Topical thread April 16, 2010 Oil and demand/supply
Lifted from an e-mail by Stormy. Another topical thread.
U.S. military….massive oil shortage.
I have not tracked down the original report….but there has been growing concern from a number of unusual quarters. (I discount the Oil Drum, Matt Simon, et al.)
With gas usage in the states at low levels and with oil prices continuing to rise….something is amiss and out of place. This could well be the next shoe to drop.
Just a heads up. Something to watch.
Dear, Luddites. Good news.
There is so much energy available in the US that the sooner the Arabian oil runs out, the better
There is a difference between oil production from oil fields and oil refining. We have pretty much known we are on the down side of oil production; however with oil refining, there is still capacity. The picture in the article shows a refinery as opposed to an oil field. Two different cartels.
Good point.
Since when did Joint Forces Command in Tidewaters (backwaters) get the job of making up fearful estimates to scare the militarist and find cause for more pillaging of US resources from better uses and improving the lot of the common Merikan?
Coal, natural gas, geothermal, wind, hydro, solar, methane, did I say nuclear…..
Oil is so passe.
Peak oil was achieved somewhere between the Chinese finding the automobile and $140 a bbl in 2007.
The weak dollar will cause US to need to stop importing oil, and that will allow the US to stop wasting its resources to keep the Persian Gulf militrarized with US troops.
Good point the US imports more refined product, petrel based fuels and lubricants now than ever, and has no new refining capacity coming on line. So, the militarists now need to defend Greek refineries as well as Saudi princes as an excuse to plunder the US.
Or else we are getting smart and going off gasoline and diesel so do not need to endanger the environment with huge polluting refineries.
It might help if you looked at the source reports concerned.
The Guardian (UK) article is referring to the U.S. Joint Command’s 2010 JOE report.
http://www.jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf
The JOE report energy discussion begins on page 24 of the report (pdf page 26), ending on page 29. Note the two graphics on page 25.
If you want to challenge or complement the source of the energy data outlook compiled in the JC 2010 JOE report, trying directing your attention to the IEA and its 2009 WEO report as that is the source of the data; some data in creating a chart was also from OECD. You will find the public access IEA WEO summary here:
IEA home page (leads with the 2009 WEO report)
http://www.worldenergyoutlook.org/
World Energy Outlook 2009 Edition – Table of Contents
(the table of contents is 27 pages long)
http://www.iea.org/textbase/nptoc/WEO2009TOC.pdf
Key Facts
http://www.worldenergyoutlook.org/docs/weo2009/fact_sheets_WEO_2009.pdf
Report Slide Show – Presentation to the media
(IEA’s walk and talk speech slide show; 23 slides)
http://www.iea.org/speech/2009/Tanaka/WEO2009_Press_Conference.pdf
Be prepated to hand over Euro 120 for the pdf and Euro 150 for the hardcopy of the 696 page WEO report from IEA if you want your own copy.
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reports from just this week:
Alaska Predicts Higher Oil Price But Lower Output (Reuters) – But fiscal 2010 production will be 6.9 percent lower than that achieved in the previous fiscal year, averaging 650,000 barrels per day, according to the forecast. Production in fiscal 2011 will drop another 4.8 percent to 619,000 barrels per day, according to the forecast.North Slope oil production peaked in 1988 at slightly over 2 million barrels per day. The main North Slope fields, Prudhoe Bay and Kuparuk, are the two largest in the nation, but they are mature and producing far less than they did two decades ago.
One Of The World’s Biggest Oil Producers Is Going Bust – Most Americans don’t realize it, but Mexico is a major player in global oil production. According to the Energy Information Agency, it was the seventh largest oil-producing country in 2008. Mexico is the U.S.’s second-largest source of imported oil, behind Canada. Now, Mexican oil officials have a problem… one the entire world has: There are no easy barrels left. You see, in the oil business, there are “easy barrels,” like the kind discovered in Mexico, Texas, and Saudi Arabia decades ago. There are also “hard barrels,” like the kind locked inside oil sands. They require enormous amounts of digging and processing in order to become the “light, sweet” crude that we turn into gasoline.
…to simplify, the “easy oil” such as we were extracting in the 30s, cost about 1 energy input for each 90 energy outputs…most new oil today, such as deep ocean well drilling, cost us 1/3 of the expected output in energy inputs, and that ratio is rising…that is complicated by the fact that some of the largest unconventional sources of oil, such as the alberta tar sands or the bakken shale, for example, take large quantities of fresh water to extract, which is left polluted after the fact; the tar sands are an environmental disaster and if bakken is to be viable, water will need to to trucked from the missouri river system
here’s a DOE report: http://www.eia.doe.gov/conference/2009/session3/Sweetnam.pdf
see page 8 for “unidenified” oil yet to be found…
A little context: In 1950, A guy named M King Hubbert successfully predicted the peak in US oil production around 1970. Since he proved to be right, predictions about peak oil mostly use his methodology. Unfortunately, it is difficult to apply in practice because it depends on accurate knowledge of reserves and future demand — both of which are more difficult for the world as a whole than the US.
If you want a shorter reading list than MG’s, try the Wikipedia article on Peak Oil — which is pretty good:
http://en.wikipedia.org/wiki/Peak_oil
Everybody agrees that there isn’t an infinite supply of oil. Projections of peak oil vary from — we’re already there (unlikely unless you live at http://www.theoildrum.com) and 213 mbpd in 2037 which is something like 2.5 times current production. The EIA and USGS estimates — which are generally considered to be optimistic, have likely peak oil production in the 2030s at 130-180 mbpd — that’s about twice current levels. They may not be right, but they are easy to understand and well documented. http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2004/worldoilsupply/oilsupply04.html
Trouble is that peak production isn’t necessarily the same as peak demand and the two are interrelated. There is certainly a a good deal of high cost oil that will not be drilled until demand pushes prices to levels that are much higher than we are used to. Because there is a lag of a number of years between demand pushing prices up and new drilling bringing oil to market, there are likely to be periods of of shortage
To make a long story short, the military’s concern is quite likely valid. The cost of operating their mostly oil driven, and not very fuel efficient (Nuclear powered naval vessels excepted) toys is likely to go up, and the diesel to make them run may not always be available when and where it is “needed”.
Since I happen to think that the US military is two or three times as big as is necessary and has mostly proved to be a vehicle for exercising gross stupidity and irresponsibility on a national level, I don’t much care if it runs out of oil. But if there is no oil for the tanks and APCs, there is also going to be no gasoline at home for the daily commute and those who heat with fuel oil. And the plastics that most everything is made of are going to be scarce and the economy is going to be sick.
My belief. Jimmie Carter laid out a road map for us in 1977. We chose not to listen to him. We’re going to wish we had.
My suggestion. You have a few years. If you heat with fuel oil, switch to natural gas if you possibly can. (Not cheap BTW, it cost us $10000 to convert a rather small house). Make sure that you have at least one fuel efficient vehicle for commuting. If you have a power boat, maybe you’d like to consider downsizing or buying a sailboat. If you need to tow a trailer, consider not using your tow vehicle as your daily driver after 2015 or 2020. And don’t expect to see many cheap air fares after 2020 unless Boeing starts building coal powered aircraft.
***There is so much energy available in the US that the sooner the Arabian oil runs out, the better***
No offense, but that’s really dead wrong. Yes there is a lot of energy available in the US. Not as much as you seem to think, but a lot. Trouble is that we have a huge infrastructure that is based on cheap liquid hydrocarbons. It took us a century to build that infrastructure and we are not going to easily switch away from it in five or ten years … especially since we aren’t yet trying very hard. We need for the Persian Gulf to keep pumping oil — and lots of it — for many decades.
An additional problem is that liquid hydrocarbons are a compact, portable, and relatively safe fuel for transportation. The US uses about 13 million barrels of oil a day for transportation. (Another 5 million is used for home heating and industrial applications). If 5% of the world’s population uses 13mbpd just to move stuff and people around, how much will the world need when all the countries are developed? The answer is “every drop that can be pumped and then some”.
***The weak dollar will cause US to need to stop importing oil,***
Now there’s a fantasy for you. Almost certainly, the US will keep right on importing oil and thereby further weaken the dollar. You have to remember that we Americans are not very bright.
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You don’t see many coal, wood, solar, wind, or nuclear powered cars, trucks, or aircraft. There are good engineering reasons for that. The only real substitute is Compressed Natural Gas and that only works well in some applications.
“Projections of peak oil vary from — we’re already there (unlikely unless you live at http://www.theoildrum.com)”
Not everybody at http://www.theoildrum.com thinks oil has already peaked, but those who do have a much better case than you guys seem to think, and most views on that site have been a lot more realistic than the experts that, say, the NYTimes is always quoting. Anyway, oil is a real problem; thanks for discussing it.
VT,
250 years of total US consumption in coal alone.
For the cost of an aircraft carrier you can build coal gasification plants.
Natural gas.
Fuel cells. You could probably set up infrastructure to do fuel cells using the money wasted on the hugely expensive, useless, unreliable, don’t work F-35.
Think about how much more quickly new infrastructure comes on line these days………
I do not think you are a Luddite.
MG,
As usual you make the fact available.
I suppose the guys up in Def. Energy Supply have a view as well.
“The cost of operating their (US DoD) mostly oil driven, and not very fuel efficient (Nuclear powered naval vessels excepted) toys is likely to go up, and the diesel to make them run may not always be available when and where it is “needed”.”
The answer is to disavow militarism. Find some new form of corporate welfare to plunder the US.
How much of the wasted militarism 7% of GDP is just burning fossil fuels for nothing more than making smoke, noise and poking holes through the sky, sea or deserts?
Almost the entirety of it.
By the way as a logistician I used to know that the “bill” to refuel a nuke aircraft carrier was around $2.5B and took that hugely expensive floating crap game away from the kids’ play for 2 to 3 years and there are no holes in the ground to hide the hundreds of thousands of cubic meters of low grade nuke waste. The teabaggers in Nv don’t want it in their desert mountain.
One more reason to find another way to waste the US resources so that the common man’s lot is unchanged beside militarism.
Also an excuse for the historians to use as to why 7% of the US GDP resulted in losing to cavemen.
The problem with coal is that it is a very dirty fuel both in terms of contaminants and Carbon. Coal releases 9.5kg of Carbon per 100Kbtu vs 5.3kg per 100Kbtu for natural gas. And it also releases a lot of heavy metals, radioactives, etc. “Clean Coal” is fine in concept, but it pretty much doesn’t exist in reality.
I think that a sensible energy strategy — like that’s going to happen in the US — would be to burn natural gas now and try to cut coal usage to use as an industrial feedstock — while trying to switch away from oil as a feedstock. In the meantime, we should be researching how to burn coal cleanly … especially since the US has a quarter of the world’s known coal reserves.
Trouble is that doing something sensible would impact the coal mining industry for a number of decades and raise the price of electricty. That clearly is interfering with the Free Market and God’s Will. (Where in the bible does God tell us to go forth and do the stupidiest possible thing? Based on our history, I assume that it must be there somewhere.)
***Think about how much more quickly new infrastructure comes on line these days………***
Ehrr … No. It takes maybe 10-12 years to upgrade 90% of the personal auto fleet. But we don’t even really have the vehicles that we need to upgrade to available yet and won’t for a number of years. Even the Volt, Prius, Leaf are less than ideal and two of those aren’t quite available yet. Upgrading planes, trains, power plants, etc will take even longer.
***By the way as a logistician I used to know that the “bill” to refuel a nuke aircraft carrier was around $2.5B and took that hugely expensive floating crap game away from the kids’ play for 2 to 3 years***
Surely 2.5 billion is the whole cost of the trip to the yards, not just the refueling. My understanding is that the these periodic trips to the yards involve upgrading the ship’s sysems from stem to stern and are lengthy and expensive whether the ship is nuclear powered or not. Wikipedia puts the RCOH (Refuel Complex Overhall) for the Theodore Roosevelt started in 2009 at 2.4 billion.
ilism:
Not quite what I meant. The US has plenty of Refining Capacity.
I posted on this somewhere around Angry Bear before. Here are a few stats concerning Refining Capacity. Remember Refining is a process industry and 80% of capacity does not necessarily mean full capacity as it might in manufacturing. Refining Capacity 1948 – 2008 http://www.eia.doe.gov/emeu/aer/txt/ptb0509.html. and recent 2010 Refining Capacity? http://tonto.eia.doe.gov/dnav/pet/pet_pnp_unc_dcu_nus_m.htm ~80% It doesn’t appear as if there is any problem with Oil Refining Capacity in the near term. Even a refinery fire or two should not result in price increases due to a loss of Refining. Oil refining has been as high as 98% in the US as shown in the historical chart.
What about oil supply in the near term? Scroll down to US Crude Oil Stock “Stock (Million Barrels” here http://tonto.eia.doe.gov/oog/info/twip/twip.asp “This Week In Pretroleum.” The red line is a trend line of supply on expected demand and past demand (assumption being made here) as opposed to inventory. It might be how I may plan manufacturing to ensure adequate inventory to meet demand. As you can seen Oil Supply has exceeded the Average Range since May 2009 and is expected to exceed demand into the near term or 30 days out. The Average Range would be the optimal range to meet demand, insure profitability, and protect against supply problems. I would expect Americans slowing down, driving less frequently, and planning trips has contributed greatly to the increased oil supply even with their driving dinosaurs and the “big behemoth” to which they have grown accustom. While “cash for clunkers’ has an impact, our habits are still the driving (no pun intended) factor here.
Here are the top oil importers to the US? http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html “Be Kind to Canadians” Not only do they make great beer and have good fishing, they also are #2 in the world for oil supply.
So what is the force for increased prices at the gas pump? I think the Enron Energy loopholes were closed 2009 September. Perhaps a weakening dollar? The giant China awakes? Anticpation of Summer Driving – peak time for consumption? Transportation? If you look here http://www.api.org/aboutoilgas/gasoline/upload/PumpPriceUpdate.pdf, it is definitely a crude oil led price increase.
And where does lithium come from ? Not exactly places that are friendly to US corporations.
Yes, there is no energy source like the oil we accessed in the 20th C. for ease of use. Nothing else comes close. I have some hopes for battery power, connected to a grid powered by a variety of sources as an eventual replacement. But, you’re right. We need to get on it.
Methinks the DoD has long been engaged in writing such reports. They do economic reports which worry that the Great Recession could raise threats against US interests. They do reports that find that global economic output would return to X% of the pre-war within a decade, unless a disproportianate number of lawyers survive the war.
The thing that leads us to know that the DoD has a view of oil markets is not that the DoD has a view of oil markets, but that somebody chooses to tell us that the DoD has a view. We can take it as given that the DoD has a view about commodity markets, demographics, technological change and its dissemination, weather, meteors, alien mind probes – add to the list as you will. Odds are, you’ll be close to the mark.
What we need to do to assess heuristic value of knowing what the DoD has concluded on any given subject is the DoD’s record on that subject.
Toyota’s Bill Reinert on Peak Oil – “Everything you know is wrong” Reinert expects gasoline demand destruction to hit at about $6/gallon. At $3.50/gallon behavior begins to change, and even more so at $4.20/gallon. When the price of gas went up in 2008 Prius sales increased as much as SUV sales declined and then when it went back down, SUV sales increased even more. He said we are at or near “peak oil,” and that it will hit the second half of this decade. At Toyota they don’t discuss peak oil, they discuss peak liquid fuels. A half barrel of oil goes towards the production of gasoline. He explained why corn ethanol is a political game and not a rational choice because the amount of gasoline it offsets after inputs is minimal. He does think bioplastics make more sense since they offset another part of oil use. He has some hope for algae.
Demand for oil to outstrip supply within two years – RISING oil prices pose a grave threat to global economic recovery, according to some experts. The fear has been expressed by the US military and by the automobile industry. This week in Perth, Volvo’s head of product planning, Lex Kerssemakers, said “we all know that oil is running out”. “We need to find alternative solutions and though we are aware of the alternatives…