[Texgreen] Peak oil update

[Roger Baker]

[This is written by a retired CIA analyst who I had met at several  
previous ASPO conferences and who I got to meet again in Houston. At  
one time, he used to prepare the president's daily news briefings. He  
is married to a Virginia state senator.  -- Roger]

<http://www.truthout.org/issues_06/102507EB.shtml>

The Peak Oil Crisis: A Message From Houston
By Tom Whipple
The Falls Church News-Press

Thursday 25 October 2007

We gathered at a hotel near the Convention Center, some 525 of us
from 18 countries and 36 states attending the Association for the
Study of Peak Oil-USA's 3rd annual conference. The PowerPoints
flashed by at mind-blowing speed as speaker after distinguished
speaker shared the latest thoughts and insights into the peaking of
world oil production.

For those of us acquainted with the field, there was nothing
startling. World oil production has either peaked already or is
certain to do so within the next few years if the world's petroleum
industry manages to eek out a little more production. But the good
times are clearly over.

Peak production of conventional oil came 30 months ago and
although new production projects will come on stream in the next few
years, they will have a hard time balancing the depletion from
existing fields which various speakers placed at 4-5 percent a year
and probably increasing. As a greater share of world production
shifts to undersea production, which is expensive and is usually
water flooded to get the oil out as quickly as possible, some believe
the annual world depletion rate could increase to six percent or
more.

The most ominous development for countries such as the U.S.,
which must import most of its oil, is the emerging concept of "peak
exports" which was discussed by several speakers. Peak exports simply
means that oil-producing countries are using more and more oil at
home - leaving less to sell abroad. Moreover, sentiment is starting
to develop in many nations that they must save some oil for future
generations, not just sell it to the foreign devils as quickly as
possible.

This clearly means that major oil importers will face a shortfall
in their ability to obtain oil many months or years sooner than they
had been anticipating. The fall in the amount of oil available for
purchase is likely to drop much more quickly than declines in
production. When world oil exports fall, if they have not started
doing so already, effects are likely to sharp and painful.

For me, the most interesting insight of the conference had
nothing to do with oil production but rather was an insight I gained
into the psyche of the American people. A keen observer of the
American scene pointed out that most literate Americans are aware
that we have some sort of energy problem. If for no other reason than
unprecedented gasoline prices and the TV ads featuring yellow corn-
fueled cars, most have at least an uneasy feeling that some sort of
transformation is coming.

The problem is that most have no concept as to how soon the
transformation will start and how much their lives are going to
change. The President, his government, the Congress, the oil
companies, and indeed the media have left us with the impression that
we have the transformation to an alternative fuel future well in
hand. Bills mandating and increasing the supply of ethanol have been
passed or are in the hopper. The President makes periodic references
to hydrogen-powered cars. The oil companies allege there is no
problem and the media takes it all in and remains mute.

The peak oil problem is not that most of us don't recognize a
transition is coming - if for no other reason than reducing our
dependence on "foreign oil" - it is that we don't recognize that the
transition will come soon and will inflict more economic pain and
social dislocation on the American people than we have experienced
since the Civil War or perhaps ever.

Thus the message from Houston was "it will be soon and it will be
bad, very bad," much sooner and much worse than 99 percent of the
American people realize.

Earlier this week, a European Organization called Energy Watch
released a paper concluding as many others have done that world oil
production peaked last year and will decline steeply over the next 22
years so that by 2030 production will be in the vicinity of 40
million barrels per day which is less than half of current
production. In ten years production will be down on the order of 20
million barrels per day.

What we in America have not yet begun to grasp is that numbers
like this imply the near total demise of the private internal
combustion powered automobile. Your local gasoline station is at the
end of the distribution pipeline and is the most likely to be cut
off. If gasoline available for distribution in the U.S. were to fall
from 9 million barrels a day to the order of 5 million through a
combination of declining production and declining exports, it is not
hard to figure out what would happen when the government gets around
to prioritizing uses.

Food production and distribution would come first, then public
health (clean water, sewage, sanitation, medical services), then
public safety including the armed forces, and finally some level of
economic activity that uses petroleum products.

Thirty seconds of pondering this situation should leave you with
the idea that there will be very little gasoline available for your
gas station to sell to you. For sure, there will be a lot fewer gas
stations around ten years from now and you are not going to like the
prices.