Life As I See It

It seems like we're getting a bit of a respite from the sky-high gas prices. Don't be fooled, the crunch is coming and coming fast. There are several new studies out that have analyzed our global oil outlook.

One of the best researched studies on future oil is posted on the web site "The Oil Drum" at www.theoildrum.com. The outlook is grim and a lot of people are going to be hurt. If we don't start taking steps to conserve today we are all going to suffer. Even conservation will only delay the pain.

The Global Oil Market:

1. Total oil production has remained at a peak level since 2006 and it is expected to start decreasing
in 2009. The annual decrease is expected to be about one percent until 2009 and four percent after 2012. We can only assume that the decreasing production will accelerate in the near future.

2. New oil discovery rates peaked in 1969 and demand has exceeded discoveries every year since then. Peak discovery in the USA occurred in 1930 and peak production occurred in 1972. (It normally takes forty years to bring a new oil field to peak production.)

3. Some of the new oil finds are of the heavier crude oils and are much harder to extract and harder to process. We've all heard of the "Light Sweet Crude"; this is the cheapest oil to extract and process and is becoming increasingly harder to find.

4. Many countries are resorting to pumping water into the wells to force the last little bit of crude from the wells. The success of this pumping varies.

5. Natural gas and ethanol are expected to increase which will blunt the oil shortage impact some but not all of the situations that we now use oil for can use natural gas and ethanol.

Saudi Arabia:

1. The latest oil figures indicate that Saudi Arabia passed peak production in 2005. The OPEC nations are investing heavily in other than oil businesses.

2. The relatively new fields are increasing production and slightly offsetting the declines in the older Saudi fields.

3. One of the latest discoveries is on the back burner now because it will product heavy crude which sometimes command a lower price.

4. Total oil production in Saudi Arabia declined eight percent in 2006.

Russia:

1. Russia is secretive about their oil production to some extent but known figures on their production indicates that they have reached a plateau.

North Sea Oil:

1. The North Sea Oil has been in a decline for a couple of years.

2. Maintenance on the North Sea infrastructure has impacted production.

Canada:

1. Canada has been in a decline of about 100,000 barrels a day and no significant finds have occured this year.

2. The oil sands in Canada are very expensive to bring into production. Higher oil prices might bring more oil into the market.

Mexico and Venezuela:

1. Mexico production has been decreasing and industry sources feel that Mexico has reached a plateau.

2. Venezuela production has decreased because of the actions of it's leaders but industry sources feel that they have reached a plateau.

3. Venezuela's oil is of a much lower quality than Saudi oil.

Africa:

1. Nigeria's production has been hampered by militant action and the outlook for resumption of full production is bleak.

2. Angola is the only bright spot but only because of their late start into the oil business. Production is expected to increase for the near future.

3. Several other African nations have some oil reserves but their production will have a minor impact on the world market.

Iraq and Iran:

1. Iran has not maintained their oil fields as they should and they are now importing much of their energy. I'm sure that Iran would sell to the USA only after hell freezes over.

2. Iraq oil outlook is shaky at best. Oil production will continue to be hindered by militant action for years to come.

Now What?

Our politicians seem to want to do everything they can to protect the profits of the oil companies at the expense of the people. It's now up to the people. We must make a commitment to conserve, recycle, reuse, and cut back our consumption. There MUST be pressure from our elected officials to use solar energy, there must be a minimum efficiency rating for appliances, and we must create an energy policy for new construction, we must make our existing homes more energy efficient by caulking or insulating. As I stated at the start of this post; the crunch is coming fast and it won't be pretty.