following significant increases in the real price of oil.

"Higher priced energy may force policy-makers to think of economic recession or slow growth as the usual state, and force farmers to rethink agricultural inputs. The shift away from high inputs to soil-conserving technology is theoretically ideal from the perspective of moving to a sustainable agricultural system. The downside, however, is that crops will be smaller and food costs higher – probably much higher – than with industrial agriculture," she said.

The second link, from economic change to the fertility rate, is based on a theory called the "economic opportunity hypothesis" that Abernethy first proposed more than 30 years ago. According to her hypothesis, people increase the size of their families when they are convinced that economic opportunities are expanding and decrease family size objectives when they believe that resources are shrinking and the difficulty of raising children is increasing.

What is important in this regard is not how rich or poor a society is, but the perception its people hold about how things are changing. When the future appears threatening, for example, people tend to exercise reproductive caution and adopt such measures as marrying later and putting more space between births within marriage.

According to Abernethy, this correlation holds true over the entire socioeconomic range and its predictions differ substantially from the conventional view that increasing educational levels in a society by itself can reduce fertility rates.

Abernethy uses recent U.S. history to support her proposed energy-fertility link.

The 15-year burst in fertility rates that followed World War II, known as the "baby boom," was accompanied by the widespread substitution of energy-intensive technology for labor that substantially improved productivity. Higher productivity and labor shortage in an expanding economy produced an increasingly large and affluent middle class that "responded with early marriage and closely spaced births." The baby boom ended within a year following rising energy prices and the 1961 recession.

Fertility rates fell to the lowest level ever recorded in the United States following the oil-induced recession of 1980-81. Both white and black fertility rates plunged below replacement level.

In the late 1980s, lower oil prices and other factors encouraged rapid job growth. Nevertheless, the bottom half of wage-earners enjoyed little increase in real income. So fertility rates rose only slightly and the recession at the beginning of 1990 reversed the modest upward trend.

"The improving standard of living to which many societies have become accustomed will be difficult to maintain in the face of rapidly rising prices for energy. In these circumstances, fertility rates are unlikely to rise. Indeed, a future marked by declining energy use per capita may be the ultimate driver of worldwide declines in fertility," she wrote.

#80 advancedatheist

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Posted 13 February 2004 - 01:54 AM


Dried Up?
Are We Running Out of Oil? Scientist Warns of Looming Crisis
By Lee Dye
Special to ABCNEWS.com

Feb. 11— "Civilization as we know it will come to an end sometime in this century unless we can find a way to live without fossil fuels."

That's the way David Goodstein begins his book. And that's the way he ends it.
Goodstein is not an environmental extremist, or a doomsayer, or a political hack trying to make points with his constituency. He is a professor of physics and vice provost of the California Institute of Technology, one of the nation's headiest institutions.

In his just-released book, Out of Gas: The End of the Age of Oil, published by W. W. Norton & Company, Goodstein argues forcefully that the worldwide production of oil will peak soon, possibly within this decade. That will be followed by declining availability of fossil fuels that could plunge the world into global conflicts as nations struggle to capture their piece of a shrinking pie.

We've all heard that before, only to be told by organizations like the U.S. Department of Energy that there's plenty of oil around, much of it still undiscovered, and there's no cause for panic. Some economists argue that as the supply declines, the price will rise, making it possible to develop energy sources that are not now available, such as the mineral rich oil sands of Canada, or the shale formations in the western United States.

Clues From a Historical Rebel

Some time soon we'll find out who's right, but Goodstein argues that we don't have any time to spare. It takes decades to develop new energy sources, as the prestigious National Academy of Sciences warned last week in a report on the dream of using hydrogen to fuel our cars. So are we poised to meet this challenge head on?

Not likely, Goodstein says.

"Nothing is going to happen until we have a crisis," he said in an interview. "When we have a crisis, I think attitudes will change."

That crisis, he predicts, will probably come sooner rather than later.

But how can experts from economics and science and business differ so strongly on an issue that is this important? How can they look at the same data and come to such different conclusions?

Most predictions concerning the end of the age of oil are based on estimates of when the supply will run out and the last drop is pulled from the last well. But that's the wrong way to look at it, Goodstein argues.

Goodstein relies partly on the work of a historical rebel in the oil industry, M. King Hubbert. Back in the 1950s, when Hubbert was working as a geophysicist with Shell Oil Company, he predicted that oil production in the United States would peak by 1970.

He was almost laughed out of his profession, but guess what? He turned out to be right.

U.S. Oil production has been declining ever since, leading to an increased reliance on foreign oil, and we all know where that has led.

Hubbert's formula was really pretty simple. He looked at all the geological reports that were available at that time and determined how much oil nature had created for us beneath the United States. Then he determined how much had been extracted. He found that half of it would be gone by 1970, and U.S. production would decline forever thereafter.

Best- and Worst-Case Scenarios

Globally, nature left about 2 trillion barrels beneath the ground, and the peak will occur when we reach the halfway point, Goodstein argues. Since we have used close to a trillion barrels, the peak can't be more than a few years away, he says. But are huge new oil fields waiting out there somewhere to be discovered?

"Better to believe in the tooth fairy," he writes.

Most of the planet has been explored extensively, and even if some new fields are found, they won't delay the peak by more than a few years, he says.

So that leads him to two scenarios.

"Worst case: After Hubbert's peak, all efforts to produce, distribute, and consume alternative fuels fast enough to fill the gap between falling supplies and rising demand fail. Runaway inflation and worldwide depression leave many billions of people with no alternative but to burn coal in vast quantities for warmth, cooking, and primitive industry. The change in the greenhouse effect that results eventually tips Earth's climate into a new state hostile to life. End of story.

"Best case: The worldwide disruptions that follow Hubbert's peak serve as a global wake-up call. A methane-based economy is successful in bridging the gap temporarily while nuclear power plants are built and the infrastructure for other alternative fuels is put in place. The world watches anxiously as each new Hubbert's peak estimate for uranium and oil shale makes front-page news."

A number of things can be done, but all have some limitations, and all take the one thing we're running out of — time.

"There can't be a quick resolution," Goodstein said in the interview. "It's a huge problem."

Time to Switch?

He would begin an immediate shift toward a greater reliance on natural gas, since supplies of methane are greater than the remaining oil, and he sees no alternative to building more nuclear power plants. That won't sit well with many Americans.

"There are difficulties and dangers associated with nuclear power, but there may be no alternative," he writes. Other potential sources of energy, like oil shale, are fraught with environmental problems and they may take more energy to develop than they ultimately produce.

That has been the case in other fields, including fusion reactors that could make their own fuel.

Despite the fact that the federal government has poured billions into fusion research, no experimental reactor has ever produced more energy than it consumes, not even for a second.

Ultimately, Goodstein argues, we must return to the energy source used by our ancestors thousands of years ago.

"There is a cheap, plentiful supply of energy available for the taking," he says, and we won't run out of it for billions of years. "It's called sunlight."

Therein lies the greatest hope. New technological breakthroughs could finally harness the sun in ways we haven't even begun to imagine. But it will take a commitment on a global scale that would make the Manhattan Project seem like child's play.

And here we are in the midst of a presidential election campaign, and no one is even talking about it.

Lee Dye’s column appears weekly on ABCNEWS.com. A former science writer for the Los Angeles Times, he now lives in Juneau, Alaska.

#81 advancedatheist

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Posted 15 February 2004 - 03:55 PM


Beyond Fossilized Thinking
The world needs innovative technology now to meet energy needs
By David Goodstein

If Earth had no greenhouse effect, it would be a frozen ice ball, far too cold for advanced life. If it had a 100% greenhouse effect, it might well be like its near-twin Venus, whose runaway greenhouse effect gives it a surface temperature hotter than molten lead. Instead, we live on a planetwide Garden of Eden, delicately balanced between those extremes.

Our atmosphere is transparent to the white-hot radiation from the sun, but it is nearly opaque to the much cooler radiation with which Earth tries to send its received energy back out into space. The result is a balmy average temperature of 57 degrees Fahrenheit. In those benign conditions, we evolved, climbed down from the trees and began drilling oil wells.

Over the last 150 years, we have evolved a civilization firmly anchored in the mathematically impossible promise of an endless supply of cheap oil. Now there is good reason to believe that sometime in the next decade or two, the world's oil fields will start to be depleted faster than new ones can be tapped. When that happens, a gap will begin to grow between the supply of fuel and the need for it.

If we lived in an orderly, rational world, it might be possible for some other fossil fuel to fill the gap. But anyone who was alive in 1973 knows that we don't live in such a world, especially when it comes to a shortage of our precious gasoline. In 1973, a temporary, artificial shortage immediately caused mile-long lines at gas stations and panic and despair for the future of our way of life. When worldwide oil supplies reach their natural peak, the shortages that follow will be neither temporary nor artificial.

It is technically possible to make a substitute fuel out of coal or natural gas, and as the price of oil skyrockets (along with the price of all petrochemicals and everything that has to be transported), more oil at this higher price will be grudgingly extracted from oil sands, tar sands and depleted oil fields. So, ignoring the effects of runaway inflation, possible armed conflict and the like, it might be possible to muddle on for a while.

How long? We are told by countless studies that there is enough coal in the ground to last for hundreds of years or more, but that estimate is surely flawed. For one thing, if we use coal as a substitute for oil, it will have to be mined many times faster than now. In addition, the world's population continues to increase, the poorer peoples want to live more like the richer ones, using far more energy, and coal supplies, like those of any mineral resource, will peak and begin to decline long before the last ton is dug out of the ground. It's a pretty good bet that the peak will happen before the end of this century.

And, if we let all that happen, the increased greenhouse effect produced by burning all those fossil fuels may well destroy the delicate balance that makes it possible for us to live on this planet.

President Bush has asked us to think beyond our mundane concerns and dream of placing humans on the hostile surfaces of the moon and Mars. He would do better to offer a far more visionary and courageous challenge: to kick the fossil fuel habit now, before we have made Earth hostile to humans.

Beyond fossil fuels there is only sunlight and nuclear energy. Finding ways to run a civilization as complex as ours on those resources alone would be exceedingly difficult, but not entirely impossible. The scientific principles on which the new technologies would have to be based are well known.

We are very good at solving technical problems when we put our minds to it. The task to be accomplished is enormous, but we could do it. What's lacking now is leadership.

David Goodstein is a professor of physics and vice provost at Caltech. His latest book, "Out of Gas: The End of the Age of Oil," was published recently by W.W. Norton.

#82 advancedatheist

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Posted 19 February 2004 - 01:31 AM


The escaping price of natural gas

By David R. Francis | Staff writer of The Christian Science Monitor

The United States is skating on the edge of another big jump in natural-gas prices this spring - perhaps even a shortage that, depending upon the weather and its severity, could leave residents shivering and cause some industrial customers to curtail operations.

Analysts describe the situation with varying degrees of alarm, from "shaping up for an unmitigated disaster" to "tight" on supplies. Last week, Alan Greenspan, chairman of the Federal Reserve, spoke of his "chronic concern" about how a sharp spike in natural-gas prices would affect the economy.

Most Americans would quickly feel the effects of a severe shortage - and subsequent price hike. Natural-gas utilities, with 64 million customers in the US, provide 24 percent of all energy consumed. Their gas heats and cools millions of homes, and increasingly is burned to generate electricity. Natural gas is both a fuel and a feedstock for the nation's $460 billion chemical industry with its 1 million employees.

"The problem is awfully serious," says Matthew Simmons, head of Simmons & Co. in Houston, an investment bank specializing in the energy industry. "It's shaping up for an unmitigated disaster."

Driving the concern are data suggesting that natural-gas production in the US is tumbling faster than anticipated. As a result, environmentalists, industry representatives, and others are marshalling their arguments about what needs to be done to stave off a crisis. Ideas range from pushing for greater conservation and efficiency to opening new areas for drilling to importing more liquid natural gas (LNG).

Mr. Simmons and others say the US confronts a problem not only in the immediate future, but is likely to see natural-gas shortages for years to come. In a September report, the National Petroleum Council warned that the US is on a course to pay an additional $1 trillion in natural-gas costs over the next 20 years as a result of shortages.

Paul Wilkinson, policy vice president of the American Gas Association, sees a "tight" gas supply for several years. Natural-gas production in the lower 48 states dropped half a percentage point (or less) in 2003, and he expects a "modest" increase in gas production over the next few years.

Simmons, by contrast, believes gas production in the US and Canada has already peaked. That means the US will become increasingly dependent on imported LNG - just as its dependence on imported oil has grown, he says. Imported oil now accounts for 60 percent of US oil consumption.

As partial validation of his concern about gas supplies, Simmons cites a new study by FirstEnergy Capital, a research firm in Calgary. Using new data, the company found that natural-gas production in the Gulf of Mexico has declined from about 14 billion cubic feet per day in 2001 to 11.3 Bcf/d in May 2003. The Gulf provides 23 percent of all US natural-gas output.

"Essentially it looks as if the Gulf is in fairly sharp decline," says Martin King, author of the FirstEnergy study. He calls it "a wake-up call."

Simmons suspects Gulf output could be as low as 9.5 billion Bcf/d by now, as gas wells tend to peter out faster than do oil wells.

With this situation, the nation is likely to face even more intense debate on the best ways to meet energy needs in the future.

Environmentalists say the priority should be on conservation; greater efficiency of appliances, lighting, and homes; and boosting renewable energy resources, such as wind, solar, or biological.

The gas and chemical industries, for their part, want the US government to ease restrictions on drilling for gas and oil in offshore waters, including the eastern Gulf and Atlantic shelves, and in the inner Rocky Mountains. They urge bringing gas south from Alaska. They see a need to speed up construction of more terminals for importing LNG by tanker. Currently there are four.

Though Simmons refutes claims that conservation alone can cure the situation, he welcomes measures that would both reduce the demand for energy and increase its supply. "We are in a crisis," he says.

Many in the gas industry would welcome passage of the evolving energy bill now before Congress. But not everyone in corporate America is on board.

In recent days, the bill has been stripped of provisions that would have enlarged the areas that could be drilled for natural gas - areas which possibly include about 40 percent of US usable gas reserves, complains Greg Lebedev, president of the American Chemistry Council.

Because of today's high gas prices, Mr. Lebedev says, America's chemical industry - one that has been the biggest and most competitive in the world for decades - has become uncompetitive and could be "gutted" in the years ahead.

"We are trying to stabilize the industry so it stays in the US," he says. Already, some global chemical firms have shifted production to countries where gas prices are lower.

Meanwhile, analysts are trying to get a bead on whether the gas supply is adequate for what's left of this year's heating season. Each week, they pore over a natural-gas storage report from the Department of Energy - and then guess at the future price. The price of gas has been volatile, running about $2 per million BTUs (British thermal units) a few years ago to as high as $10 in shortage-induced spikes.

"Weather is the most decisive factor," says Michael Stoppard, an expert with Cambridge Energy Research Associations, a Cambridge, Mass., adviser on energy to businesses.

Seven weeks of cold weather lie ahead. If it's a deep freeze, natural-gas supplies could be stretched and prices could soar. If prices jump high enough, many industrial firms voluntarily shut down temporarily, leaving gas utilities more capacity to serve residential users.

But that didn't happen in large measure during a price bubble last spring, Simmons says. Only a cool summer, weakening the demand for airconditioning, enabled gas producers to build up enough underground gas storage for this winter - so far. "That [weather] bailed us out," he says.

Another help was a doubling of LNG imports last year. Yet LNG still amounts to only about 1 percent of total gas consumption.

Mr. Stoppard sees a huge business opportunity for imports of LNG - gas cooled to minus 260 degrees F. to make it liquid and suitable for shipment in specialized tankers.

But ramping up LNG imports is expensive and will face "not in my backyard" opposition. A new terminal in the US costs $300 million to $1 billion, depending on its capacity, says Stoppard. The cost at the supply end - gas wells, pipelines, a liquification plant, and ships - could run $6 billion to $8 billion.

At least 30 LNG projects have been announced in North America. But Stoppard figures four or five large regasification terminals will actually be built in the US.

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#83 advancedatheist

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Posted 24 February 2004 - 02:01 AM


Natural gas at crucial juncture
Scott Haggett 
Calgary Herald 

Monday, February 23, 2004

Natural gas supplies are waning, prices for the fuel are rising and relief is at best years away.

After years as a low-value commodity, natural gas has ascended into the spotlight as demand for the fuel to fire power plants, heat homes and serve as a chemical feedstock outstrips the petroleum industry's ability to tap new reserves.

That imbalance has forced up prices and caused many observers, including Alan Greenspan, the influential head of the U.S. Federal Reserve, to wonder whether a natural gas shortage has the potential to devastate the economies of the U.S. and Canada.

The future of the natural gas industry will be at question at a Canadian Energy Research Institute (CERI) conference being staged in Calgary next week. Its themes echo the concerns of both gas suppliers and consumers on how the North American energy industry can meet demand and whether unconventional alternatives like liquefied natural gas (LNG) or coalbed methane will be able to plug supply gaps....

Natural gas reserves are declining in North America. Many gas producers are finding it difficult to tap new reserves to offset declining production from existing fields.

While many hope that new supplies can come from Alaska, the Mackenzie Delta or areas like the ultra-deep waters of the Gulf of Mexico, the reality is that those areas won't be producing for a number of years....

Natural gas prices have been uncharacteristically high over the past few years.

In 1999, the benchmark price of natural gas on the New York Mercantile Exchange averaged $2.32 US per million British thermal units. That was less than half the $5.49 US that gas averaged over 2003. That price rise has squeezed industrial users like the petrochemical industry and could threaten jobs.

Rather than invest in North America, many petrochemical companies are choosing to locate new plants in areas like Trinidad or the Middle East, where gas is plentiful and cheap.

#84 Lazarus Long

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Posted 24 February 2004 - 02:21 AM

Should we put the recently released Pentagon Paper on Global climate shift, fuel depletion and social upheaval here or in the Climate thread?

Ah why not both places.



#85 advancedatheist

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Posted 24 February 2004 - 02:46 AM

Once again, the Canadian press reports about Peak Oil while the American press tends to ignore it.


Canada seen as top oil region

New report highlights energy operations' low exploration risk, long reserve life

From Monday's Globe and Mail

Canada has emerged as one of the few growth regions in an energy market where the majority of oil-producing countries are past their prime or on the verge of declining output, says a comprehensive study of world petroleum supplies.

Given tight global supplies, the oil sands in Alberta stand out since they hold an estimated 175 billion barrels in recoverable reserves, says the new report by investment dealer Raymond James Ltd. in Calgary.

Bolstered by the oil sands and offshore Newfoundland projects, Canadian oil production last year averaged a record 2.5 million barrels a day, up 8.7 per cent from 2002. Canada's prospects hinge on expansion in northern Alberta's oil sands in particular because East Coast exploration has stalled.

While Saudi Arabia, the kingpin in the Organization of Petroleum Exporting Countries, is still swimming in oil, dozens of often-overlooked, non-OPEC nations accounting for one-quarter of global oil output already have peaked.

Faltering oil production from a basket of 14 key countries, part of 55 non-OPEC countries seeing annual output dip, will keep oil prices at surprisingly high levels,
Raymond James says.

"We believe that high oil prices are here to stay. The recent period of high oil prices is neither a short-term nor a temporary phenomenon," the report predicts. "Oil supply is no longer a matter of simply turning on the tap."

#86 advancedatheist

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Posted 24 February 2004 - 05:04 AM

We are definitely reaching a "tipping point" in public acknowledgement of Peak Oil!


February 24, 2004
Forecast of Rising Oil Demand Challenges Tired Saudi Fields

When visitors tour the headquarters of Saudi Arabia's oil empire — a sleek glass building rising from the desert in Dhahran near the Persian Gulf — they are reminded of its mission in a film projected on a giant screen. "We supply what the world demands every day," it declares.

For decades, that has largely been true. Ever since its rich reserves were discovered more than a half-century ago, Saudi Arabia has pumped the oil needed to keep pace with rising needs, becoming the mainstay of the global energy markets.

But the country's oil fields now are in decline, prompting industry and government officials to raise serious questions about whether the kingdom will be able to satisfy the world's thirst for oil in coming years.

Energy forecasts call for Saudi Arabia to almost double its output in the next decade and after. Oil executives and government officials in the United States and Saudi Arabia, however, say capacity will probably stall near current levels, potentially creating a significant gap in the global energy supply.

Outsiders have not had access to detailed production data from Saudi Aramco, the state-owned oil company, for more than 20 years. But interviews in recent months with experts on Saudi oil fields provided a rare look inside the business and suggested looming problems.

An internal Saudi Aramco plan, the experts said, estimates total production capacity in 2011 at 10.15 million barrels a day, about the current capacity. But to meet expected world demand, the United States Department of Energy's research arm says Saudi Arabia will need to produce 13.6 million barrels a day by 2010 and 19.5 million barrels a day by 2020.

"In the past, the world has counted on Saudi Arabia," one senior Saudi oil executive said. "Now I don't see how long it can be maintained."

Saudi Arabia, the leading exporter for three decades, is not running out of oil. Industry officials are finding, however, that it is becoming more difficult or expensive to extract it. Today, the country produces about eight million barrels a day, roughly one-tenth of the world's needs. It is the top foreign supplier to the United States, the world's leading energy consumer.

Fears of a future energy gap could, of course, turn out to be unfounded. Predictions of oil market behavior have often proved wrong.

But if Saudi production falls short, industry experts say the consequences could be significant. Other large producers, like Russia and Iraq, do not have Saudi Aramco's huge reserves or excess oil capacity to export, and promising new fields elsewhere are not expected to deliver enough oil to make up the difference.

As a result, supplies could tighten and oil prices could increase. The global economy could feel the ripples; previous spikes in oil prices have helped cause recessions, though high oil prices in the last year or so have not slowed strong growth.

Saudi Aramco says its dominance in world oil markets will grow because, "if required," it can expand its capacity to 12 million barrels a day or more by "making necessary investments," according to written responses to questions submitted by The New York Times.

But some experts are skeptical. Edward O. Price Jr., a former top Saudi Aramco and Chevron executive and a leading United States government adviser, says he believes that Saudi Arabia can pump up to 12 million barrels a day "for a few years." But "the world should not expect more from the Saudis," he said. He expects global oil markets to be in short supply by 2015.

Fatih Birol, the chief economist for the International Energy Agency, said the Saudis would not be able to increase production enough for future needs without large-scale foreign investment.

The I.E.A., an independent agency founded by energy-consuming nations, and Washington see investment in energy exploration and field maintenance as vital, but such proposals face strong opposition inside Saudi Arabia. Tensions with the West, particularly the United States, make such investment politically difficult for Saudi society. For example, an effort by Crown Prince Abdullah, the kingdom's de facto ruler, to encourage Western companies to invest $25 billion in his country's natural gas industry essentially collapsed last year.

"Access to Persian Gulf oil reserves, especially Saudi Arabia's, is the key question for the whole world," Dr. Birol said.

President Bush has said he wants to make the United States less reliant on oil-producing countries that "don't like America" by diversifying suppliers and financing research into hydrogen fuel cells, but achieving that remains far off.

His administration backs foreign investment initiatives in the gulf region, including Saudi Arabia, and his energy policies rely on Energy Department projections showing the world even more dependent on Arabian oil in 20 years. That may be enough time for governments to find alternatives, but oil field development requires years of planning and work.

Publicly, Saudi oil executives express optimism about the future of their industry. Some economists are equally optimistic that if oil prices rise high enough, advanced recovery techniques will be applied, averting supply problems.

But privately, some Saudi oil officials are less sanguine.

"We don't see us as the ones making sure the oil is there for the rest of the world," one senior executive said in an interview. A Saudi Aramco official cautioned that even the attempt to get up to 12 million barrels a day would "wreak havoc within a decade," by causing damage to the oil fields.

In an unusual public statement, Sadad al-Husseini, Saudi Aramco's second-ranking executive and its leading geologist, warned at an oil conference in Jakarta in 2002 that global "natural declines in existing capacity are real and must be replaced."

Dr. al-Husseini, one Western oil expert said, has been "the brains of Saudi Aramco's exploration and production." But he has told associates that he plans to resign soon, and his departure, government oil experts in the United States and Saudi Arabia say, could hinder Saudi efforts to bolster production or entice foreign investment.

Saudi Arabia's reported proven reserves, more than 250 billion barrels, are one-fourth of the world's total. The most significant is Ghawar. Discovered in 1948, the 300-mile-long sliver near the Persian Gulf is the world's largest oil field and accounts for more than half of the kingdom's production.

The company told The New York Times that its field production practices, including those at Ghawar, were "at optimum levels" and the risk of steep declines was negligible. But Mr. Price, the former vice president for exploration and production at Saudi Aramco, says that North Ghawar, the most valuable section of the field, was pushed too hard in the past.

"Instead of spreading the production to other fields or areas," Mr. Price said, the Saudis concentrated on North Ghawar. That "accelerated the depletion rate and the time to uncontrolled decline," or the point where the field's production drops dramatically, he said.

In Saudi Arabia, seawater is injected into the giant fields to help move the oil toward the top of the reservoir. But over time, the volume of water that is lifted along with the oil increases, and the volume of oil declines proportionally. Eventually, it becomes uneconomical to extract the oil. There is also a risk that the field can become unstable and collapse.

Ghawar is still far too productive to abandon. But because of increasing problems with managing the water, one Saudi oil executive said, "Ghawar is becoming very costly to maintain."

The average decline rate in Saudi Aramco's mature fields — Ghawar and a few others — "is in the range of 8 percent per year," without additional remediation, according to the company's statement. This means several hundred thousand barrels of daily oil production would have to be added every year just to make up for the diminished output.

Every oil field is unique, and experts cannot predict how long each might last. For its part, Saudi Aramco is counting on Ghawar for years to come.

The company projects that Ghawar will continue to produce more than half its oil. One internal company estimate from 2002 puts Ghawar's production at 5.25 million barrels a day in 2011, more than half the total expected crude oil capacity of 10.15 million, according to United States government officials and oil executives.

"The big risk in Saudi Arabia is that Ghawar's rate of decline increases to an alarming point," said Ali Morteza Samsam Bakhtiari, a senior official with the National Iranian Oil Company. "That will set bells ringing all over the oil world because Ghawar underpins Saudi output and Saudi undergirds worldwide production."

The I.E.A. warned in November that huge investments would be needed to offset the decline rates in mature Middle Eastern oil fields — it put the average at 5 percent — and the increasing costs of oil and gas production. The agency, based in Paris, forecasts that Saudi production will need to reach 20 million barrels a day by 2020. (I.E.A. and other research estimates say that more than 90 percent of that would be crude oil; the rest would be liquid products like natural gas liquids that result from the processing of crude oil.)

In his speech in Jakarta, Dr. al-Husseini noted the need for exploration, pointing out that colleagues at Exxon Mobil predict that more than 50 percent of oil and gas consumption in 2010 must come from new fields and reservoirs.

Harry A. Longwell, the executive vice president of Exxon Mobil, says finding new sources of oil is crucial. Mr. Longwell, in an interview, said that increasing demand and declining production were not new problems, but they were "much larger now because of the world's demand for energy and the magnitude of the numbers now are much larger."

To offset its declines, Saudi Aramco is bringing back into production one idle field, Qatif, and is enhancing production at a nearby offshore field, Abu Safah. The company says that with expert management, these fields will produce about 800,000 barrels a day.

But current and former Saudi Aramco executives question those expectations, contending that the goal of 500,000 barrels a day for Qatif is unrealistic and that development costs are higher than anticipated.

Qatif poses real difficulties. It is near housing for Saudi Arabia's minority Shiite population and contains high concentrations of hydrogen sulfide, a highly toxic gas. Its development is "particularly challenging," according to a technical paper by Saudi Aramco engineers presented last year in Bahrain, which said that 45 percent of potential drilling sites "were rejected due to safety concerns."

At Abu Safah, Saudi Aramco has experienced increasing water problems as it has turned to submersible pumps to extract oil. Experts, including American and Saudi government officials, say the technique is ill advised. Saudi Aramco, in its written response to questions, defended the use of the pumps at Abu Safah and its ability to manage the water after 37 years of production.

One United Sates government energy expert noted that "submersible pumps is what the Soviets went to on an indiscriminate basis in West Siberia and it went south." Samotlor, a huge field in Siberia, once produced more than three million barrels a day, but it declined sharply in the 1980's after the Soviets pushed it too hard. Today it produces only a few hundred thousand barrels a day.

#87 advancedatheist

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Posted 28 February 2004 - 02:53 AM

Here's a downloadable mp3 of Caltech professor David Goodstein's appearance on KPFK's "Live From the Left Coast," Sunday, Feb. 15, 2004. I called in to ask about the use of oil in agriculture:

#88 advancedatheist

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Posted 02 March 2004 - 03:48 AM

Here's a radio interview with Caltech physicist David Goodstein on WBUR's On Point (requires Real Player):


⌛⇒ new years donation: support LE labs

#89 advancedatheist

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Posted 03 March 2004 - 03:02 AM


China's Growth Fuels Global Energy Markets 
3.2.04  Joseph Dancy, President, LSGI Advisors, Inc.

An increasingly energy-thirsty China is expected to surpass Japan to become the world's second-largest crude oil importer next year. China's faster-than-expected growth in oil demand has lead to a huge shortfall in meeting its' requirements from domestic production.

The energy shortfall may eventually limit China’s economic growth, and even trigger a worldwide struggle for limited reserves according to a study by analysts at China’s Ministry of Communications and the Shanghai Shipping Exchange.

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#90 advancedatheist

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Posted 06 March 2004 - 03:14 AM


Next News: What trends—technological, social, economic, political—do you see developing over the next 10 to 25 years that most people today have little awareness of?


5. An oil crisis looms when it becomes clear that oil production has finally peaked and begun its course down the backside of the supply curve. . . . What is startling is that the slide down the backside of the curve occurs at several times the speed of the climb up. That is, once the peak is reached, supplies dwindle more quickly than seems logical, simply because so much of the world, especially China, has reached a dependence on oil that is very great. Crash programs to move away from oil begin.

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