Monday, April 16, 2007
We are running out of oil
From the RoundTable blog
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Michael Abraham
Abraham is a businessman who lives in Blacksburg.
Tommy Denton in "U.S automakers still don't get it" (March 20) did a tremendous service to the readers in underscoring our impending energy crisis and how American automakers have cut their own throats by resisting regulated efficiency improvements. It's no coincidence that the makers of the most inefficient vehicles on the road are struggling.
Nevertheless, a couple of additional factors and conclusions are valuable to the discussion.
He said, in the 1970s, OPEC "countries conspired to change the energy situation forevermore with the oil embargoes." What he didn't say, and isn't well known, is that domestic oil production peaked in 1970. There was never a year before or since when our nation produced as much oil. This is what made our country so vulnerable to OPEC cutbacks. Had we been able to ramp up domestic production to cover the shortfall, we would have been fine. But no matter how hard we explored and how vigorously we pumped, the aggregate of our domestic wells was, by the mid-'70s, in terminal decline. This was a geological fact and there was nothing we could, or can, do about it. Even the addition of the massive Prudhoe Bay field was unable to reverse the trend.
Note: Opening ecologically sensitive areas like the Continental Shelves and the Arctic National Wildlife Refuge will momentarily blip the domestic production curve, but even in the aggregate won't reverse the downward trend and will simply rob our progeny of these resources. This oil, in a meaningful way, is our strategic petroleum reserve.
The embargoes, which reduced overall consumption in the U.S. by 7 percent, caused the price of a barrel of oil on the international market to quadruple. Then, we imported 30 percent of our daily consumption of oil. Since then, our consumption has increased and production has decreased, with the difference being imported. Today we import nearly 60 percent of our consumption and the number is continually rising.
Meanwhile, the world creeps closer daily to its peak. Saudi Arabia's production is down 8 percent in 2006 over 2005 and its Ghawar field, the largest ever discovered, is declining. Mexico's largest field, Cantarell, is crashing at least at a 15 percent annual decline. According to an employee of PEMEX, Mexico's national oil company, the production expectations of new fields are a fraction of Cantarell and others in terminal decline. This will cause enormous stresses to PEMEX and the entire economy of Mexico. Russia is nearing peak. The North Sea, Iran, Indonesia (an OPEC member) and Venezuela are all past peak, producing less every year.
The only regions left on Earth still on the upswing of production are the Persian Gulf and the Caspian Basin. Needless to say, not all the folks in these regions are too fond of us and do not consider the fulfillment of our oil addiction necessarily vital to their national interests. That our nation has used the Afghanistan and Iraq wars to build military bases throughout that region is not coincidental to the strategic nature of their oil resources.
The conclusion that anyone who has studied the international oil situation would reach is that it would be a true-blue miracle if every gallon Americans wish to consume continues to flow into our gas tanks for another decade. The OPEC embargoes were artificial shortages, politically motivated. The next oil shortage will be real, permanent and worse every year. This impending crisis has the potential to cripple our economy and end our reign as the world's pre-eminent economic power.
Denton concludes that burning less fuel by producing more efficient vehicles is part of the solution. However, we face a fundamentally more challenging situation. Asking how we will run all our cars more efficiently or on other fuels is flawed and counterproductive. We need to be asking how we will feed, employ, educate and re-create ourselves with significantly less mobility, both of ourselves and all the products we consume. Social critic James Howard Kunstler writes, we will soon be forced by nature to "start thinking beyond the car. We have to make other arrangements for virtually all the common activities of daily life."
Resource wars are nothing new and our military misadventure in Iraq is evidence that we will declare war on anyone who would deprive us of our ability to drive our SUVs at our merest whim, forever.
True, the U.S. automakers still don't get it, but the foreign automakers don't get it either, nor do the world's governments or consumers.
