Crude awaking

For my first post on my new blog I am not going to post a "flashback" story but instead write about something we should all learn more about. If you read this article through to the end you will find it informative and shocking! After a decade of living in California I have moved back to Houston, Texas where I live now. I have set up shop on the 20th floor of a condo building on main street in Downtown Houston. 

I am right across the street from the old Enron buildings in the business district. If ever there was a city in America about oil then this is it. I have a chance to rub shoulders with entrepreneurs in this industry all the time and our city thrives off the oil industry. When gas prices were up to $4.00 a gallon last summer and everyone was screaming bloody murder, our city was bloody rich. We were building new high rises, malls, highways all all sorts and more new stuff. The price of oil went from nearly $150 a barrel to $33 a barrel today which is our four year low. Yes, cheap gas is everywhere and people are hitting the streets with their Humvees and monstrous custom built SUVs. 

We need to take a second to consider why oil is so friggin cheap right now? This comes at a time when a new president is getting ready to take office and pushing technology for an alternative form of energy. Coincidence? I don't think so. What if I told you that the world has already exceeded its sustainable peak supply of oil? If we are producing less and less oil wouldn't it be getting more expensive and not cheaper? That is how supply and demand works right? Could it be possible they are giving it to us cheaper to keep us hooked to our addition? What else would make our country put alternative energy on the back burner?

This year the price of gasoline got as high as it has ever been and the result? We got used to paying higher prices and there is 3-4 all electric cars getting ready to hit the market in 2009 including Chevy's "Volt". If we are over the world's sustainable peak supply of oil and its becoming scarce then wouldn't cheap gas cause us to go through our remaining oil faster? If this interest you (and it should) then this article is for you... 

Oil is the blood of the earth...

Oil is the bloodstream of the world economy...

“Oil is our god. I don’t care if you say you worship jesus, Buddha, Allah or whoever you actually worship petroleum”...Matt Savinar 

We are moving from an era of cheap abundant energy to an era of scarce hard to get expensive energy. 

The US is dependent on oil and making ourselves dependent on extremely unstable regimes in some very nasty parts of the world.

90% of the people in our country have any inkling of the potential problem we are facing. Increased unemployment, poverty, bankruptcy, starvation...they are all the types of things that happen when a society collapses.  

Oil is not like wheat that we are growing every year, oil is the outcome of many millions of years of geology and chemistry. The great bulk of the world’s oil was formed at just two very brief moments in extreme global warming between 90 and 150 million years ago. Animal and plants had died in the ocean and were compressed by more composites of sand and over the years these deposits compacted even more and later cooked in what experts call the “kitchen” era. When the organic material was at a depth of about 2,000 meters a chemical reaction transformed the material into oil. 

This all happened in one brief moment in all of geological time and we are using the stuff up in only one or two centuries. One barrel of oil of which the refined product makes 42 gallons of gasoline can be bought today (Dec 18, 2008) for only $36! This one barrel of oil will produce as much energy or as much work that you would get from 12 people working all year for you! Take an average man working physical labor for 25,000 hours to produce the same amount of energy in that one barrel of oil. If that one barrel of oil is pulled out of the ground in iraq it cost $1! That’s right I said $1, so for $1 you get 25,000 hours of human labor. That energy source is so dense that it is essentially free energy!

70% of oil is refined into transportation fuels which include motor gasoline, diesel fuel, jet fuel, railroad fuel and more. 98% of all transportation is fueled by oil. The liquids that come out of oil as its processed and refined creates the building block for all of our petrol chemical products and plastics including pharmaceuticals, tires, insecticides, cosmetics, weed killers, and zillions of other things. 

The US was essentially the Saudi Arabia of the world up to late 1950s. More and more oil is going to come from less stable, less secure places. Places that challenge the taking of oil in the first place. Oil fuels war, its a catalyst for war, its something that prolongs war and its not a pretty picture for us. 

So how much oil does the world have left?

“I suppose that the classification of oil reserves depends of the motivations of the people classifying them” says James Blackwell which is a oilfield technology consultant. 

The public data on this is extremely misleading and misunderstood. OPAC countries (Organization of the Petroleum Exporting Countries) wildly exaggerates how much oil it has left for all sorts of political reasons. In 1985 Kuwait overnight added 50% to its reserves because at that time the OPAC quota (the amount of oil a OPAC country could produce) was based on the reported reserves. The more you reported the more you could produce which means profit. Two years later Venezuela doubled its reserves over night and that caused many other countries like Saudi Arabia to announce enormous increases overnight simply to protect their production quota. HERE IS THE IMPORTANT PART. These numbers have not changed since then and its simply absolutely implausible to image that the numbers should stay the same when they are always producing millions of barrels each day.

OPAC countries don’t care what might happen in 5, 10, 15 or even 20 years from today. These are politicians that want more money wether its rationally or irrationally since they are prisoners to their budgets. The United States had been the largest producer of oil on earth for almost a 100 years and nobody thought we would ever peak. In reality US oil production peaked in December of 1970 (the month I was born) at 10.2 million barrels a day and then oil prices went through the roof. 

Today we see more and more countries that have reached their peak and our declining including Kuwait city, Baku, China, Qatar, Venezuela, Russia, Indonesia with about 58 other countries that are producing much less today then in the past. The last great frontiers of new oil discoveries were the Alaska north slope oil, Siberian oil and the oil discovered in the North Sea. Those great discoveries were in 1967, 68 & 69. The world has now been sufficiently explored for the oil industry to know that all the promising areas have been found. 

Countries like Canada and other places are getting so desperate to find new oil basins they are extracting oil from the tar sands. The fact is they are using more energy from natural gas to produce this oil then they are getting from the tar sands. The fact that these countries are resorting to getting oil from the tar sands says alot because you don’t go to those areas unless you used up all the good stuff. 

Now with over 58 OPAC countries on the deep decline and Saudi Arabi as the world’s #1 producer of oil you have to consider the following. Saudi Arabi has been doing an intense oil exploration effort for the last 35 years and has found only one new oil field between 1967-2005. If Saudi Arabia has now exceeded their sustainable peak supply then the experts will argue with some clarity that the world has now exceeded its sustainable peak supply.

Its now widely excepted by professionals worldwide that the world oil supply peaked between 2000-2005. We are coming to the end of the first half of the age, during this 150 years we have seen the growth of everything from industry, transport, trade and agriculture. We seen an explosion of the number of people and all of this was made possible by the cheap abundance and supply of oil based energy. Demand is on the march and supply is flattening out. You have to supply if you want to meet the demand from the current level of 18 million barrels to 102 million barrels a day in the year 2030 but in order to meet that profile you would have to add new oil in the amount of 200 million barrels of oil a day! 

In this new modern world that was shaped by oil every other country in the planet is trying to build a society that looks like us! The demand for energy is rising faster than even predicted five years ago because people all around the world can see how countries of the world live and how good of life people have in those areas have. People everywhere even in small 3rd world countries want to be like us, they want to drive big cars like us, live in nice houses, they want to have air conditioning, refrigeration and why shouldn’t they? 

Most Chinese think they will own an automobile in the next five years. It’s the fastest growing automobile market on earth. Something like a third of their population already have drivers licenses so the demand for oil and gasoline is really going to take off! Last year China increased their oil import by 25% so now they are the number two importer in the world. China’s economy is growing at 10% a year and a 10% growth rate doubles in seven years, four times bigger in fourteen years and they are requiring more and more energy. Countries like China and India are getting to the party when the glass is half empty so they are going to have to fight with the rest of us to get what is left.

The Hummer is a status symbol in the US where Americans can drive around saying look at me, I am driving the best most expensive vehicle and I can afford it. The Hummer gets somewhere around 10 mpg! America is a role model wether we like it or not, we use 25% of the world’s oil. American’s will go on living our lifestyle driving our big cars as long as we are rich and the energy is cheap. We pay more for a bottle of drinking water than we do for gasoline. Gasoline is just about the cheapest liquid you can buy in the United States and as long as that is true Americans won’t be concerned. 

People in America think they are having their eyes cut out because they are paying $3.20 for a gallon of gasoline but that is only 20 cents a cup. Think about that for a minute, you have an average passenger car you can get 1-6 people in it with gear, drive a mile and half in just a few minutes for only 20 cents! Now if you don’t have gasoline and you try to barter with a guy with a horse or a bicycle to take you and your friends that same mile and a half for 20 cents you would get laughed at. 

I would think we would need to get oil prices up to something like $5.00 cup ($75 gallon) that starts to equate with what we actually spend on things that are not nearly as valuable and non renewable. Not one in 50 or even a one in a 100 people have any inkling of the potential problem that we are facing. If we wait until peak oil to start making the transition then there will be very serious economic consequences. If we anticipate it by 10 years there will be meaningful economic consequences and  have no economic consequences you need to anticipate it by 20 years! I am almost certain we don’t have 20 years, I’m pretty sure we don’t have ten because I think we are there now.

So why isn’t the government telling us more about this? What about congress or the president?

I don’t think the people in positions to tell the public about it from the official standpoint have been totally honest with us. The person who will win an election is the person who can most persuasively lie to the population which is to tell them what they want to hear which is “the future is going to be great” so follow me. In ancient Greece the person who brought bad news was executed and politicians that bring bad news frequently do not get re-elected. Our political system is controlled by major corporations so there is steps that need to be taken to address this is some kind of productive way. 

If your a CEO of a big company are you going to contribute money to the politician who    says I want us to slow down the economy, I want to sell fewer cars because we want people to drive less so these cars won’t use as much fuel. This in return would shrink the automotive manufacture sector and the economy...no one is going to vote for that! We are in some ways a victim of our own success. Suburbia is in a lot of trouble because the whole idea is that we commute from our house to work and back to suburbia. This can be 20, 30, 40 or even 50 miles from your house to your place of work. 

This model is only viable as long as we have cheap oil and gas. Its not just because the country is spread out but our cities have evolved for the use of cars. Our cities would have to rebuilt from scratch to make it more efficient with usable public transportation. This is all quite different for cities in Europe which were all basically created before the car was invented. So yes its going to be a BIG blow to America when we no longer have the oil that we love so much. We have waited so long that the three things we need most are all in short supply. 

One of them is money but in our country we don’t worry about money we just borrow it from our kids and grandchildren. The other two things we cannot borrow from our kids and grandchildren is time and energy. In order to make energy available to invest and to buy time we need a very vigorous conservation plan. In the last decade it is the Bush administration that has had the closet relationship with oil companies themselves and the administration that has most greatly married energy security with National security in US foreign policy. 

So the Bush administration believes that the way to secure oil supplies that would in fact get the support of the American people and create a more stable world is to “democratize the Middle East”! They believe that this issue of promoting democracy to the Middle East is a way of securing oil supplies. The basis of our foreign policy in the United States from 1945 until today was essentially an exchange of secure cheap reliable oil to the United States for the protection of the governing rulers of Saudi Arabia . One thing many people fear including me is that eventually we will simply take oil by arms. That day will change everything and make us into an entirely different country altogether. It would change our position in the minds of other countries.

So there are really only two options for us...

#1 Militarize the taking of oil. This means you would have to get your population to understand that if they want to continue to drive SUVs and continue to consume energy they way they are that they will be in war after war. 

#2 Prepare for what we all see coming which is the end of cheap oil and invest in technology that is cleaner, safer with less negative consequences. 

How long will it take to replace oil with an alternative energy?

Even if we made every car on the road hybrid cars we would still be consuming the same amount of oil we are now in 5-7 years. This is because with each passing year the economy grows and we have to consume more and more oil. We have very big challenges to face in this century, this is a planet that has 6 billion people on it now and perhaps 9 billion by the end of the century. The problem is the huge 14 terawatts of energy we need by 2050. We need a new source of energy which is equivalent to 220 million barrels of oil a day!

We have 700 million internal combustion engines running around the roads of the world. We need to consider the scale of what it would really take to replace fossil fuels for transportation. 

HYDROGEN ENERGY-The hydrogen economy in theory is a good idea but it faces many challenges. The problem for industry is sort of a chicken and egg thing. The industry is reluctant to invest heavily into fuel cell technology because there is no hydrogen infrastructure to deliver and produce hydrogen. On the other hand this infrastructure is not in place because there is no demand for hydrogen. The economics right now is that we use the equivalent of 3-6 gallons of gasoline to make enough hydrogen to drive a car the same distance that one gallon of gasoline will drive it. The hydrogen economy at this point makes no sense. It will take us easily 30-50 years to build the the hydrogen infrastructure.

ETHANOL ENERGY-If you look at all the energy inputs into making ethanol you use more fossil fuel producing ethanol than the energy you get out. The quantities that could be made available by ethanol and bio diesel are very small and would replace only a small portion of the fuels we use today. Even if you scaled ethanol production up 10-20 times it would still only be a drop in a bucket compared to the amount of energy we use today. 

NUCLEAR ENERGY-Nuclear will be very expensive and the experience we gathered over the last 30-40 years in terms of safe storage and such would all have to be rethought. People are already afraid of negative side effects and then there is the question of terrorist attacks. If you wanted to build enough nuclear power to replace all the fossil fuel we would have to build 10,000 of the largest nuclear plants possible. If we went this route and could build all 10,000 nuclear plants then our worldwide reserves of uranium would be depleted in 1-2 decades. This would only be a bridge at best. 

WIND ENERGY-Wind energy has become more popular and economically viable but because of its intermittency and low power density it will never contribute more than a small fraction of our required energy. 

SUN ENERGY-The total amount of sunlight that falls on the planet is 20,000 times the amount fossil fuel power we are using now. To generate he same amount of power we use in fossil fuel we would have to cover a land area roughly half the size of the state of california. All the solar power cells built in the world today would only cover about 10 kilometers which is only a small fraction of what is needed. Not impossible and not unthinkable but really a huge technological challenge. 

We have to look at all of these alternative forms of energy and if you add them all together you must be very optimistic about each of these sources to believe that we can produce anything like quantity and quality of energy we are getting from fossil fuels. Our worldwide demand now is somewhere between 25-30 million barrels of oil a year and its increasing at an alarming rate. In the not too distance future things like driving cars and air travel will only be made available to the super super elite, not the rich but the super rich (one tenth of one percent). Air travel will eventually stop and our children or great children may never get to ride in a plane or skydive at of one. 

We are facing an unprecedented unparalleled situation and that explains why it is so difficult for us to really except it because one thinks that in this modern era there must be a solution. Its somehow contrary to our mindset to think about these things and we just don’t like to do it. We have got used to the world around us and the gas station has always been there for us. Its a strange issue of mind set, attitude and experience that somehow leaves us so unprepared for this situation. 

Wanna learn more?

Words from the documentary "Crude awakeing"

lifeaftertheoilcrash.net/