Not Running Out Yet
Somehow it is really a hard concept: Shortages don't imply we're running out of oil. It only means demand is exceeding supply.
The most conservative estimates suggest the world has about 1 trillion barrels of conventional oil left that is economically extractable. That doesn't necessarily imply how much it costs, or environmental costs, only (ideally) a positive energy balance.
Current world useage of oil, about 84 million barrels/day imply this 1 trillion barrels could last about 32 years - until 2037.
There's lots of variables on such a simple prediction. How much will world demand go up in the coming decade? How much could higher prices reduce demand? How much will higher prices encourage development of alternative energy sources? How much could a global recessions slow production?
THEN there's more technical and geological limits. How fast can we pump oil from the gound? Can we continue increasing from 84mbbl/day OR are we approaching "peak oil" by physical limits where production may decrease no matter how much money is invested, no matter how high prices go?
The idea of "peak oil" is a useful one, but we should realize there's also limitations before that. Ideal economics says that supply ought to just keep up with demand. That keeps prices on the higher side and encourages more investment for more production. Before "peak oil" occurs or current 2-4% world oil production growth curve must slow. This suggests economic growth can support 4% oil growth per year, and when oil production fails to meet this growth, opportunities are lost and prices rise.
This is perhaps what we're seeing now, at least in part. Demand is being limited by supply, so prices will remain high even when there's still plenty of oil, even if oil production can continue to increase.
Overall I think America should be scared. We use 25% of the world's oil each year and only have 10% of the world's production and our production continues to fall each year. The rest of the world will be competing for the same oil we're competing for, and with our trade deficits, our standard of living MUST eventually fall as our wealth is accumulated by other countries.
If there were easy answers to this, politicians would be debating it. We're in a transition zone "hoping" high prices are temporary, hoping our problems will go away.
We are being tested now - by OPEC and the world. Can the U.S. reduce our demand for oil? Can we use our science and technology to find alternative energy? The test is PASSED if we can reduce our demand WITHOUT a recession. The test is failed if our consumption continues to increase with higher prices, but there's no end-date for this test. Prices will continue to RISE until we pass and reduce our demand.
What are you doing to reduce your demand for oil? What is your community doing?
Poor president Carter was 25 years ahead of his time. Perhaps I'm still 5 years ahead of mine. We can NOT win this race to ever increasing consumption of oil.
When will we learn?
The most conservative estimates suggest the world has about 1 trillion barrels of conventional oil left that is economically extractable. That doesn't necessarily imply how much it costs, or environmental costs, only (ideally) a positive energy balance.
Current world useage of oil, about 84 million barrels/day imply this 1 trillion barrels could last about 32 years - until 2037.
There's lots of variables on such a simple prediction. How much will world demand go up in the coming decade? How much could higher prices reduce demand? How much will higher prices encourage development of alternative energy sources? How much could a global recessions slow production?
THEN there's more technical and geological limits. How fast can we pump oil from the gound? Can we continue increasing from 84mbbl/day OR are we approaching "peak oil" by physical limits where production may decrease no matter how much money is invested, no matter how high prices go?
The idea of "peak oil" is a useful one, but we should realize there's also limitations before that. Ideal economics says that supply ought to just keep up with demand. That keeps prices on the higher side and encourages more investment for more production. Before "peak oil" occurs or current 2-4% world oil production growth curve must slow. This suggests economic growth can support 4% oil growth per year, and when oil production fails to meet this growth, opportunities are lost and prices rise.
This is perhaps what we're seeing now, at least in part. Demand is being limited by supply, so prices will remain high even when there's still plenty of oil, even if oil production can continue to increase.
Overall I think America should be scared. We use 25% of the world's oil each year and only have 10% of the world's production and our production continues to fall each year. The rest of the world will be competing for the same oil we're competing for, and with our trade deficits, our standard of living MUST eventually fall as our wealth is accumulated by other countries.
If there were easy answers to this, politicians would be debating it. We're in a transition zone "hoping" high prices are temporary, hoping our problems will go away.
We are being tested now - by OPEC and the world. Can the U.S. reduce our demand for oil? Can we use our science and technology to find alternative energy? The test is PASSED if we can reduce our demand WITHOUT a recession. The test is failed if our consumption continues to increase with higher prices, but there's no end-date for this test. Prices will continue to RISE until we pass and reduce our demand.
What are you doing to reduce your demand for oil? What is your community doing?
Poor president Carter was 25 years ahead of his time. Perhaps I'm still 5 years ahead of mine. We can NOT win this race to ever increasing consumption of oil.
When will we learn?
posted by Ares Olympus at 1:40 PM
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