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Monday, February 07, 2005

The Year in Review

In many ways 2004 was a watershed year, in that many milestones were reached in the unfolding saga of peak oil and gas. It will be a year known for record-high oil demand, as China and the US competed for incremental supplies. This last year has also seen real oil prices not only top $40 a barrel consistently, but also rise to $55.67 in October. This was the year surging prices forced Americans to focus on a problem that has been building for years.

Simply put, the world’s thirst for oil is perilously close to overtaking the global energy industry’s ability to satiate. And of course there is the “terror premium”—the cost of Iraqi pipeline disruptions; Venezuelan political instability; Nigerian labor strikes; etc. Heretofore, the whole concept of peak oil had been relegated to late night chat room discussions and the obscure writings of some retired geologists.

All that is changing as peak oil theory goes mainstream. The June 2004 cover of National Geographic was entitled, “The End of Cheap Oil.” The Fall 2004 Issue of Yes! Magazine was titled, Can We Live Without Oil?

A plethora of books have been written on the subject this year, including one of my own, Madmen at the Helm. A consistent scenario, of almost every writer I have read, spells out a world of far more expensive energy and an end to suburbia-type endless growth.

Once upon a time, there was an instance of long-term planning that might have made all the difference, and it was perhaps our one chance in history to find sustainability and environmental balance with regard to energy use. This took place during the Carter era, where a choice by the US to wean itself from fossil fuels was abandoned, thanks to Reaganomics and “morning in America.” As a result, economic crises and resource wars are now virtually assured for us and the future generations to come.

China and India have become global energy players, with China increasing their oil imports 43% over 2003. They are building a new coal-fired power plant every two weeks, while jetting about the globe seeking to land sweet energy deals to feed the hungry maw of its expanding economy. They are building cars, trucks, factories, hospitals, office and apartment buildings stretching skyward at a pace that has left the United States in the dust.

November’s Hurricane Ivan damaged platforms and pipelines in the Gulf of Mexico, some of which are not likely to reopen anytime soon. The Gulf is now producing only 73% of the 1.7 million barrels of oil it normally pumps each day. With less crude to distill, America’s oil refiners have failed to keep heating-oil stocks at last year’s levels.

Leading oilmen gathered late October in London for the “Oil & Money” conference, an annual expense-account jamboree fiesta often preoccupied with the industry’s woes. This year, though, the tone was cheerful. Jeroen van der Veer, head of Royal Dutch/Shell, reassured his audience that Americans are “still driving their SUVs to Wal-Mart”. Royal Dutch/Shell, of course, has had a rough time this year due to a scandal involving exaggerating their oil reserves by 20%. Lord Browne, the boss of BP, gave a sunny speech insisting that without petroleum “the world would be a dark, cold and miserable place.”

It would be easy for me to look back on 2004 and recall all the new words and butchering of the English language by George W. Bush, but I will stick with his most apropos statement.

“We need an energy policy that encourages consumption.”

1 comment:

TheDevilIsInTheDetails said...

Be prepared for the next hurricane victim or find another one that's similar. As the Boy Scouts say: "Be Prepared"!