Thursday, September 13, 2007

$80 oil doesn't translate

There is a reason that, as the price of oil rides a new high, the mainstream media avoids the term peak oil. Surely by now at least some of those reporters have investigated Hubbert’s Peak, the prediction of an all time global maximum in oil output that is happening during this decade. And the peak oil community is partly to blame for this quiet response. I should follow immediately by including myself wholeheartedly because I have done what other regular folk have done as we’ve stumbled onto the idea that in the near future we will see less fossil fuel energy available to human race. As a movement I think we’ve freaked out a bit.

The impact of peak oil isn’t to be taken lightly but the framing of the issue, in hindsight, could have been a bit more productive in my humble opinion. Personally I could have done a better job of discussing the possible positives of the response. Instead I have responded fearfully at times. Angry at others. Mostly though people just want to know how to cope. They want to see some examples of positive change.

But the G & D response can’t help but be expected, in our defense. If you go rearranging the future of almost anyone to an extreme degree, that individual is likely to respond with some sort of negative emotion. My wife sometimes kiddingly explains that I am planning for the end of the world, which is not at all true. But seen through the eyes of others who do not better understand our society’s utter dependence on fossil fuels, especially oil, this massive wave of chatter about everything and anything ‘peak oil’ must seem as quite the gloomy doom prophecy- ‘The End of the World’ indeed. We’ve focused largely on the negatives and who wants to be a part of that?

Regardless it looks more certain now that Crude Oil plus NGL peaked in May of 2005 and all liquids peaked in July of 2006. In other words it seems increasingly likely that the world’s oil supply will be unable to increase and meet world oil demand; no matter how many majick wands the traditional economists wave. Still though few among the regular media want to be the bearer of bad news. And such a harsh reality visited upon the western world won't be favorably received. So we get coverage of an event like to day- the historic high price of oil at more than $80 per barrel- without a mention of peak oil. Oh the author hints all around it but won’t come out and say it. The emphasis of course is mine.

“The combination of robust long-term demand growth and lagging non-OPEC supply suggests that strong support for oil prices is set to remain a feature of the markets beyond 2010,” he quotes Deutsche Bank chief energy economist Adam Sieminski as saying.

“The tight supply and demand picture is the main reason cited for oil’s price surge since 2002, when it traded at just $20 a barrel,” article author Hargreaves goes on to mention.

“High demand in the United States, as well as developing nations like China, India and Brazil, has not been met with a similar increase in oil supplies," Hargreaves says before adding,

“That means the difference in what the world could currently produce and what it consumes has narrowed, which magnifies the effect of any supply disruption - such as a hurricane in the Gulf of Mexico or even a possible war with Iran - as there is less spare capacity elsewhere to pick up the slack.”

In other words since we can’t get more oil out of the ground than we did this time last year, the growth economy is going to groan under this new limit.

I would like to pause and add that the author of this article did his home work and recognized that the price of oil is still below the all time high when adjusted for inflation. That number, which he does offer, is approximately $90 per barrel. With an increase in oil prices this year alone of around 30%, I’ll let you guess when we’ll pass the majick $90 per barrel mark. And I’ll let you guess as to if that new peak in price will offer enough incentive to those writing for the mainstream media to come out and say peak oil is here. Or if it will scare them further into avoiding the truth.

Sam explains that the Economist (yes that publication) has mentioned peak oil.

Ok so I haven’t heard of Peak Oil either.

Alright so what do I do about peak oil?

What else?

Enough already. You’ve mentioned gloomy doom. Tell me something cheerful about peak oil. Please…


mdubuque said...

Coal is a great alternative to Middle East oil: Fischer-Tropsch

nulinegvgv said...

not really.