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Peak Oil's Threat to Public Health
Excerpts from a presentation at the annual meetings of the American Public Health Association,
By Dan Bednarz, PhD Philadelphia,
December 14, 2005
http://www.energybulletin.net/12158.html
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
The world is near "Peak Oil," the point where half of its recoverable oil has been consumed. Petroleum -and natural gas-- provides fuel for transportation and machines, energy for heat and air conditioning; is used in pesticides and fertilizers, pharmaceuticals and medicines, and is integral to an extensive array of manufactured goods. Oil is the indispensable resource of industrial society.
Absent alternatives to oil our nation's public health system will face threats many thought were eliminated once and for all one hundred years ago when the profession organized itself around germ theory and gained the upper hand in controlling infectious diseases.
A short review of where we stand is needed. In the 1950s a renowned geologist, M. King Hubbert of Shell Oil, forecast that domestic production of oil would peak and enter irreversible decline around 1970. Although his colleagues thought him eccentric and wrong, he was correct. Currently the Unites States imports 60% of its petroleum. Hubbert later predicted that world production would peak in 2000 -he was off by a few years. Accordingly, last October Kuwait announced that its biggest field, the second largest in the world, had peaked; and recently Kuwait announced that it had "overestimated" its oil total amount of reserves, a common practice in the industry. Presently, oil companies are making record profits yet doing little to explore for oil or to increase their refining capacity. Why? Because Hubbert's calculations indicate that 94% of all the oil in the world has been discovered. Meanwhile, world demand for oil is rising while supply is -at present-- holding steady; this is ominous.
There is little dispute that we have not found scalable energy substitutes for oil and gas since the 1970s when Jimmy Carter talked to the nation about our reliance on fossil fuel; and now the hour probably is past for a "smooth transition."
Space constraints prevent elaboration, but consider the following. The "Hydrogen Economy" sounds catchy yet is unworkable due to unresolved technological issues; plus hydrogen is no more a fuel than is electricity -you need to spend energy to produce hydrogen that carries energy. Some advocate synthetic (liquefying) coal while pooh-poohing the cost to the consumer ($5.00 a gallon gas), the additional pollution and climate change ("global warming") it will generate, and the ecological destructiveness of massive coal extraction. Similarly, wind, solar, biomass, nuclear, and hydroelectric at present can provide only a fraction of the energy we now get from oil and natural gas; moreover, they are reliant, either in construction or maintenance, on oil and gas. As things stand, nothing rivals oil and natural gas for their convertibility, energy density and other features, such as their indispensable role in increasing agricultural yield ("The Green Revolution").
So what does a post-petroleum world look like?
Let's focus on what we know with some certainty. 1) Oil is a resource modern society relies upon. 2) Populations and economies continue to grow as oil production is about to plateau and then decline. 3) We presently have no scalable substitutes for oil. 4) When a vital resource becomes scarce, if no substitute is available, something will have to give, meaning that if society does not make changes, nature will.
An energy crisis would guarantee that a variety of public health threats, direct and indirect, will emerge: mass unemployment, lack of fuel for heating and cooling, critical shortages of fertilizers and pesticides for food production, transportation for agricultural products, to name a few. These will severely burden the public health system, especially since we face threats from SARS, Avian Flu, among other diseases.
There are four logical outcomes of the decline of oil:
Ø No Crisis: Technology and the market will supply a substitute(s) energy sources just in time. Therefore, most free market economists argue that Peak Oil is of no consequence. This scenario is popular among government officials; nonetheless it is as dubious as it is deeply-rooted.
-- Short-term Crisis: Under this scenario there will be a one to two decade severe economic and social transition to new energy sources; this is a virtually unavoidable outcome. As with the previous scenario, there is no assumption here that there are limits to growth, or that the crisis is anything more than a temporary setback.
-- Long-term Crisis: Under this scenario there will be a long-term transition that stabilizes society at a significantly lower level of energy consumption, AKA, a lower standard of living. It will produce shortages and then waves of economic, political and social crises. This is a situation which the vast majority of Americans would find deeply unsettling and disorienting.
-- Social Collapse: In this scenario society as we now know it no longer "makes sense" to people because it simply no longer works, and, therefore, nature (the "Four Horsemen") reduces the human population to sustainable numbers. This outcome is as appalling as it is inevitable if we do not properly solve our energy problems.
What then is the role of public health in our energy crunch? And with gasoline at $2.00 plus a gallon and the cost of utilities dramatically rising, the crunch is beginning. Rather than offer specific advice -which will vary-- let me suggest the following guidelines.
1. Public health must "Brand" itself as worthy of the public's trust. But we must accomplish this through the fruits of our actions, not with slogans on ball point pens.
2. We must define problems and solutions on a local "do-able" level that in turn contribute to the solution of wider complex problems.
3. Finally, we need a nationwide inclusive network of citizens, academics, public health workers and government policy-makers. To quote Ben Franklin, We must all hang together, or, most assuredly, we shall all hang separately.
Dan, formerly at U. Pittsburgh School of Public Health, is now an independent consultant working to establish an Energy and Public Health Caucus and consortium about peak oil among the 37 U.S. university and college Schools of Public Health.
Currently on board - Loma Linda U., Harvard, Columbia U., Ohio State, UNC-Chapel Hill, UNC-Chapel Hill and SUNY-Albany.
(Barely) Winter '06: Buttercups Are in Bloom
By The Associated Press
February 3, 2006
http://www.climateimc.org/?q=node/297
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
Let's put it this way: People played golf this winter in Maine. In shorts.
Buttercups have been blooming in Montana. In Ohio, an ice-free Lake Erie allowed an early start to seasonal ferry service. And the sap started running early in Vermont.
While January plunged much of Europe and Russia into the deep freeze, it was remarkably mild across the United States. Government scientists have not yet calculated whether it ranks as the warmest January on record, but "it's certainly going to be right up there," said Michael Halpert, a meteorologist at the National Oceanic and Atmospheric Administration.
It was the warmest month on record in Oklahoma and South Dakota, and barely missed tying the record for Iowa.
It was the second-warmest in Maine and Milwaukee; third-warmest in Memphis and Detroit; and fourth-warmest in New York City.
Minneapolis and St. Paul had the warmest January in 160 years. Ice sculptures at the St. Paul Winter Carnival melted and broke up nearly as quickly as they were carved, and several big ice-fishing contests in Minnesota were canceled or moved because of thin ice.
For much of the nation, however, Mr. Halpert said, the warm weather is on its way out.
"Probably by next week we will be seeing much colder weather over the eastern half to two-thirds of the country," he said.
The current warmth is caused by the unusual position of the jet stream, the high-altitude river of air that flows west to east across North America. It divides warm air from cold, with colder temperatures to its north and warmer temperatures to its south.
Usually in the winter, it follows a lazy zigzag across the United States and Canada, allowing cold air into the United States, where it dips south, Mr. Halpert said. But for the past month or so, it has flowed east in almost a straight line across the northern part of the country, basically forming a fence that has kept cold air out and allowed in milder air masses from the Pacific Ocean instead.
Additions slipped into Patriot Act
By James Kuhnhenn
Knight Ridder Newspapers
http://seattletimes.nwsource.com/html/politics/2002775079_patriot01.html
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
WASHINGTON - Anthony Spears has been on Arizona's death row for nearly 13 years, convicted of the murder of his girlfriend near Phoenix. He isn't an international terrorist, has no links to al-Qaida and was in prison on Sept. 11, 2001.
But tucked away in the pending renewal of the USA Patriot Act, the nation's controversial law to fight terrorism, is a provision inspired by Spears. Sen. Jon Kyl, R-Ariz., inserted language that could make it harder for state death-row inmates to appeal cases in federal court.
The provision is one of a handful that neither the House nor the Senate has voted on but that Republican lawmakers crafted during closed-door negotiations last year after Democrats had been excluded from the talks.
Another obscure addition, never debated in Congress, would broaden existing laws that prohibit disturbances at any event - such as those involving the president - at which the Secret Service is providing protection. Civil libertarians said it could restrict free-speech rights in the name of security.
The changes illustrate how closed-door negotiations over legislation can inspire lawmakers to slip substantive policy measures into bills with little public notice.
The House has voted for the amended Patriot Act, but the Senate hasn't.
The Secret Service provision, added by Sen. Arlen Specter, R-Pa., would make it a federal crime to trespass or create a disturbance at a "special event of national significance," such as the Super Bowl, even if the president isn't in attendance. Under current law, people who enter security zones set up by the Secret Service to protest the president or others while they're at the event can be arrested and face imprisonment for up to six months.
"It expands the jurisdiction that the Secret Service has over its ability to put in place these exclusion zones," said Timothy Edgar, the policy counsel for national security at the American Civil Liberties Union (ACLU).
Specter and his aides say the language is designed simply to allow the Secret Service to set up a protective perimeter and secure it before the president or another person in its care arrives.
The death-penalty changes would make it easier for states to benefit from faster federal appellate procedures in capital-punishment cases. Under a law that passed in 1996, states that take steps to ensure that poor murder defendants are represented by competent counsel can ask for a fast-track system in which inmates have shorter deadlines to file appeals.
Under current law, federal courts of appeal decide whether states can speed processing capital cases. Kyl's change would give that power to the U.S. attorney general.
Arizona had tried to get Spears' federal appeal dismissed in 2000, claiming it was filed too late. State officials had argued the state was entitled to a faster appeals process because state law guaranteed effective representation for poor defendants who were facing the death penalty.
The 9th U.S. Circuit Court of Appeals ruled in 2002 that Arizona had the safeguards to qualify for faster appeals. But it said the state hadn't supplied Spears with a lawyer in a timely fashion and allowed him to proceed with his case. Spears, now married to the forewoman of the jury that convicted him, is awaiting a decision on his claim of innocence.
The Patriot Act is set to expire Friday. Democrats and a handful of Republicans have blocked renewal of the act because they want to add civil-liberties protections. Because negotiations continue, the House and Senate are expected to extend the current law by a month to six weeks as early as today.
Copyright © 2006 The Seattle Times Company
[In "The End of the Grid" we described how mergers and acquisitions were going to work to harm Americans. The economic and energy issues driving what's happening in America are no different from what's happening in the industrialized capitalist world.
The bottom line is that "the free movement of capital" is in direct conflict with Peak Oil and Gas regarding the movement of money and wealth. Peak Oil will win. Globalization is dead. - MCR]
To Avert Takeover, France Gives Blessing to Merger of Utilities
REUTERS
February 26, 2006
http://www.nytimes.com/2006/02/26/business/26utility.html?_r=1&oref=slogin
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
PARIS, Feb. 25 (Reuters) - The French government on Saturday gave its blessing to a merger of the state-controlled company Gaz de France and the private utility group Suez. The merger would create an all-French gas giant worth more than 72 billion euros, or $85.73 billion, and fend off a looming bid for Suez by Enel of Italy.
France's center-right government, which is promoting "economic patriotism" at a time of increasing globalization, risks angering the European Commission and World Trade Organization because of concerns that its action goes against the spirit of free movement of capital.
The Italian economy minister, Giulio Tremonti, criticized the announcement, saying members of the European Union should stop defending their national companies from foreign takeovers. "We still have time to stop European Union states from building national barriers," he said.
Speaking at his central Paris office in the presence of his finance minister and the chief executives of the two companies, Prime Minister Dominique de Villepin said the merger was important to protect France's energy supplies.
"The independence of our country for energy supplies is of strategic importance for France," Mr. Villepin said. "The merger of Gaz de France and Suez seems the most appropriate solution."
Mr. Villepin said it was up to the companies involved to agree on the terms of the merger. France now owns around 80 percent of Gaz de France and will need to change its laws to allow it to own less than 70 percent.
Suez owns Electrabel, a utility in Belgium. The chief executive of Enel said Wednesday that his company was interested in Electrabel and would not rule out a bid for its parent. Enel had no immediate comment on Saturday.
Mr. Villepin said that the two companies had been discussing a merger for several months and that the idea also had the support of the Belgian government.
"With this merger, we aim to create one of the world's leading energy companies, in particular in the gas sector," he said.
Gaz de France has a market capitalization of 29.3 billion euros, and Suez's market value is 43.1 billion euros. Their combined value of 72.4 billion euros would overshadow Enel's 44 billion euros and surpass E.On of Germany at 65.6 billion euros. It would still be smaller than Électricité de France, the country's largest utility, which is worth 80 billion euros.
Because about 76 percent of Suez's revenues are from outside France, Suez might need to ask the European Union to review its merger plans.
Washington digs in for a 'long war' as Rumsfeld issues global call to arms
Simon Tisdall
Tuesday February 7, 2006
The Guardian
http://www.guardian.co.uk/Columnists/Column/0,,1703990,00.html
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
The Bush administration's re-characterisation of its "global war on terror" as the "long war" will be seen by critics as an admission that the US has started something it cannot finish. But from the Pentagon's perspective, the change reflects a significant upgrading of the "generational" threat posed by worldwide Islamist militancy which it believes to have been seriously underestimated.
The reassessment, contained in the Pentagon's quadrennial defence review presented to Congress yesterday, presages a new US drive to rally international allies for an ongoing conflict unlimited by time and space. That presents a problematic political, financial and military prospect for many European Nato members including Britain, as well as Middle Eastern governments.
According to the review, a "large-scale, potentially long duration, irregular warfare campaign including counter-insurgency and security, stability, transition and reconstruction operations" is necessary and unavoidable. Gone is the talk of swift victories that preceded the 2003 Iraq invasion. This will be a war of attrition, it says, fought on many fronts.
Donald Rumsfeld, the US defence secretary, suggested at the weekend that western democracies must acknowledge they are locked in a life or death struggle comparable to those against fascism and communism. "The enemy have designed and distributed a map where national borders are erased and replaced by a global extremist Islamic empire."
Mr Rumsfeld denied the Iraq invasion had proved a catalyst for terrorist recruiting - but said al-Qaida and its allies wanted to use Iraq as a central front in the longer struggle. "A war has been declared on all of our nations [whose] futures depend on determination and unity," he said. "As during the cold war, the struggle ahead promises to be a long war."
The Pentagon review proposes a series of measures to equip the US and its allies for the long haul, built around a whopping overall 2007 defence budget request of more than $550bn. They include increased numbers of special forces and unmanned spy aircraft or drones, expanded psychological warfare and civil affairs units (for winning "hearts and minds"), and more sea-borne, conventionally armed long-range missiles. Countries such as Iran will note plans for covert teams to "detect, locate and render safe" nuclear, chemical and biological weapons.
Addressing the International Institute for Strategic Studies in London yesterday, Brigadier General Mark Kimmitt, deputy director of US central command covering the Middle East, said winning the "long war" would necessitate increased "security assistance, intelligence-sharing and advice" for allies. "Regional nations must participate and lead the fight," he said.
A revived, enlarged international coalition would enable the US to "re-posture" its Middle East ground forces once stability in Iraq and Afghanistan was achieved, he said. Ground forces that remained would be quickly deployable elsewhere; and their area of operations would grow to include old and new theatres in south-east Asia and east and north Africa.
Just as important, Gen Kimmitt said, was enhancement of the coalition's ability to forge long-term diplomatic and law enforcement networks to counter the "astonishing" use by al-Qaida and its allies of "physical and virtual domains" such as the internet.
'The fundamental forces at play in the long war should not be underestimated," he said. "An extremist ideology seeks to go back to the era of theocratic dictatorship, repression and intolerance" while employing the latest technology to do so. The movement's aim was to end western influence in the Muslim world and overthrow "apostate" Middle Eastern regimes, he said, and it would not hesitate to use WMD.
The "long war" doctrine, formalising President Bush's earlier division of the world into good guys and evil-doers, is likely to prove highly controversial as its wider implications unfold. Washington will be accused of scaremongering and exacerbating the clash of cultures. In the US itself, the human and moral cost of the post-9/11 wars is already under critical scrutiny, from soldiers' families to the former president Jimmy Carter.
Gen Kimmitt admitted the biggest battle could be at home: "It will require strong leadership to continue to make the case to the people that this war is necessary and must be prosecuted for perhaps another generation."
[Although we might disagree with rep. Udall's optimism that there will be enough production increases to meet demand for two more years the rest of what he says is both brilliant and concise. It's looking more and more like we are at Peak now which makes what Tom Udall has to say all the more important. - MCR]
Why Peak Oil Matters to Americans
Source: Tide Pool
Feb 04, 2006
http://www.evworld.com/view.cfm?section=communique&newsid=10915
SYNOPSIS: Congressman Tom Udall editorial on why he and Congressman Roscoe Bartlett formed the Peak Oil Caucus.
In 1970, oil production within the United States peaked -- reached its maximum production rate -- at not much more than 10 million barrels of oil per day. That means since 1970, oil production in this country has been declining, and we now import 58 percent of the oil we use. The sheer scale of the American appetite for petroleum is difficult to grasp: Per capita, each of us consumes about 20 pounds of petroleum products each day.
With demand rising and production that we can control falling, our dependence on imported oil has become an economic, diplomatic and security nightmare. We now send $25 million an hour abroad to pay for foreign oil, and some of that money is diverted to the same jihadi terrorists we are spending additional billions to fight. For these and other reasons, Rep. Roscoe Bartlett (R-Md.) and I founded the Congressional Peak Oil Caucus in October 2005.
A crisis looms if we do not begin preparing for the day when world oil production peaks. And that day is coming, most likely within four to eight years. Peak oil is a fact, not a theory, and the logic is simple. World oil production has been increasing for more than 140 years. But you have to discover oil before you can produce it. Global discoveries peaked 40 years ago, so the production peak will necessarily follow. Oil production in 33 of the 48 largest oil-producing nations in the world has already peaked.
The world now consumes 84 million barrels of oil per day, and it is true that there will be enough oil produced this year and the next to meet global demand. But thereafter, depletion is likely to gain the upper hand as global production flattens and begins to decline.
Peak oil does not mean we are running out of oil. Indeed, at peak, society will recover and refine more oil than ever before. But once oil production begins to decline, prices are likely to rise sharply, with some mainstream experts predicting a doubling or tripling by 2015. What we are running out of is cheap oil -- the $20 per barrel oil around which we have designed our automobiles, our subdivisions, the American way of life. Cheap oil, in conjunction with Yankee ingenuity and the entrepreneurial spirit, has been the wellspring for our current prosperity.
When world oil production peaks at 88 or 90 or 94 million barrels a day, we will move from the era of cheap oil to an era of more expensive oil. An economy based on the availability of oil, as we've known it, will no longer make sense. Looking ahead, we need 10 to 15 years to develop and implement a new energy policy before the shock of peak oil arrives.
Oil provides 40 percent of the world's energy, and some people argue that market forces will make alternative fuels more competitive. This is wishful thinking. None of the currently available alternative sources of liquid fuels is anywhere near ready to replace oil in the volumes we use it today. Happy talk about hydrogen and other mythical elixirs will not save the day. Solar, wind, and biofuels all have significant potential but still represent far less than 10 percent of our current energy portfolio in the United States.
So what do we do? A few years ago, Vice President Cheney said, "Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy." He could not be more wrong. Our future prosperity now depends on a rapid increase in energy conservation. Conserving energy is patriotic; indeed, it's one of the most patriotic things any of us can do.
The storm is gathering. There's a lot of work to do and not much time to do it. We've got to replace 200 million vehicles with far more efficient ones. If we are smart about this, we can rebuild Detroit, now rapidly going broke, in the process. We've got to own up to the fact that transporting goods and people by rail is at least five times more efficient than cars and trucks. Therefore, we must revive and reinvest in our passenger and freight rail systems. We must accelerate our deployment of wind and solar power, while launching a massive, long-term investment in advanced energy research.
President Kennedy challenged the nation to reach the moon in less than a decade, and we did. If we are serious about defending the nation and preserving our prosperity, energy security and energy conservation must be our new watchwords, our new space program.
Rep. Tom Udall, D-N.M., is a senior member of the House Resources Committee. His web site is tomudall.house.gov.
[There are few journos anywhere who can compete with Tom Whipple for clarity and the ability to pick the right stories at the right moment. Over the course of just the last year worldwide depletion rates have skyrocketed everywhere from the North Sea to Norway to Kuwait and now to Mexico. Combining these developments with Ken Deffeyes' pronouncement that actual peak occurred last December 16th gives us a clear picture that the wheels will be starting to come off sooner rather than later. That may be more incentive to go back and read what the Japanese are doing and maybe starting to try that for ourselves. If nothing else it's good training. - MCR]
The Peak Oil Crisis
Cantarell - An Omen?
By Tom Whipple
http://www.fcnp.com/550/peakoil.htm
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
There are a lot of bad things out there waiting to bite as the world moves towards peak oil- Iran, Iraq, Nigeria, Venezuela, China, globalization, and hurricanes to name a few. Last week a new bogeyman arose - super fast oil depletion.
Our story begins 65 million years ago when the Chicxulub meteor (or perhaps comet) crashed into the sea near the Yucatan Peninsula . This was one big bang, for it not only wiped out all our dinosaurs, but also took out 75% of the species living on earth.
As our 10 km wide meteor was tooling along at 60,000 miles per hour when it hit, there was not much left of the meteor but vapor after the impact, but for a few seconds, there was a monster hole in the earth 100 miles in diameter. I won't go into all the terrible things that happened to our earth in the months after the blast, but few living things survived.
Our new hole promptly filled up with rubble (breccia, to geologists) pushed in by the rushing waters of the returning sea and landslides along the sides of the crater. Somewhere, between 65 million years ago and 1976, parts of this underwater rubble filled hole, filled up with about 35 billion barrels of oil. Making it one of the world's greatest oil fields. It is now called Cantarell.
Within a few years of its discovery in 1976, it was producing over a million barrels a day from only 40 wells. Fifteen years later however, the natural gas pressure driving out the oil started to give out and production started dropping. In response, the Mexican Oil Company PEMEX built a large nitrogen separation plant near the field and started injecting 1.2 billion cubic feet of high-pressure nitrogen into Cantarell each day.
The program worked like a dream; a few years later Cantarell was producing 2.1 million barrels per day- making it number two in the world right up there behind the Saudi's great Ghawar field which is producing on the order of 4.4 million barrels a day. This 2 million barrels a day represents about 60% of Mexican oil production and is what allows the country to export 1.82 million barrels a day most of which went to the United States.
Like all good things, massive flows of cheap oil must one day come to an end, so only four years after getting production up to over 2 million barrels a day, PEMEX announced the end was in sight and Cantarell was going into depletion. Last year, they announced the decline had actually started and that 2005 production would be down to 2.0 million barrels a day- 5% lower than in 2004.
There the matter rested. However, as we know in Washington , you simply can't keep a really good secret very long. Last week, somebody leaked the top secret PEMEX Cantarell Depletion study, and guess what? The situation might just well be a whole lot worse than the Mexicans have been letting on.
An energy consultant in Mexico City published parts of the study and later the Wall Street Journal got to examine the document. It seems there is only 825 feet between the gas cap over the oil and the water that is pushing into Cantarell from the bottom. This distance is closing at between 250 and 360 feet per year.
The more pessimistic of the study's scenarios have Cantarell's production dropping from 2 million b/d to 875 thousand barrels a day by the end of next year and 520 thousand barrels a day by the end of 2008.
PEMEX, while refusing to release the study comments the pessimistic scenarios will only happen if they do nothing and they are taking aggressive steps to mitigate the situation.
Outside experts are not so sure. Cantarell is a meteor-crater based field and as such is unlike any other. Extremely high depletion rates are not completely unknown. Production at Oman 's 35 year-old Yibil field peaked in 1997 at 225-250 thousand barrels a day and then declined to 88-95 thousand barrels a day in three years. In the case of Yibil, part of the rapid decline was attributed to the introduction of horizontal and multi-lateral drilling into field that increased the percentage of water being brought to the surface with the oil to a greater extent then anticipated.
If the pessimistic scenarios outlined in the PEMEX study come to pass, it will be very serious. The loss of nearly 1.5 million barrels a day of production capacity within three years will be very difficult to overcome either from other Mexican fields or from new production in other countries. Unlike political stoppages from exporters such as Iran or Nigeria , depletion can't be put right. Mexican exports will be seriously reduced or perhaps even eliminated forever.
Cantarell could turn out to be another case where advanced technology -in this case nitrogen injection- does not ultimately increase the quantity of oil recovered from a field, but simply gets a smaller amount out faster.
In the meantime, oil production from Cantarell bears close watching. An unusually fast decline will be yet another indicator that peak oil is indeed very near at hand.
[Copper is averaging $2.20 per pound so far in 2006, and Merrill Lynch has just raised its forecast price by 21%. Metal prices are flying upward in a feedback loop - Chinese industrial demand pushes prices up, which attracts the attention of speculative finance money, driving prices further up. That makes China want to get the copper while it can, and so on.
This is true for both the base metals and the precious, each with its own energy-related applications. Power lines demand cheap copper. And while fuel cells are useless without massive conservation efforts, they do offer a potent energy savings in the every-little-bit-helps department. But their key ingredient is an electro-catalyst made of platinum, which the science folks are just beginning to learn how to replace. -JAH]
Copper, Zinc, Coal Prices Forecasts Raised by Merrill
http://www.bloomberg.com/apps/news?pid=10000086&sid=aE5COv6. WH7g&refer=latin_america
In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
March 1 (Bloomberg) -- Copper, zinc and thermal coal price forecasts were increased by Merrill Lynch & Co., the world's biggest securities firm by market value, because of increasing demand and investment funds driving prices higher.
Merrill raised its price forecasts for four base metals, including aluminum and nickel, and thermal coal by between 5 percent and 43 percent, analyst Vicky Binns said in a note today. It made its last price revision in December.
Copper, zinc and other metals rose to records this year, bolstered by economic growth in China that fueled demand for autos, homes and appliances. As much as $200 billion of fund money is invested in commodities, with $30 billion in base metals, Citigroup Inc. said in a Jan. 25 report.
``We, like everyone else in the market, have been caught out by the effect of money flowing into the commodity markets and therefore need to upgrade price forecasts,'' said Sydney- based Binns. Investment demand is being backed by rising consumption from developing countries like China, and developed economies in Europe and Japan, she said.
The price of copper, used in pipes and wires, may average $2 a pound in 2006, 21 percent higher than a previous forecast, Merrill said. The metal has averaged $4,856.60 a ton, or $2.20 a pound, this year on the London Metal Exchange.
``Demand has surprised on the upside in key Chinese and Indian markets,'' said Binns. ``This has combined with supply bottleneck at the smelters to switch our small surpluses in 2006 into small deficits.''
Zinc, Thermal Coal
Zinc, used to protect steel from corrosion, may average $1 a pound, 43 percent more than a previous forecast, Merrill said. That compares with the average price of $2154.2 a ton, or 97.7 cents a pound, this year.
The securities firm also raised its forecast for aluminum, used in cars and planes, by 5 percent to $1.05 a pound for 2006. Aluminum has averaged $2,417.50 a ton, or $1.1 a pound this year.
Merrill Lynch also raised its forecasts for annual thermal coal prices to $48 a ton, from $43 a ton, due to rising rates on the spot market. Thermal coal is used to generate electricity.
``We believe the risks are for higher prices, with coal seen as the preferred source of power in Asia and Europe and with cement production picking up in Japan,'' Binns said. ``Supply continues to experience delays, higher costs and unavailability of truck tyres.''
Zinifex Ltd. and Oxiana Ltd. are expected to be the biggest beneficiaries of higher prices, Merrill said.
The brokerage raised its earnings forecast for Zinifex, the world's second-largest zinc producer, for fiscal 2006 by 50 percent to A$743 million ($552 million).
Oxiana, an Australian copper producer, will likely post 2006 profit of A$298 million, 55 percent higher than earlier predicted, Merrill said.
Merrill Lynch also revised its profit estimates for BHP Billiton and Rio Tinto Group, the world's largest and third- largest mining companies. It raised its fiscal 2006 profit forecasts for BHP by 7 percent to $9.9 billion, and for Rio by 8 percent to $6.6 billion.
[This is a big, big story and I wish I could cheer. I really do. Robert Semple, a heavy hitter at the New York Times has told us that the Peak Oil theory is “almost certainly correct”. He does quote many of the right sources like Deffeyes and Simmons and he also quotes – to be expected – the charlatans we have come to “know and love” like Daniel Yergin. Yes, this is an historic milestone. So why am I not cheering?
What Mr. Semple does not tell us is that global oil discoveries peaked in the 1960s. What Mr. Semple does not tell us is that for the last three years not a single 500 million barrel field has been discovered (a 5.5 day supply for planet earth) while at the same time reporting that the Energy Information Administration (EIA), and other entities are saying that in spite of that we’re going to find the three required new Saudi Arabias to keep everything going any minute now. He does not ask why they haven’t been found already even though the whole world has been mapped by petroleum geologists and fields like Ghawar are pretty hard to miss. What Mr. Semple does not mention is current global depletion rates (estimated at 8%) or the fact that 35 producing nations, including 18 of the largest (including Mexico, Britain, Indonesia and Kuwait), have entered permanent and irreversible decline.
In the financial world they have hedge funds to offset losses. In journalism they have “hedge” stories. This is one of them. Peak Oil has gotten so serious that it had to be acknowledged, but not to the point where the errors and omissions of past reporting needed be examined or corrective measures taken. -- MCR]
The End of Oil
By ROBERT B. SEMPLE Jr.
Correction Appended
http://select.nytimes.com/2006/03/01/opinion/01talkingp...=81&headline= The+End+of+Oil&tsType=try&pagewanted=print
When President Bush declared in his 2006 State of the Union address that America must cure its "addiction to oil," he framed his case largely in terms of national security — the need to liberate the country from its dependence on volatile and in some cases hostile nations for much of its energy. He failed to mention two other good reasons to sober up. Both are at least as pressing as national security. One is global warming. This is not an issue Mr. Bush cares much about. Yet there is no longer any doubt among mainstream scientists that the earth is warming up, that increasing atmospheric temperatures have already damaged fragile ecosystems and that our only real defense against even graver consequences is to burn less fossil fuel — which means, among other things, using less oil.
The second reason is just as unsettling, and is only starting to get the attention it deserves. The Age of Oil — 100-plus years of astonishing economic growth made possible by cheap, abundant oil — could be ending without our really being aware of it. Oil is a finite commodity. At some point even the vast reservoirs of Saudi Arabia will run dry. But before that happens there will come a day when oil production "peaks," when demand overtakes supply (and never looks back), resulting in large and possibly catastrophic price increases that could make today's $60-a-barrel oil look like chump change. Unless, of course, we begin to develop substitutes for oil. Or begin to live more abstemiously. Or both. The concept of peak oil has not been widely written about. But people are talking about it now. It deserves a careful look — largely because it is almost certainly correct.
I. Peak Oil
In oil-patch lingo, "peak oil" refers to the point at which a given oil reservoir reaches peak production, after which it yields steadily declining amounts, no matter how many new wells are drilled. As Robert L. Hirsch, an expert on energy issues told Congress last December, the life span of individual oil fields is measured in decades. Peak production typically occurs 10 years or so after discovery, or when the reservoir is about half full. An oil field may have large estimated reserves. But a well-managed field that has reached its peak (as most American fields have) has also reached a point of no return, no matter how much new technology is applied. And what's happening in individual fields will be reflected on a global scale, because world production is by definition the sum of its individual parts.
When will oil peak? At least one maverick geologist says it already has. Others say 10 years from now. A few actually say never. The latest official projections from the Energy Information Administration put the peak at 2037, or 2047 — depending, of course, on how much of the stuff is out there and how fast we intend to use it up. But even that relatively late date does not give us much time to adjust to a world without cheap, abundant oil.
II. Hubbertians vs. Cornucopians
Let's start with the true pessimists, proudly known as Hubbertians after the legendary Shell Oil Company geophysicist, M. King Hubbert. In the 1950's, Mr. Hubbert collected a wealth of historical data on oil discoveries and production, developed some complex mathematical formulas, and produced a bell-shaped curve showing that the rate at which oil could be extracted from wells in the United States would peak around 1970 and then begin to decline. Though perhaps not the most popular guy at Shell headquarters, he turned out to be right. U.S. oil extraction peaked at about 9 million barrels a day in 1970, and is now below 6 million a day. His basic methodology has been used ever since.
Various economists and geologists have applied the Hubbert technique to the world oil supply. Among the more readable and entertaining of Mr. Hubbert's disciples is another Shell alumnus, Kenneth S. Deffeyes, who is now a professor emeritus at Princeton. Mr. Deffeyes holds that nature's original oil bequest amounted to about two trillion barrels, of which nearly half has already been consumed. Armed with Mr. Hubbert's bell curve, and incorporating all sorts of up-to-date data, Mr. Deffeyes concludes with playful certainty that the apocalypse is not only upon us but has in fact occurred. "I nominate Thanksgiving Day, Nov. 24, 2005, as World Oil Peak Day," he says at the outset of his latest Hubbertrelated book, "Beyond Oil: The View From Hubbert's Peak." "There is a reason for selecting Thanksgiving. We can pause and give thanks for the years from 1901 to 2005 when abundant oil and natural gas fueled enormous changes in our society. At the same time, we have to face up to reality: World oil production is going to decline, at first slowly, and then more rapidly."
Other prognosticators — Mr. Deffeyes dismisses them as "cornucopians" — paint a much cheerier picture. The most authoritative of these is not one person but 40 — the number of geologists and physicists the U.S. Geological Survey assigned to carry out the most comprehensive study ever conducted of the oil resources outside the United States. The study was done between 1995 and 2000. When combined with the results of an earlier survey of U.S. resources, it suggested that earth's original oil endowment was 3 trillion barrels, not 2 trillion as supposed by Mr. Hubbert and his followers. It also suggested that the remaining inventory was more than twice Mr. Hubbert's — 2. 3 trillion barrels, consisting (in very round figures) of 900 billion in proven reserves, 700 billion in "reserve growth" (additional barrels that can be retrieved through advanced technology) and 700 billion in "undiscovered" reserves, meaning oil the USGS experts think we can find given what we know about geological formations. These figures, admittedly speculative, are undeniably more upbeat than anything the Hubbertians have to offer (Mr. Deffeyes, for instance, puts the "undiscovered reserves" figure at 100 billion barrels, max). And, of course, these rosier official calculations yield a much later oil peak — 2037, assuming a steady annual increase of 2 percent in worldwide demand, and maybe later, if another mammoth oilfield kicks in somewhere on earth. No reason yet to abandon the family S.U.V.
III. Consequences
Or is there? Think about it: the year 2037 is a mere half-generation away. Despite their differences, neither Mr. Hubbert's disciples nor the optimists showed the least interest in doing a straight-line calculation to figure out when earth will yield its last drop of oil (a calculation easily done, by the way — dividing USGS's 2.3 trillion by today's average annual consumption of 30-plus billion gives us about 80 years until the fat lady sings). But that's not the important date. The important date is the point at which demand zips past supply.
In the past several years, the gap between demand and supply, once considerable, has steadily narrowed, and today is almost in balance. Oil at $60 a barrel oil may be one manifestation. Another is the worried looks on the faces of people who fret about national security. In early 2005, for instance, the National Commission on Energy Policy and another group called Securing America's Future Energy (SAFE) convened a bunch of Washington heavyweights at a symposium called, alarmingly, Oil ShockWave, and asked them to imagine what it would take to drive oil prices into the stratosphere and send shockwaves reverberating through America and the rest of the western world.
It wouldn't take much — a terrorist attack on Alaska's Port of Valdez would reduce global oil supply by 900,000 barrels a day; unrest in Nigeria, 600,000 barrels; an attack on Saudi Arabia processing facilities at Haradh, 250,000. Throw in an unseasonable cold snap across the Northern Hemisphere, boosting demand by 800,000 barrels, and before long you're staring at a net shortfall of almost 3 million barrels, or about 4 per cent of normal daily supply. This, in turn, is enough to drive oil prices from about $60 to $161 a barrel. The cost of fuel at the pump — indeed, the cost of most petrochemical-based products — rises dramatically. The U.S. economy slides into recession. Millions are thrown out of work. More broadly, the quintessentially American lifestyle — two-car suburban families commuting endlessly to office, school and mall — suddenly becomes unsustainable. But what the peak oil experts are saying is that we don't need terrorists to make this happen. Essentially the same scenario is unfolding now, right before our eyes, without benefit of bombings or cold snaps, simply through the normal laws of supply and demand.
The 2005 International Energy Outlook from the government's Energy Information Administration is instructive on this point. Over the next two decades, global oil consumption is expected to increase by more than half, from about 84 million barrels per day now to nearly 119 million barrels by 2025. U.S. consumption alone is expected to jump from 20 million to 30 millions barrels a day, one fourth the world's total. But the thirstiest consumers of all will be the emerging giants of Asia, particularly China, which is expected to quadruple the number of cars on its roads in the next 20 years and whose oil needs are expected to grow by a minimum of 3.5 per cent every year, well above the worldwide norm. Can supply keep pace? Put differently: Can Saudi Arabia bail us out?
IV. The Mysterious Saudis
Conservative projections and simple arithmetic tell us that the world will need at least 35 million more barrels a day in 2025 than it needs now. The Energy Information Administration is cautiously optimistic that those barrels can be found. It foresees steady production increases in the old Soviet Union, Africa and the Caribbean. It hopes that Iraq's oil industry will survive the war and return to its old self. It does not even mention the possibility of blackmail by Iran. And it sees no reason why Saudi Arabia — the elephant in the oil patch, the country whose 260-plus billion barrels in proven reserves is one-quarter of the world's total, twice Iran's and ten times the U.S.'s — shouldn't be able to keep the oil flowing our way. Forecasters at the E.I.A. and elsewhere assume that the Saudis will be able to make a contribution commensurate with the overall 50 percent rise in production the world will need to produce those extra 35 million barrels, jacking up output from 10.5 million barrels a day now to 12.5 in 2009 to 15 million after that. But there are some people who seriously doubt whether Saudi Arabia can turn on the spigot as it's always done before.
Matthew Simmons is one of them. Indeed, Mr. Simmons is not sure that Saudi Arabia can do much of anything. Mr. Simmons is a Texas businessman and oil expert who runs a consulting firm in Texas, making good money advising energy companies. Like Mr. Deffeyes, he is seen as a maverick. His other trademark is pessimism — a pessimism nourished, he told Peter Maass of the New York Times Sunday Magazine, by months of poking around in obscure data about Saudi oil fields that left him with deep doubts about Saudi Arabia's ability to deliver the oil the world will ultimately need. His studies of Saudi Arabia's huge Ghawar field, which has produced an astonishing 55 billion barrels in the last halfcentury, left him particularly wide-eyed. "Twilight at Ghawar is fast approaching, " he says in a new book, "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy." "Saudi Arabia clearly seems to be nearing or at its peak output." Or as he told Mr. Maass: "The odds of the Saudis sustaining [even] 12.5 million barrels a day is very low. The odds of them getting to 15 million for 50 years — there's a better chance of me having Bill Gates's net worth."
Publicly, Saudi officials and many American experts scoff at Mr. Simmons the way official Washington scoffs at Mr. Deffeyes. Other industry consultants, including the much-admired author Daniel Yergin, believe that Mr. Simmons and Mr. Deffeyes and "peakists" in general are being much too gloomy. " This is not the first time the world has run out of oil," Mr. Yergin wrote last year. "It's more like the fifth. Cycles of shortage and surplus characterize the entire history of the oil industry." Privately, however, a few well-placed Saudis share Simmons's doubts, and for one obvious reason: Hitting the Energy Information Administration's targets will require the Saudis to extract increasing amounts of oil from fields that may already be past their prime.
V. What Now?
There are many economists who believe that a nasty oil-price shock might not be such a bad thing, just as a big fat increase in gas taxes might not be such a bad thing. Sharply higher price increases might force us to conserve in ways we never have before, and lead also to a public outcry for fuel-efficient cars that neither Detroit nor the Japanese have been willing to build on a large scale. Higher prices for conventional oil could also make other sources of energy more attractive, including unconventional forms of oil. These include the heavy oil lodged in the Canadian tar sands, where there are thought to be many billions of barrels and where companies like Exxon are poking around. There are also the billions of barrels of unconventional oil trapped in shale formations out West. In the 1970's, during Jimmy Carter's synthetic fuels craze, a lot of people lost their shirts on shale oil, which needs to be heated and basically boiled out of the rock. Getting at tar and shale oil require heavy, energy-intensive mining operations. And despite the serious bets being placed on the tar sands, unconventional oil won't be available in large enough quantities to make a real difference until well down the road. The same can be said of the hydrogen power President Bush has been touting ever since he came to office; the National Academy of Sciences says we won't see affordable hydrogen-powered cars in meaningful numbers for 30 years, if that. This does not mean that we shouldn't keep trying — future generations will not forgive us if we don't. What it does mean is that we need to look quickly for near and medium-term solutions that can help us cushion the shock when we hit the peak, assuming we haven't hit it already.
There is no shortage of ideas about what to do to reduce the demand for oil. In the last two years, there have been three major reports remarkable for their clarity and for their convergence on near-term strategies — from the Energy Future Coalition, consisting of officials from the Clinton and first Bush administrations; from the Rocky Mountain Institute in Aspen, which concerns itself with energy efficiency; and from the above-mentioned National Commission on Energy Policy, a collection of experts from academia, business and labor. All three groups call for much stronger fuel economy standards, beginning very soon. All three call for major tax subsidies and loan guarantees to help the carmakers develop and market these more efficient cars on a massive scale without going bankrupt. And all three call for an aggressive program to develop gasoline substitutes from starch and sugars, known loosely as cellulosic fuels. These strategies would not only help reduce oil dependency but, in the bargain, greatly reduce greenhouse gas emissions, 40 percent of which come from vehicles. They would not threaten economic growth, especially if Washington stood ready to ease Detroit's transition from the S.U.V.'s and light trucks they depend on for their profits (such as they are) to a new generation of cars and trucks. And they are not pie-in-the sky. Off-the-shelf technology can boost our average fuel economy from 26 to 45 miles a gallon in a decade. Brazil already has its cars running on cellulosic fuels. What these groups are talking about — and what distinguishes them from the administration's rather more passive approach — is not more research but getting good ideas into commercial production in a hurry. This is going to take serious investment. It will also take real leadership, which may be the biggest missing ingredient of all.
A couple of years ago, David Goodstein, vice provost of the California Institute of Technology, published a slim, intelligent, and spry little book called "Out of Gas: The End of the Age of Oil." A Hubbertian at heart, he nevertheless thinks we have time to avoid the worst, but only if we stop deluding ourselves. He also knows, though, that human nature does not easily leap to a challenge that seems always to be receding, and for that reason he does not think that we will really act until the wave crashes down upon us. "Our present national and international leadership is reluctant even to acknowledge that there is a problem," he writes. "The crisis will occur, and it will be painful. The best we can realistically hope for is that when it happens, it will serve as a wakeup call, and will not so badly undermine our strength that we are unable to take the giant steps that are needed."
Correction
An earlier version of this article misstated some numbers in estimates of world's oil reserves. The figures from the U.S. Geological Survey are 900 billion in proven reserves, 700 billion in "reserve growth" and 700 billion in "undiscovered" reserves, not trillions. Kenneth S. Deffeyes's estimate of undiscovered reserves is 100 billion barrels. The estimated shortfall that could be caused by unrest and terror attacks is 3 million barrels per day.
Lela Moore contributed research for this article.
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