
U.S. & CANADA
Last summer, consumers experienced unprecedented gas prices at the pump. Suddenly, gas-guzzling SUVs didn’t seem such a good idea. Then the full impact of the US ‘sub-prime’ debacle hit and economies tanked. The price of gasoline – or petrol as Brits call it, has since slumped to more reasonable levels. But is this but a short reprieve? ‘Big Oil’, such as Exxon-Mobile Corp, BP plc and the Saudi giant Aramco, have in recent years; all poo-poo’d any suggestion that global oil supplies have peaked. BP exploration boss Michael Daly recently told oil execs “Peak oil is a long way off and that the exploration of alternative hydrocarbons indicates that the peak oil argument is misplaced or at least premature.”
Daly’s comments fit well with Big Oil spin. In-house economists working for Exxon-Mobile, BP and other multi-nationals, tend to focus on the bottom line and preach an investor-friendly, but not necessarily honest perspective that while commodity prices always go down, ingenuity will always beat scarcity! Bottom-lining, mentioning peak oil is bad for business!
At an offshore oil industry supplier’s convention in Newfoundland, Canada last year, the counter-argument was not well received by delegates attending. An Australian oilman, Jim Buckee, recently retired from heading Talisman Energy Inc, a leading Canadian oil company, warned that the coming oil scarcity could see gasoline prices rocket to $20 a litre. His presentation received polite, but scant applause from the oil pundits listening. Buckee told his audience that crude production had already peaked. The biggest oilfields were 50 years old and output was unsustainable. No discoveries had been made in recent decades to replace the half-million plus barrels a day mega-oilfields in Saudi Arabia, Kuwait and Iraq. While demand may be down due to the recession, the equivalent of a new Saudi Arabia is needed to sustain existing reserves into the future.
Buckee suggests the evidence is clear. Population growth continues unabated, especially amongst emerging economies. Once the recession recedes, demand for petroleum will rise again. At the same time, production in OPEC countries will likely shrink, due to rapidly expanding populations of young people putting pressure on domestic consumption. All of this will leave western societies feeling increasingly uncomfortable and in need of some serious thinking about how to cope in the future with gasoline prices in the $10-20 range.
Much has been stated about the wealth in the Alberta tar-sands; however, Buckee considers them overrated as a future source of supply. So far the tar-sands have proven horrendously expensive to exploit, with rapidly escalating labour costs and major environmental challenges such as water supply and contamination as so graphically shown in a recent edition of National Geographic.
The Obama administration has adopted a somewhat opaque stance towards the tar-sands, but looking at the eco-sensitive composition of his team, Alberta’s best chance right now is to take really positive steps to curb CO2 emissions and grapple with other environmental hot potato’s in the present economic lull – and before their southern neighbours start dictating.
Whatever happens, the message is clear; oil is a rapidly depreciating commodity. For society at large, and especially in the West, the future indeed looks troubling, given the degree of economic dependence on hydrocarbons. Ingenuity may yet provide some answers, by way of example, electric vehicles. But priorities will increasingly be forced on us, be it loss of the ubiquitous plastic bag, or decreasing access to foreign goods, due to a paucity of bunker fuel for shipping.
Posted under Environmental News
This post was written by Nicholas Worthington on April 2, 2009
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