Monday, May 28, 2012

Oil and Troubled Waters

Like some crazed fan-dancer, the oil industry (along with its wholly owned subsidiaries such as the US Congress) is doing its best to conceal and distract us from the naked truth. It has waved in our faces during the past year such ostrich feathers as “Canadian tar sands; another Saudi Arabia!” and “shale gas; another Saudi Arabia!!” and “hyper-deep ocean drilling; another Saudi Arabia.”

But when we step back from the year, and look at the unhyped numbers, it doesn’t matter any more whether the dancer has any clothes on or not.
When the shouting and the hyping and the blizzard of competing numbers are all over, reality stares us in the face from these few, simple numbers (for which I am grateful to Tom Whipple, writing in Energy Bulletin):
  • Last year, on average, a barrel of crude oil cost $111. That’s up 14% from 2010 and 11% from the previous all-time high.
  • Last year, the amount of oil produced from existing fields continued its long-time annual decline of 3,000,000 barrels per day, while world demand continues to grow by about 1,000,000 barrels per day (new discoveries and reserves have to make up the difference).
  • Oil available for export, after the exporting countries have met their own citizens’ increasing demand, continues to drop by 2.8 per cent a year. It is projected to decrease by 5 to 8 per cent per year for the rest of this decade.
There is no need to factor in the dangers of uprisings, civil war, or acts of war (such as closing the Strait of Hormuz, as Iran once did and threatens to do again) to see in those numbers the spectre of catastrophe. Read More