An oil and energy crisis, is arriving soon in America and in the world. As the oil reserves and, eventually, the natural gas reserves, are depleted, oil and fuel prices will rapidly rise (in the case of oil, it is already happening!) and a mad scramble will take place to control the remaining oil and natural gas reserves of the world. Development of alternative energy sources will become frantic!
Can we find & develop enough new energy resources, e.g., the Bakken Formation of North Dakota, to maintain the world's increasing demand for fuel? Or will existing oil and natural gas reserves become depleted before we have developed new energy supplies? If so, serious oil and gas shortages will develop.
Does Peak Oil and an energy crisis mean that more oil wars lie ahead?
This web page reviews the soon-to-arrive Peak Oil and the resulting fuel shortages and energy crisis that Peak Oil will bring to America and to the world. Although, Peak Oil and the energy crisis received little attention during the 2004 and 2006 elections, the issues remains alive. Unfortunately, before the presidential election of 2008 occurs, Peak Oil may be here. We are apt to be in serious trouble on the economic scene as Peak Oil either arrives or approaches. Some of the questions this web site will try to answer:
Can we find energy sources, i.e., conventional or alternative energy sources to meet our energy needs for the next few decades? Optimists are pointing to the recently heavily publicized Bakken Formation of North Dakota which may contain hundreds of billions of barrels of high-quality oil. However, pessimists point out that as little as 1% of the two-mile deep Bakken Formation oil may be recoverable at present oil prices. And even if most of the Bakken oil were recoverable, it would take years to drill enough wells for the produced oil to significantly impact our energy needs.
Chevron's nice strike in the deep Gulf of Mexico (Jack prospect) is often used to illustrate that we are not really in an energy crisis and that there plenty oil out there. What they fail to mention is that it will take 10 years to get the new field in production.
One location that does look great is offshore Brazil where Petrobras has just found a giant oil field (estimated up to 33 billion barrels) - Carioca - shortly after finding the very large (8 billion barrels) Tupi field. (And they say a state-run company is inefficient!) It should be noted that some experts dispute the size of the Carioca field. Whatever, it appears that there is a whole lot of oil in offshore Brazil. Keep up the good work, Petrobras.....the world needs that oil!
How will this country and the world handle Peak Oil or the "end of the cheap oil era." The end of cheap gas is at hand as gas prices are already rising rapidly and Peak Oil and an accompanying energy crisis is now approaching. Can we prevent world-wide depression and mass famine as the conventional energy system (oil, natural gas, coal) winds down?
Will additional oil wars be necessary to provide the U.S. with its needed fuel supply as Peak Oil arrives?
Will an attack on oil-rich Iran or oil-rich Venezuela by the U.S. be the start of a third oil war (the two Iraq wars were the first two oil wars!)
In regards to the war issue, the U.S. won't be the only country desperately seeking to obtain its share of oil and natural gas as fuel shortages occur due to the arrival of Peak Oil. China, India and other nations without large oil or natural gas deposits will be competing with the U.S. for the scarce fuel supplies.
Tiffs between countries are already breaking out - even before the arrival of Peak Oil. For example, in the past few years, Condoleezza Rice traveled from oil-producing country to oil-producing country asking for more oil and gas production from the countries visited and, at the same time, asked the countries visited not to do oil or gas-related business with Iran because the US is upset at Iran. The oil and gas producing countries mostly ignored her.
Also, it was reported a year or so ago that we are funding the building of a small naval fleet in the Caspian Sea so that our allies there can control contested oil fields. But what if the other side builds a little navy there also? Maybe a little rumble?
Japan and China (CNOOC is the Chinese Offshore petroleum company) squabbled over offshore oil well drilling planned by the Japanese in disputed ocean waters. China threatened with gun boats. What if Japan had retaliated?
In 2006, CNOOC made an offer to buy Unocal, an American oil company with large reserves in Asia. Some members of the American Congress were very upset at the prospect of a Chinese company moving in on an American oil company and they were able to stop the purchase of Unocal. But China will make other attempts to buy oil and gas supplies as Peak Oil arrives and the world energy crisis deepens. (Large Oil Company Stocks has more on CNOOC.)
Folks, get ready to rumble! The oil is running out and the United States has developed no firm strategy as to what to do about Peak Oil (except, of course, the present administration's unsuccessful attempt to use force to take the oil of other countries, e.g., Iraq, away from them.)
Peak Oil - The New Perfect Storm. The new perfect storm may eclipse World War 2 in its fury. The new storm is not terrorism, as many in high places would like for you to believe. Rather, it is the Peak Oil storm or, to put it in the simplest terms, the end of cheap oil. We have been warned again and again but the evidence is that the warnings often fallen on deaf ears.
Evidence of the ignored warning is the accelerating growth in size and inefficiency of our cars and trucks, the lack of oil and gas well drilling in California and off the coast of Florida, and the slowness of developing an effective research effort for alternative sources of energy.
Of course, rapidly rising gasoline prices and oil prices are an important manifestation of the approaching perfect storm of Peak Oil. Oil prices are now about $115 per barrel and seem destined to go higher.
Lets face it! The U.S. is running out of oil and natural gas and an oil & energy crisis is developing.
In 1956, geophysicist Dr. M. King Hubbert of Shell Oil made a prediction for which he was widely ridiculed. He predicted that US oil production would peak in 1970. Among the "bewhiskered oil experts," this was consider another "chicken little" prediction about oil reserves similar to others that had been made over the years. These same experts were startled in 1970 when oil production in the US did peak and then began a steady decline. The resulting increase in gasoline prices set off an oil shock in the country. Remember the TV shots of men and women fist-fighting each other at the gas pumps?
The US eventually recovered from that oil shock. Is another one on the way?
Recently, a disciple of Hubbert, petroleum geologist, Kennith Deffeyes, made an even more startling prediction: the peak of world oil production would occur on Thanksgiving Day 2005. This time those experts that support the peak oil concept didn't laugh. It appears, indeed, that Peak Oil production is approaching although it didn't occur on Thanksgiving day of 2005 and that the near-record warm winters in 2005 and 2006, and the rapid development of Canadian oil sands, might delay Peak Oil arrival for another year or so. When it does arrive, the consequences of Peak Oil will be shocking to the world economic system.
Although many oil experts support the Peak Oil concept, our political leaders and media figures appear almost oblivious to the problem. This probably shouldn't come as too big a surprise. Remember that in the 30's, Winston Churchill tried to warn the world of Hitler and the approaching conflagration. Few listened. Everyone wanted to hear only pleasant news. Fifty million lives later, they realized their error. However, if all the bad stuff is true about Peak Oil, World War 2 will, by comparison, appear like a lawn party game compared to the energy crisis we will have when Peak Oil arrives.
This web site reviews the options the US and the world have for coping with the impending oil & energy crisis. Actually, if one reviews the movement of oil prices over the past year or so, it appears that "impending" may not the right word to use. The oil & energy crisis may already be arriving!
Peak Oil is a term you will hear often in the next year or so. Better learn something about it.
See Oil Demand for discussion.
Visit Natural Gas and Oil for details. In regards to natural gas, keep an eye on exploration activities underway in Canadian shale formations. We already import about 15% of our gas from Canada but they are running a little short. However, if natural gas is plentiful in the shale formations of Canada as it was recently found to be in some United States shale formations, Canada might be able to increase their gas exports to the US. But Canada also needs large new sources of natural gas to help in the oil sands development.
In regards to oil supply, the development of the Bakken Formation (discussed above) of North Dakota will help but it will take several years for this oil to help significantly. The large Gulf of Mexico strike made two years ago will also provide some help. But, what is missing are "super-giant" fields which are now seldom found. We are finding considerable less new oil than we consume.
4. Types of Alternative Energy Sources Under Development.
See Alternative Energy Sources. and Alternative Energy -Solar-Ethanol-Biodiesel-Wind.
The rapid development of the oil sands, wind energy, ethanol, biodiesel, and solar energy are discussed. LNG (Liquefied Natural Gas) is so new to the US that it can properly be lumped into the alternative energy category. The same holds for GTL (gas to liquids) which is being developed largely in South Africa.
One of the key concepts here is Hybrid Cars. It will help relieve the fuel shortage by increasing automobile gas mileage. However, it should be noted that the hybrid cars don't get quite the gas mileage that we first thought.
Improved efficiency of equipment saved us in the energy crises near the end of the last century. More such energy efficiency improvements are on the way. Many more are needed.
6. For the Energy Investor: Which Company Stocks Will Benefit?
Maybe you should personally benefit by investing in Oil & Energy Company Stocks. .
A year ago, when I began this web site, I did not feel good about the prospects of the US in resolving the problems of Peak Oil and the energy crisis. Perhaps, I was too much under the influence of the pessimistic references and pessimistic web sites. However, in the past year, I have become more hopeful, largely due to recent news regarding LNG, GTL, Hybrid Cars, wind energy, and oil sands.
The development of oil sands is moving ahead at a rapid rate although great environmental obstacles still lie ahead. The potential with the oil sands is enormous and, with all the problems inherent in such an operation, recovering the syncrude from Canadian oil sands in large quantities has been a pleasant surprise to me
The hybrid car is now roaring ahead and, while it won't make a quick impact, it is a great start.
LNG (liquefied natural gas) is also coming on strong and, indeed, was already stronger in other parts of the world than I previously realized. I personally believe that LNG is the next big thing in the energy area. It could get us through Peak Oil with less serious problems than are now anticipated for the Peak Oil era. (It should be noted that for the past six months or so, LNG imports have actually dropped in the U.S. Other countries need LNG even more than the U.S. and have been willing to bid higher for the available liquefied natural gas.)
Also, gas to liquids (GTL) processes are really getting going in South Africa and the ultra-clean diesel-like fuel that the processes produce are going to be very marketable, particularly in Europe where diesel is taking over from gasoline.
Like LNG, time is needed to allow GTL development. Will Peak Oil allow us enough time before the crisis comes crashing down on us?
The success of wind energy, particularly overseas, has been surprising to me. Denmark is already obtaining 20% of their energy requirements from wind energy. Germany and Spain are obtaining about 7% of their energy from wind energy.
Encouraging also is the report that virtually every drilling rig in the world looking for conventional oil and gas is hard at work. We have got to keep finding conventional oil and gas until alternative energy sources kick in. (Even with the increased activity, we are presently replacing less than 50% of the oil used with new oil. Just 5 years ago, we were replacing 90% or thereabouts.)
The future doesn't look bright on the energy crisis front but it looks a little less dim than it did a few months ago.
On the negative side of the fence, I have been increasingly concerned about fuel cell (hydrogen-related) development. Hydrogen was supposed to be the cure-all and many of our eggs have been placed in that basket, but there are serous problems with the system. It does not look like hydrogen fuel cells will arrive in time to save us from the devastation of Peak Oil.
Have you driven any cars powered by hydrogen, lately?
I won't dwell on solar power. It was going to be our savior a decade or so ago. Driven any cars powered by solar energy lately?
In fairness, I have just seen a report that the cost, $/watt, of producing solar energy has dropped dramatically in recent years. Maybe, there is hope for solar energy after all! Lets keep up the effort!
I hate to even mention shale oil. We have a trillion barrels of the stuff locked up in shale rock out West but no process has come even close to being able to efficiently extract the stuff in a usable form. However, if the price of conventional oil keeps rising, maybe something can get going with shale oil.
I also hate to mention ethanol, the American farmer's dream fuel. Government subsidies and uninformed media coverage has made a booming business out of the production of ethanol from corn for now. But rapidly rising corn prices and rapidly rising food prices may eventually take some of the steam out of the ethanol business. In addition to the U.S., food prices in other countries, e.g., Mexico, are rising rapidly because of the booming ethanol business.
But it will be difficult to take the subsidies away from the U.S. companies that are producing ethanol.
Ethanol is not the answer to the energy crisis.
A very negative temporary development was the arrival of Hurricanes Katrina and Rita in the Gulf of Mexico in 2005. Much of our domestic production of conventional oil and natural gas (especially natural gas) is in the Gulf of Mexico and most of it was shut down for weeks and some is still shutdown over two years later. The two hurricanes also created temporary havoc with the refineries that dot the coastline in Mississippi, Louisiana, and Texas.
As a result of Hurricanes Katrina and Rita, fuel price continued to rise sharply for some time. Because so much of our natural gas is produced in the Gulf of Mexico, the price of that fuel seemed to have been affected most with prices per thousand cubic feet rising from about $7 to about $13. (The recent warmer-than-normal winters have helped in reduce the natural gas price back to about $9 per thousand cubic feet.)
Politics. Most discouraging of all on the energy front, though, are political developments. The Bush administration still adamantly denies that oil had anything to do with the Iraq War although it is obvious that it did. Telling the truth about the need to obtain stable oil and natural gas resources might help get things going toward a rational energy policy.
Energy Conservation. Energy conservation efforts to solve the energy crisis don't look good - not in this country anyway. Judging by the enormous size of pickup trucks and SUVs that park on either side of me down here in Louisiana, I see no indication that the American people, at least not down here, are seriously concerned about the energy crisis. Instead, I see evidence of oil imports having to increase at a rapid rate just to supply these "giant" vehicles.
In the past few weeks, three items of importance to the oil shortage and energy crisis situation have occurred:
1. Almost frenzied activity in the Bakken Formation of North Dakota, adjacent states and adjacent Canadian provinces has occurred as word of the immense size of oil potential of the Bakken Formation has become better known. Oil companies are now either in North Dakota or on their way to North Dakota to work on the prolific but difficult-to-recover Bakken oil. Greatly improved horizontal drilling technology and, of course the soaring oil prices, now allow the oil to be recovered profitably. For more details on oil companies involved, see Large Oil Company Stocks and Small Oil Company Stocks linked to below. Additional oil companies getting involved in the Bakken Formation will be added to the lists as fast as I can verify their presence there.
2. The Carioca Field, a giant oil field (apparently...some experts dispute its size), has been discovered offshore Brazil by Petrobras. The estimate of up to 33 billion barrels for the oil contained in the oil field would make it the third largest oil field.
3. Time Magazine presented a very impressive report casting doubt on the wisdom of using Ethanol and biofuels as renewable alternative energy sources. This article is likely to cause changes in how the country looks at Peak Oil and alternative energy. If the article receives the sort of attention that I think it deserves, the discoveries in the Bakken Formation and offshore Brazil become that much more important........we desperately need all the conventional oil we can find until we get alternative energy sources worked out!
1. Global Warming . Al Gore is right - even if you think he is just another ppointy-head liberal. We have global warming problems The energy crisis has been largely responsible for global warming
2. Famous Oil Experts & Oil Companies. These are the oil experts and oil companies that must identify and solve our Peak Oil and energy crisis problems.
3. Oil Information . General references on oil and energy crisis.
4. German Fuel Shortage of World War 2. Germany had a severe fuel shortage in World War 2 and we can learn from their efforts to overcome the shortage.
5. Global Warming & Alternative Energy Sources . Global warming and Peak Oil will liven up the energy crisis. Alternative energy, anyone?
While there are some hopeful developments in alternative energy developments, Peak Oil and an accompanying oil crisis and fuel shortage are about to hit this country and the world between the eyes. Oil and gas prices will soar and oil wars may break out as various countries try to control the oil and natural gas supplies.
Last Updated: 08/02/08
e-mail me @ vanc13@cox.net
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