Pastor Jim on OIL & Energy (part one)

A New Peak for Your Mapby Jim Walters
Picture a big Easter egg hunt, with a bunch of kids scouring a park where 1,000 Easter eggs have been hidden. As the kids fan out and begin to pick up eggs, let’s plot a graph that shows their production in terms of “Eggs per Minute.” With each passing minute, the number of eggs found in that minute will increase, so our graph will resemble the first half of a classic bell curve, with the production line going upwards and right.
However, a funny thing happens when half the eggs have been found. The rate of finding eggs (production) will flatten out, because the kids have found all the eggs that were in plain sight, and from here on they’ll be rooting around under the bushes and burrowing into the more difficult hiding places. Even later, as the number of eggs remaining gets really small, the production rate really drops, and our production line comes down sharply, completing the bell curve just as the last egg is found.
The Easter egg hunt describes what is happening with global oil production today. Petroleum geologists believe that roughly half of all the oil that will ever come out of the ground has already been pumped up, and so the bell curve that tracks “oil production per day” is reaching a flat peak at around 88 million barrels of oil per day. It’s not a “peak” as much as it is a “mesa top,” but petroleum geologists call it a peak, namely “Hubbert’s Peak.”
Mr. Hubbert was a petroleum geologist with Shell back in the 1950’s, when he first observed that oil production in any field (or group of fields, or continent, or planet) would follow a bell curve (like the Easter Egg hunt). When Hubbert predicted that gross oil production in the lower 48 states would peak in 1970, everyone laughed at him.
They stopped laughing in 1970 when production in the lower 48 states peaked, pretty much when Hubbert had said it would. The peak production rate was around 11 million barrels per day. Would you like to know what it is today? Just over 6 million barrels per day (from the Continental 48 states). Hubbert later passed away, but his successors used his equations to accurately predict the peaking of the Alaska Prudhoe Bay, in the Gulf of Mexico, and even the North Sea. ALL of those fields have peaked.
So, today America burns 22 million barrels of oil daily, but only produces about 9 million, including Alaska and the Gulf. That means we import, from other nations, 13 million barrels a day, at the staggering cost of $100 per barrel, that’s one-point-three billion dollars every single day. That’s the “largest transfer of wealth in history” that T Boone Pickens is talking about.
Half of all the world’s oil endowment is still in the ground. If the geologists are correct, there’s at least another trillion barrels remaining. Note that at the rate of 88 million per day, those trillion barrels will be GONE in about thirty years. And remember, we’ve already used the "easy to find” oil (eg: Texas) and much of what remains is the “hard to find” oil (eg: under deep ocean water) or, it is in the hands of people who don’t like us very much. That’s the long-term problem.
The short-term problem is that while “supply” is peaking, “demand” just keeps growing. Since 2002, India and China ceased exporting surplus oil and now import (just like us) to meet their own needs. We are all competing for the same oil in a “commodities” market, where “supply and demand” factors fluctuate. The price of oil is no longer pre-determined by OPEC or “big oil.” No, the entire market is driven by speculative forces. Oil companies and investors buy like crazy when they think demand is strong; then they sell like mad when supply catches up and demand shrinks. At the last Presidential election, oil rose through $40 a barrel and soared eventually to $140. Now it’s falling through $90. You can expect these cycles to continue, with “higher highs” and "lower lows.” Most places in the world pay more than $5 per gallon of gasoline at the pump. The ultimate problem is, what will we use to first supplement, and then replace oil? Will it be oil shale or oil sands, ethanol, solar, wind, hydrogen, or some of each? Next week I will attempt to explain why none of these options alone will be a simple answer, and why the phrase “The Long Emergency” is a good descriptor of the global energy situation.
For more info: “Hubbert’s Peak” by Richard Deffeyes; “Twilight in the Desert” by Matthew Simmons; “The Long Emergency,” by James Kunstler; or just google “peak oil.”