But since we just hit $80 per barrel $150 is less than a doubling. What, me worry?
Lord Oxburgh, the former chairman of Shell, has issued a stark warning that the price of oil could hit $150 per barrel, with oil production peaking within the next 20 years.
He accused the industry of having its head "in the sand" about the depletion of supplies, and warned: "We may be sleepwalking into a problem which is actually going to be very serious and it may be too late to do anything about it by the time we are fully aware."
Oxburgh argues that it isn't so much that we are running out of oil but that we are running out of oil that is cheap to extract. But we really are running out of oil too. Though new enhanced extraction methods such as toe to heel air injection (THAI) for heavy oil might delay the point of peak oil production.
As far as being too late to do anything about it: Well, the start-ups that are developing next generation batteries are doing the most to prepare us for declining oil production. Once we can shift most transportation energy usage to electric cars and electric trains declining oil production won't put an end to our mobile lifestyles.
The world will produce 118 million barrels of oil a day, up from its current 85 million barrels per day, just to satisfy projected demand by 2030, according to the Energy Information Agency.
"That's never going to happen," said Richard Heinberg, a research fellow at the Post Carbon Institute and author of three books on peak oil.
Heinberg says world production of regular crude oil actually peaked in May 2005. He also says production in 33 of the 48 largest oil producing countries is in decline, and that global oil discoveries peaked in 1964.
The people who see Peak Oil as happening in the next 10 years might be right. Suppose for the moment they are. Does that mean we will see $150 per barrel oil or even $200 or $300 per barrel? I have a hard time believing the higher price predictions because substitutes will become cost competitive below those higher prices and also because there are limits on how much people can afford to spend on oil.
The longer we go before world oil production peaks the easier the peak will be to handle. With time we'll get more technologies for producing and storing and using non-oil energy. We'll also gain technologies for using energy much more efficiently. So I'm not a doomster about Peak Oil even though I find the arguments for an earlier peak to be plausible.
If we hit an earlier peak (e.g. if it is happening right now) the economic cost will be substantial since we won't have as much technology to deal with it as we will if the peak comes 10 or 20 years from now. A peak in the next few years would cause a pretty sharp recession and require a lot of investment in more efficient vehicles and capital plant. But for the United States our profligate usage of gasoline actually makes adjustment easier. We could switch from bigger conventional cars to compact hybrid diesels and double or triple our miles per gallon. Countries whose populaces already drive compact diesels (e.g. about half of European car sales today are diesel) can't adjust as easily since they already are being relatively frugal in their oil usage.
By Randall Parker at 2007 September 16 07:43 PM Energy Fossil Fuels | TrackBackSure, they have less usage, but prices are also inflated due to taxes. All the government would have to do is scale back the tax.
Huh? I don't think so...
The alternative view:
Plus australian fusion and Boussard-style fusors are on the horizon.
So none of this is a crisis.
I believe that currently, most of the fertilizers are being derived from oil. Someone from this discussion group said a few days ago that coal can be used to make fertilizers, but this will almost certainly require a lot of energy to make the conversion of coal into fertilizer. Thus unless we start building nuclear reactors in large numbers as soon as possible, even worldwide famine is possible in the near future, especially in poorer countries.
But seriously, for the United States, only 200 new 1000 Megawatt nuclear reactors would be enough to charge 300 million pure electric cars every day. Since the cost of a 1 Megawatt reactor is approximately $1.5 billion, with only 2/3 of the money we have already lost in Iraq, we can actually build these 200 reactors.
I meant to write that the cost of a 1000 Megawatt reactor is approximately $1.5 billion.
Long-term oil production is almost certainly practically unlimited if low quality shale and tar-sand become economical, but for that to happen prices must stay at or around the current price for long enough to motivate companies to invest (for some reason they don't invest and hedge their risk with futures). Since investments take some time to pay off, there seems to me to be definite risk of a short term peak way above $200/barrel, specifically, at whatever price is necessary to prevent increased Chinese expenditure. My best guess is that eventually China liquifies coal to protect their economy from oil price volatility and once they stop bidding up the price the price stops rising.
Barron's had an interview this weekend with oil expert Mike Rothman. He's predicting oil at $45/barrel within a couple years. I think he's correct. Furthermore, peak oil has been predicted for literally generations, and there's no reason to think it's correct now. Oil is still below its inflation-adjusted 1980 price.
Here's a link to the Rothman interview. It's a blog post, as Barron's is subscription only. http://www.bloggingstocks.com/2007/09/17/oil-due-for-a-big-drop/
No doubt $140 of that will be gubmint taxes.
A temporary decline in the price of oil to $45 per barrel, would be in the interest of the oil companies because this would strangle the investments in alternative energy, as well as in electric cars.
But the long term trend will be a high price for oil, and the temporary declines will hurt the alternative energy people. But on the other hand, given that the CO_2 output will continue to increase, we will probably have such terrible hurricanes and tornadoes that even air travel might become dangerous, not to mention the desertification of the world. Then maybe alternative energy might win out.
I want Oil to rise to $150 in 7 years, or $10/year from where we are now.
Why?
That is slow enough to adjust without recession. But Oil getting that high will cause a lot of innovation that reduces Oil consumption permanently.
Plus, Oil producting dictatorships will make more money in the short term, but will be burning the candle at both ends. Once the US and others adapt to alternatives since $150 Oil is not the best choice, then Iran, Saudi Arabia, Venezuela, Russia, Nigeria, etc. will all be in trouble - selling something not too many people need to buy anymore.
So, that is what I want to happen.
Plus australian fusion and Boussard-style fusors are on the horizon.
It's spelled 'Bussard', and they are not on the horizon, unless you mean they're receding into the distance. Bussard's concept appears to have insuperable fundamental physical problems. Basically, the ions (in a H-11B reactor) lose energy to electrons too fast, and his scheme does not escape this no-go result.
Mr. Deitz -- I haven't seen this result anywhere. Bremsstrahlung radiation losses occur as a result of electron/nucleus collisions, something the polywell design is supposed to prevent. Bussard claims his problem was recirculation of electrons back into the core because of an obvious but clearly unexpected cusp at the meeting points of the magnets. He also claims that bremsstrahlung losses should be something like .082 rather than the 1.2 projected by Todd Rider. I wouldn't want to place my energy future on his Polywell contraption — which has yet to be demonstrated, but is rumored to be getting another round of funding — but I sure wouldn't want to see it go untried, either.
Rothman is insane. He has no idea where that oil is coming from, and with production heading down almost everywhere except Russia and the Caspian Sea area, it's only going up. I recall there was a Bernstein analyst who came out saying that oil was headed to the $45/bbl. range, and when pressed explained that he was thinking about the post-hybrid-cars future.
Bremsstrahlung radiation losses occur as a result of electron/nucleus collisions, something the polywell design is supposed to prevent.
It cannot prevent electron-ion interactions. Let me run you through the argument to illustrate the two horns of the dilemma.
Polywell has a putative central interaction region where the ions are energetic and are to undergo nuclear reactions. This interaction region CANNOT exclude electrons. If it did (assuming it even could), the space charge of the ions would limit the ion density to a low value, preventing anywhere close to practical (let alone the promised 100 MW!) power levels.
So, there are electrons in this region. There are two possibilities: the electrons have energies approaching those of the ions ('hot' electrons) or the electrons are significantly less energetic ('cold' electrons).
In the first case, bremsstrahlung power exceeds fusion power.
In the second case, the rate of energy transfer from the ions to the electrons greatly exceeds fusion power. This power would have to be recovered and reinjected with extremely high efficiency. Rider's thesis, IIRC, showed that if the electron temperature were half that of the ions, the recirculating power would exceed the fusion power by a couple of orders of magnitude.
These two cases overlap; in the intermediate energy case both occur.
I am saddened, but at my age not all that surprised, that people invest so much psychic capital in this scheme. There's not much meat on these bones, folks.
I can easily imagine $150/bbl oil, not within 20 nor even 10 years but next year. All it takes is a major destabilizing event in the middle east.
This, of course, doesn't address the argument that alternatives will be found over time. Perhaps. But what I'm more interested in right now, especially since the Saudi's didn't lock step with the Fed on the lowering of interest rates, is which oil stocks to buy.
PS: On the Bussard front -- I haven't invested in his idea myself but I did approach him circa 1992 about what he considered a fair contest criteria for prize awards, as a driver of private investment in fusion technology. He was most helpful, as can be seen from the resulting fusion prize legislation I penned back in the early 90s with much input from his company. So long as the ITER programs and their ilk are receiving funding anywhere, it is tragic that such prizes don't exist with comparable funding.