Tighten your seat belts, it´s likely to be a rough ride.
March 14, 2012 4:07 AM   Subscribe

A Tough Oil World Why High Gas Prices Are Here to Stay by Michael Klare (via)
It was the easy oil—that’s what fueled our prosperity. Back in the fall The Johns Hopkins Bloomberg School of Public Health highlighted The five key areas that illustrate the potential health fallout of petroleum scarcity.
posted by adamvasco (61 comments total) 13 users marked this as a favorite

 
Humans live on a finite planet.
Once rock oil is consumed for energy it is no longer able to be recreated in a humans lifespan.
Not only is world population growing but humans everywhere WANT to use the energy slaves oil brings to the table.

The health fallout will be over the business models build on the under priced cost of oil. The lower external* energy model of healthcare had churches/non profits using local free volunteer labor spending time with hot water + bleach and autoclaves trying to keep things sterile VS disposable things made of plastic and quat rinse.

But hey, I look forward to the typical Blue posters claiming Peak Oil is bunk. Like the fine people here.

*for this humans are not considered external or and energy source.
posted by rough ashlar at 5:05 AM on March 14, 2012 [2 favorites]


Surely this is the biggest issue of our time. Beyond Kony or iPad or austerity, or even a very real issue like climate change.

I keep waiting for good news on the horizon about our energy plans and the best I've found are hand-wavey 'technology will solve it eventually'.

Being a pessimist is frowned upon. Being a realist is abstract. Petroleum scarcity is going to disrupt everything though.
posted by panaceanot at 5:08 AM on March 14, 2012 [3 favorites]


Peak Oil is undoubtedly real, but the current energy prices are due more to market manipulation - $70/bbl is more realistic considering demand and supply.

Commodities in general have been in a bubble cycle for the past seven years or so. I mean, FFS, take a look at precious metals. Part of it is testing price elasticity after Katrina proved people would pay a lot more for commodities than had been previously believed, especially oil and gasoline; part of it is automated wartrading systems that benefit from whipsawing prices, and so the big traders do their damndest to keep volatility high.

I think we're boned until the bubble pops or new rules regulating commodities come into play. (I suspect one will result in the other, either way.)
posted by Slap*Happy at 5:18 AM on March 14, 2012 [2 favorites]


Beyond Kony or iPad or austerity, or even a very real issue like climate change.

I don't see Kony, iPad or Peak Oil destroying the biosphere.

I can see a path where anthropogenic global warming does just that -- spike CO2 high enough that it causes former CO2 or other greenhouse gas caches to spill, and we rapidly become Venus.
posted by eriko at 5:22 AM on March 14, 2012 [1 favorite]


I keep waiting for good news on the horizon about our energy plans

Unless the new energy source can scale to exceed the growth of money printing the people at bottom won't feel the system is fair. The lack of an expanding energy source may well be why real wages for the people at the bottom haven't moved upward since the 1970's. The more people who feel the system they exist in is not fair and just, the more social upheaval you will have.

A scaleable energy source would mean more heat trapped inside the biosphere so if you think the present CO2 is good/bad energy proxy discussion is bad, wait 'till the new source of energy and the consumption path of that new source has to be shutdown because of biosphere warming.

'technology will solve it eventually'.

In a Gallup poll released today, Americans chose dilithium crystals as the “most likely” fuel to run future cars and power plants, with 84% of Americans choosing the crystals over other options including nuclear, hydrogen, corn ethanol, shale gas, and photovoltaic solar panels. Respondents indicated that dilithium crystals are popular for providing quiet, clean energy, with a proven track record of seven-hundred twenty-six episodes in four different Star Trek television series.
posted by rough ashlar at 5:26 AM on March 14, 2012 [10 favorites]


I spent the last two days with a bunch of engineers from the top two oil companies in the world and they were seriously adamant that the petroleum economy was going to keep being the dominant force in the world even if gas taxes continue to rise, for the foreseeable future. Just as peak oil was being introduced, they found shelves in the Falkland Islands and Brazil. They stressed that there are higher risks with deep sea drilling but are not looking for a panacea because the economy will not allow them to do so.
posted by parmanparman at 5:28 AM on March 14, 2012


bunch of engineers from the top two oil companies in the world and they were seriously adamant that the petroleum economy was going to keep being the dominant force in the world

Upton Sinclair: 'It is difficult to get a man to understand something when his salary depends on his not understanding it.',
posted by rough ashlar at 5:36 AM on March 14, 2012 [18 favorites]


I don't have one handy but I've seen many charts showing that the rate of new discovery versus the rate of usage of known reserves is absolutely dismal.

The problem is that institutions of production and trade are rigged to benefit from high prices rather than to have high prices work as an impetus to finding alternatives. Things are not working out as they would in some free market dream scenario. I suppose part of that is deregulation of commodities trading, and part is subsidization of oil companies no matter what the scenario, and the major factor seems to be fuck you, little guy.
posted by fleetmouse at 5:41 AM on March 14, 2012


The madness of gleefully pouncing on more sources of oil in the face of constant evidence of global climate change - supported by the world's best thinkers - doesn't leave much room for optimism.

"The dangers of carbon dioxide? Tell that to a plant, how dangerous carbon dioxide is." ... major 2012 presidential candidate (it doesn't even matter which)

"The only thing we can do is hold his hand to the grave." - Roddy McDowall
posted by Twang at 6:06 AM on March 14, 2012 [1 favorite]


C02 and associated dangers mean nothing to those such as Aubrey McClendon who must be close behind the Koch brothers on the road to hell.
The problem isn´t the lack of oil it´s the vast price of future production and investment, which in turn will be reflected by huge price hikes. We are not just talking about gassing up the pickup; it is all the byproducts of the petroleum world. The rich will get much, much richer; the rest of us might be taking to the barricades streets sooner than we think.
posted by adamvasco at 6:28 AM on March 14, 2012 [6 favorites]


I grew up in the shadow of this refinery.

My dad worked there for 30-odd years before retiring a few years ago. He had no college degree, a doubtful work ethic, once threw a scab through a window for mouthing off about the union, and despite all that was making nearly $40 an hour when he finally retired.

Can you believe that? Will these companies ever have trouble finding employees? Or buying an army?

When I read about oil industry lobbyists, it seems kind of abstract to me. I understand that the government-business relationship is corrupt, but it seems remote.

But when I think about my dad, a good old boy from Appalachia, raking in the big bucks for napping in a corrugated steel shed while occassionally making excursions to hook a tanker car up to a large tube, it feels far more real and much more frightening.

If they pay that kind of money for just some guy, what will they pay for a Senator? A President?

I mean, hearing him talk about decades past, the company had an apparently tolerant attitude towards the unions. They'd play the strike game, dance the dance, negotiate, and everything would go back to normal. They consistently caved to union demands, occasionally making a show of re-hiring people or being generous, because what did they have to be afraid of?

"Higher wages? Shorter shifts? Lemme check the books. (snicker) Oh, we can afford that. Let's let them picket for a while anyway... it raises morale."
posted by edguardo at 6:43 AM on March 14, 2012 [18 favorites]


It was the easy oil—that’s what fueled our prosperity.

That, and cheap money.

Upton Sinclair: 'It is difficult to get a man to understand something when his salary depends on his not understanding it.',

"Michael T. Klare is a professor of peace and world security studies at Hampshire College."

(Sorry, couldn't resist.)
posted by IndigoJones at 6:50 AM on March 14, 2012 [1 favorite]


Geez, what a terrible article. There's nothing new here that hasn't been said far more rigorously and correctly dozens of times before. And yet, almost every paragraph contains either an error of fact or something defensible but at the very least misleading.

“easy oil,” in the parlance of industry analysts; in other words, the kind of oil that powered a staggering expansion of global wealth over the past 65 years and the creation of endless car-oriented suburban communities. This oil is now nearly gone.

If by 'nearly gone', he means 'about halfway of current estimates of reserves", then ok.

Or

But most of the near-surface bitumen in the tar-sands-rich province of Alberta has now been exhausted,

Umm... near surface deposits are about 10% give-or-take of the total bitumen deposits in Alberta. These are nowhere near exhaustion, with mine lives for current and new mines measured in decades, not years.

And on and on it goes. Not to say that this is total nonsense -- the peak oil arguments have been made since at least the early 60s and probably sooner, and some of them are quite compelling (I keep recommending Vaclav Smil as one of the best writers and researchers in the interdisciplinary areas of physics, energy, policy and history of energy), but just that this article is pretty weak.
posted by bumpkin at 6:50 AM on March 14, 2012 [3 favorites]


parmanparman: Just as peak oil was being introduced, they found shelves in the Falkland Islands and Brazil.
I'm not sure what time frame you (and they) have in mind here. The "peak" model of resource extraction has been around for nearly 60 years.

The peak resource theory is simpler than some critics seem to realize: the rate of discovery of a finite resource eventually falls, and some time later, the production rate of that resource also necessarily falls. The discovery of some new oil fields in the Falklands etc. are not even close to sufficient to reverse the extremely strong long-term trend of falling discovery rates.
posted by Western Infidels at 6:52 AM on March 14, 2012 [3 favorites]


The oil argument is quite confusing, however this piece does well at specifying exactly how dependent industrialised socities are on continual energy flows from outside sources.

In speaking with a variety of economic policy leaders over the last two years, one thing becomes increasingly clear. The energy security argument trumps the environmental argument routinely. China, for example, is investing tremendous volumes of capital in renewables because they have seen what happens when a large country powers it's own growth with external sources of energy. Primarily that the society becomes attached to the fates of it's energy providers. One only has to look at the quanitity of American resources consumed by the Middle East to understand what happens when a society is dependent upon energy from unstable countries for its very survival.

China has decided that whilst in the short-term, expanding access to fossil fuel resources is imperative, Beijing also sees that the best path toward growth is to create as much energy as possible within one's own borders.

And this is a theme Europe has embraced as well. Whilst the Europeans do a much better job integrating a moral obligation for environmental protection as a basis for renewable energy, they are also tired of fighting odd regimes for access to energy. When Putin has the opportunity, he shuts off the gas, freezing out parts of Europe. Who wants to deal with that?

I was doing an analysis of economic growth and fossil fuel indicators yesterday. One known insight is that GDP is often correlated with energy consumption and carbon emissions. The more energy a country consumes, the greater it's economic activity. Hence, the current attachment of global economies to non-renewable resources. Looking forward, one sees that Europe's growth hovers around 1% in 2012 – 2013, whilst the US's growth will achieve 4% in 2013. The difference? Europe continues to decrease carbon emissions, whilst the emissions in the US continue to grow.

Originally, the US target for emissions reduction in the present moment was -6.7%, whilst in reality, they have climbed 7%, for a total difference of 15%. And that alone is a strong indicator of how the US is navigating out of the crisis, versus how Europe is navigating out of the crisis.

Europe continues to take very hard paths that require systemtic reform. Whether it's high energy prices to replace fossil fuel energy infrastructure, or sorting out the weaknesses of the economic zone. In both cases, there are much easier short-term solutions that would ignite growth, and relieve the pressures on the societies a bit. However, European leaders are intent on solving these problems, rather than just delaying them.

The United States loses it's once-leading focus on renewable energy as new oil and gas reserves come on line. The lukewarm attitude of the US toward global climate change agreements has grown increasingly cold. The fact that the presidential debate is about the price of gas illustrates the kind of short-term thinking that may very well undo America in the long-term.

And with problems enumerated in this piece -- especially that of food security -- are long-term problems that will not be solved by pumping more oil. Rather those problems will be delayed and allowed to fester, so that next time they rear their heads, the impact will be larger, and the solutions more difficult.

Overall, the point being that these are known problems, that many nations around the world are aware of. The trick is how do you feed the beast enough oil whilst devoloping energy systems not dependant on oil. And do that in a time of exploding global demand for energy, in a collapsed global economy. Ready? Go.
posted by nickrussell at 6:58 AM on March 14, 2012 [6 favorites]


Also, the whole notion of 'easy oil' is a bit suspect. With modern seismic and a comprehensive subsurface database, it would indeed be pretty 'easy' to find the oil fields of the Leduc trend, which in their days, were company makers. But if you talk to people who were exploring these even a few decades ago, let alone in the 50s, there wasn't anything easy about it.

The linked article quotes former Chevron CEO David O'Reilly saying that 'the easy oil is gone' -- but the full quote suggests that he was more concerned about geopolitical difficulties than technological or geological ones. Indeed, every since the Seven Sisters were booted out of much of the Middle East, the rise of national oil companies (NOCs) and diminished importance of Western publicly traded oil companies ('IOCs') has steadily diminished. Much of the globe is no longer explorable for the Exxons and Shells of the world, and their former advantage of technological skill and ability to deploy and manage massive amounts of capital -- which allowed them to enter and develop areas like offshore West Africa, for instance -- no longer differentiates them from the NOC's which more and more frequently blow the IOCs out of the water in any bidding round. Not to say that we should shed a tear for Chevron, but just that the game has changed for them in big way.
posted by bumpkin at 7:01 AM on March 14, 2012 [2 favorites]


What never gets mentioned in these BS articles is that oil arbitrage results in a significant price cut for traders. Even though some are calling for regulation, these arbitrage markets are largely unregulated. Will either Presidential candidate talk about that? Of course not. I haven't checked out this sector's campaign donor profile, yet, but I think I can guess what a detailed diligence would provide.
posted by Vibrissae at 7:03 AM on March 14, 2012


> I mean, hearing him talk about decades past, the company had an apparently tolerant attitude towards the unions. They'd play the strike game, dance the dance, negotiate, and everything would go back to normal.

That was more or less the dynamic at the synthetic rubber plant my dad worked at during the '70s, '80s and '90s; the contracts at his plant generally set the tone for negotiations between the other plants and their unions. The guys at the top were getting paid, I'm sure, and the guys (like my dad) in the middle and at the bottom were still making a comfortable middle-class living. It seemed like an arrangement that worked pretty well to me, but then I'm not a billionaire who would trade it all for a little more.
posted by The Card Cheat at 7:12 AM on March 14, 2012 [2 favorites]


The AFL-CIO: buying off the revolution since 1955.
posted by edguardo at 7:20 AM on March 14, 2012


Since when does the NYT put press releases on the op-ed page?

Hell, Judith Miller was putting Dick Cheney's press releases in the News section 10 years ago.
posted by NorthernLite at 7:23 AM on March 14, 2012


ACK - wrong thread. Sorry.
posted by NorthernLite at 7:26 AM on March 14, 2012


"If by 'nearly gone', he means 'about halfway of current estimates of reserves", then ok."

halfway IS nearly gone, unless you are arithmetically illiterate. Have you ever looked at a graph of oil consumption vs. time? It ain't linear.
posted by lastobelus at 7:26 AM on March 14, 2012 [1 favorite]


In the interests of full disclosure, I work for a major oil company as a geologist, so I have some insight on this issue.

The 'peak oil' narrative has been around for a long time, and there's some truth to it, but it consistently underestimates the real amount of oil that is legitimately out there.

More recently, there has been the narrative that 'all the easy oil has been found', which again is somewhat true, but also not as true as the authors of this article would like you to believe.

Conceptually, oil exploration is a fairly conservative business. You tend to build on successes, so once an idea is proven, a flurry of discoveries are made, followed by a secondary wave when these ideas are explored in a global context. The Brazilian discoveries are currently in the first phase (HUGE and still growing). Keep a lookout for the followup phase. Shale gas and oil have exited the first phase (and are the reason why the US is suddenly flush with gas), and are starting to enter the second phase. You may not be aware, but there have been massive amounts of gas recently discovered offshore Mozambique and Tanzania - those are still firmly in the first phase.

A massive discovery in one of the world's most mature petroleum provinces occurred last year. This discovery is just about as 'easy to get' as oil gets, and threw a monkey wrench into the 'all the easy oil is gone' narrative. This discovery is firmly in the first phase that I mentioned before.

There is still a lot of 'easy to find' oil out there, but the costs and risks involved in trying new ideas are staggering. (Would you be willing to bet in excess of $200m of your own money on something with a 10% chance of success? Would you do it 10 times?).

I think the 'easy oil is gone' narrative is mostly off the rails at this point. I don't think oil will ever be 'cheap' again, but we're not running out in the near future. New ideas will take us a lot further, and relatively high prices will maintain the positive benefit of trying out new ideas.
posted by grajohnt at 7:30 AM on March 14, 2012 [7 favorites]


(Sorry - rather than 'easy to find', it should have been 'easy to produce' !)
posted by grajohnt at 7:34 AM on March 14, 2012


I think the 'easy oil is gone' narrative is mostly off the rails at this point. I don't think oil will ever be 'cheap' again, but we're not running out in the near future. New ideas will take us a lot further, and relatively high prices will maintain the positive benefit of trying out new ideas.

Strongly agree with this. Am keen to hear your thoughts on the balance between supply and demand.

To preface, there's a strong emphasis in the American media that this is supply problem, and needs to be corrected at the supply side. In Europe, it's seen more as a demand problem, that needs to be corrected on the demand side.

Thus, how likely is it that the prices we are seeing are 1) result of classical economics, and 2) the result of building systems in a time of cheap supply, and now seeing how those systems fare in times of restricted supply?

(note, I am not talking 'supply' from a peak oil point of view, but rather from the point of view that the world can refine xx barrels per day, and demand continues to increase to -- and beyond -- that limit)
posted by nickrussell at 7:35 AM on March 14, 2012


grajohnt, do you think that there is anything to the fears of some people that extracting oil from tar sands, or from places like the Arctic, will do serious damage to the environment?

Can 'easy oil' keep us from resorting to more environmentally damaging extraction techniques for long enough to find alternative energy?

Will other nations be content to receive their oil from 'easy' foreign sources, if they have sovereignty over 'difficult' sources, the extraction of which might harm the environment, while yet supporting their national independence?
posted by edguardo at 7:40 AM on March 14, 2012


It's all about perspective:

Wife: Honey, I don't mind you spending a few minutes putting your music on before we go but do you have to run the engine while you do it? Gas is expensive.
Me: Back home petrol is $5.36/gallon for regular unleaded. You don't know what expensive is.

Keep in mind:

a) The average fuel economy of passenger cars has been increasing above CAFE standards for quite awhile.

b) Combined with the great recession demand for gasoline has year-on-year decreased over the past three years yet the price of gasoline climbs ever higher.

c) The USD sucks at the moment. This is the real problem and reason why the US is seeing gas prices soar. Americans have been paying more for crude oil as every other currency has been able to bid more US dollars for fuel. Prices in other countries haven't nearly been as volatile and looking over prices back home they've held steady between AUD$1.30-$1.50/L for the past two years.

What we do can and need to do is introduce ways of stopping intra-day price volatility and gouging during "peak" times during the day. Have gas stations report their pricing by 4pm for the next day and that becomes the new price at 6am. Publish all prices so that citizens can enter their ZIP code and find the cheapest fuel near where they work and where they live.

It's not really competition if its impossible or uneconomical for the consumer to be informed.
posted by Talez at 8:05 AM on March 14, 2012


nickrussell: The answer to supply and demand is: Yes, both are key. One of the big issues that gets missed (particularly in the political discussions) are the timeframes involved. When you make a discovery, you're looking at 3-10 years before it goes into production, and once that production starts, it's not economically feasible to do it slower (you need to get your investment costs back quickly). This is whats wrecking the gas market in the US right now - a huge spike in production leading to a glut of supply. But no one is discussing the fact that natural gas prices are incredibly cheap right now.

edguardo: It's a new world now - particularly post-Macando. Environmental damage is nearly impossible to hide in this insta-news world, so most companies have a heavy focus on zero-harm. This is particularly true in sensitive areas such as the Arctic. The discussion about the Alberta tar sands is heavily muddled by strip-mining techniques that have been used in the past, but new techniques (such as SAGD) have a very low environmental footprint. It is absolutely possible to exploit these resources in an environmentally conscious way. Regarding your last point, the bottom line is the bottom line - everything is driven by economics - if it's cheaper to receive oil from foreign sources, it will happen, if it's cheaper to do it from difficult sources, that's what will happen. The sensible thing is to make sure the tax/penalty structure for development keeps the actual costs in line with any potential social or environmental costs. That's the most responsible way to keep the economics and environmental impacts in a proper balance.
posted by grajohnt at 8:06 AM on March 14, 2012 [2 favorites]


Is it profitable to keep the economics and environmental impacts in a proper balance?
posted by edguardo at 8:11 AM on March 14, 2012


Is it profitable to keep the economics and environmental impacts in a proper balance?

Congressmen and senators are subject to inflation along with everything else.
posted by Talez at 8:16 AM on March 14, 2012


I apologize: it's easy for me to rattle off questions at little cost to myself.

So it seems to me that if everything is driven by economics, and the cheapest option is the one that will be chosen, it seems, as you say, that those cheap-but-destructive options need to be made more expensive through taxes and penalties, before the market will default to them.

But is the tax collection and penalty enforcement also driven by economics? If it is, how does this change anything, really? You just buy the regulations you want, as we see currently.

Something, somewhere, has to stop being driven by dollars, before we can consistently make decisions that take the environment into account.
posted by edguardo at 8:21 AM on March 14, 2012 [1 favorite]


* "before the market won't default to them."
posted by edguardo at 8:24 AM on March 14, 2012


And to think, we did such a good job saving the world from the depletion of the ozone. (Which, seriously, would have just happened if not for the efforts of this one scientist who saved the world. It's a lucky thing that that particular imminent cause of the end of life as we know it was easy to reconcile with our economic interests (although there were probably people even then claiming banning CFCs would bring about an economic apocalypse), because otherwise, we'd already be toast.
posted by saulgoodman at 8:31 AM on March 14, 2012


(Ignore stray punctuation, please.)
posted by saulgoodman at 8:31 AM on March 14, 2012


In a Gallup poll released today, Americans chose dilithium crystals as the “most likely” fuel to run future cars and power plants, with 84% of Americans choosing the crystals over other options including nuclear, hydrogen, corn ethanol, shale gas, and photovoltaic solar panels.

From what I've seen lately in the news, I sadly believe if you conducted this poll for real you'd get a similar response.
posted by CosmicRayCharles at 8:46 AM on March 14, 2012


Fortunately, our President is saying the right things about this, even if he might not be able to solve the problem all by himself.

"Only in politics do people root for bad news. Do they greet bad news so enthusiastically. You pay more, they're licking their chops. And you can bet that since it's an election year, they're already dusting off their three point plan for two dollar gas. And I'll save you the suspense: step one is to drill and step two is to drill and step three is to keep drilling. . . The American people aren't stupid. They know that that's not a plan, especially since we're already drilling. That's a bumper sticker."
posted by markkraft at 9:03 AM on March 14, 2012


most companies have a heavy focus on zero-harm. This is particularly true in sensitive areas such as the Arctic.

I am considerably less sanguine about this than you.

A big spill in the Arctic, particularly the offshore in the regions of heavy pack-ice will be very hard to deal with. With working seasons as short as a few months, it's conceivable that an MC-252 or a even smaller Montara-like spill could last a year or more before relief wells could be drilled. We're still reinventing response technology for every deepwater spill. Hell, even detecting oil underwater is an almost impossibly hard task. Best current technology is still visual, divers and rovs. Sonar, fluorescence, GPR, etc... remain in the prototype stages, as they have for the past 20 years. Most spill models, used for both planning and response, don't handle the presence of continuous or pack ice. Removal of oil by skimmers and in situ burning is 5-10% effective at best. Cold-water effectiveness and the ecological trade-offs of dispersant use in the Arctic is also not well understood.

Whether one would even make the dispersant trade-off in the low-productivity Arctic ocean is another question entirely. I know Norway heavily relies on the use of dispersants for smaller production platform spills in the North Sea, but, with respect, conditions are very different in the Arctic than the North Atlantic. The best experimental data is that oil is very persistent in sediments and shorelines in the Arctic, and that common assumptions about enhanced biological removal of oil with dispersant use will not hold in such low-productivity environments.

Sorry, but given the higher estimated probabilities for accidents in ice-infested waters, the greater ecological consequences in the Arctic, and the much greater difficulties of response, I remain unconvinced that seeking oil in harder to reach places, like the North American and Russian Arctic waters, will not have increasingly higher environmental costs than current off-shore production.
posted by Anonymous 5$ Sockpuppet at 9:08 AM on March 14, 2012 [4 favorites]


> I can see a path where anthropogenic global warming does just that -- spike CO2
> high enough that it causes former CO2 or other greenhouse gas caches to spill

and move Earth into the orbit of Venus, 41400000000 km closer to the sun

> and we rapidly become Venus.
posted by jfuller at 9:21 AM on March 14, 2012


The silver bullion value of a US silver quarter (a US quarter dollar coin dated 1964 or earlier) has been worth about a gallon of gas in US for 120 years, and still continues.
posted by caclwmr4 at 9:22 AM on March 14, 2012 [1 favorite]


Deepwater Oil Drilling Picks Up Again as BP Disaster Fades however extraction costs are ten times that of the Saudi Ghawar field.
posted by adamvasco at 9:35 AM on March 14, 2012


Also, with more difficult drilling conditions leading to more spills, won't that also lead to more burn offs, which will also accelerate the pace of AGW? And with weather becoming less stable (i.e., more sudden swings from cold to hot, like the kind we've had all winter in my part of Florida) mechanical part failures should increase--belts will tend to wear out faster, etc. So we'll need to burn more fuel to make up the difference--minor at first, I'm sure, but probably measurable. Once all the tiny little feedback effects are accounted for, I still think some of us are being far too optimistic about how relatively stable the near-term picture will be in the absence of serious steps to address our energy problems now. If the only argument on the side of "no big deal" is some variation on "well, we're too small and the world is so big," I'd just remind everyone that our use of CFCs in our hairspray and air-conditioners very nearly led to a global extinction event just a generation ago. There's no doubt we now have the capacity to unwittingly kill ourselves off in a relatively short span of time, if we aren't careful enough.
posted by saulgoodman at 9:43 AM on March 14, 2012 [1 favorite]


A5$S: One of the big emerging petroleum provinces is the Barents Sea, both on the Russian side and the Norwegian side. I'm not sure how you see that as different than the North American arctic, but production is already on-going, and you can be sure that Norway, being a pretty environmentally-conscious place in general, wouldn't have approved this without a substantial weighing of the potential environmental impact.

The problems you mention are all well-understood, which is why Canada has stringent regulations on relief wells. As I said, this is the correct regulatory approach to balancing the economics vs. the environmental impacts. Canada has done a good job of weighting up the regulatory/cost environment to include potential environmental costs in advance.

Now the Russians? Not so much.

Most companies have come to grips with the fact that big accidents are potential company-killers, which obviously, attracts just a wee bit of shareholder interest. Again, the bottom line rules - none of the stakeholders want to risk destroying the company, so there's an increased emphasis on such things NOT happening.
posted by grajohnt at 9:44 AM on March 14, 2012 [1 favorite]


I spent the last two days with a bunch of engineers from the top two oil companies in the world and they were seriously adamant that the petroleum economy was going to keep being the dominant force in the world even if gas taxes continue to rise, for the foreseeable future.

This is a very different assertion from: We're not at or near global peak production. We used oil as our primary transportation fuel when it was less than ten bucks a barrel in the 1980s, and we do the same now when the baseline price is $80-100. We'll probably continue to rely on it too much even at $200-plus, because we've built a hundred years of infrastructure that doesn't work very well any other way.

Meantime, we'll probably start to see much more accelerated demand for much more fuel efficient and electric vehicles, hopefully even transit and bike lanes and all that good stuff. At $150/barrel, the American auto industry very nearly imploded. Anyone who thinks this era of "extreme energy" (Michael Klare's phrase) is in any way alleviated by tight shale plays and subsaline deposits two miles under the ocean off the coast of Brazil probably has a drilling permit they'd like you to approve.

There is still a lot of 'easy to find' oil out there, but the costs and risks involved in trying new ideas are staggering. (Would you be willing to bet in excess of $200m of your own money on something with a 10% chance of success? Would you do it 10 times?).

grajohnt, I think this is the crux of what you're saying, and I don't think it's categorically different from what Klare and guys like him (Canadian geologist David Hughes, for example) are saying. Your point is we'll find enough oil at a high enough price to probably keep supply flat or ever-so-slightly growing for awhile (though I'd be curious to know if you think the IEA's 105-million-barrels-a-day-by-2030 scenario is at all achievable, especially since some in the IEA itself don't seem to think it is).

The peak oil crowd - its more studious wing, anyway - is saying, yes, but when all the oil going offline is massive Ghawar-type light sweet crude and basically everything coming online (notwithstanding the occasional North Sea surprise) is Alberta bitumen and Brazilian deep-sea and theoretical Arctic drilling, you're simply not describing the same economic equation.

We built our economy on oil because it was cheap, plentiful and easy to find, with (as we then understood) only minor externalized costs. None of these properties is valid any longer. The axiomatic statement on this was printed in oversized font, both boldfaced and italicized, in the preamble to the 2009 IEA World Energy Outlook: "The days of cheap energy are over." Any long-term plan that actually gives a shit about people should have as its goal a transition to a post-carbon economy as soon as is feasible.
posted by gompa at 9:56 AM on March 14, 2012 [6 favorites]


Japan closes 52 nuclear power plants

"There seems to be plenty of energy in Japan without nuclear power.
According to calculations by the country’s energy authorities, Japan made it through the summer of 2012 without nuclear power, and without significant blackouts.
Summer is the most energy-intensive time in Japan: in the winter the Japanese have grown accustomed to living in cold interiors, and especially to leaving those rooms unheated where people spend only short periods of time.
In addition to efficient saving of energy, the calculations have taken into account the small generators that have been built in different parts of Japan that use solar, wind, and wave energy, and other alternative solutions.
Department stores have extensive sections selling solar panels, with various solar energy products available for people’s homes."


It is revealing that Japan was able to close 52/54 nuclear plants and a lot of this was done by conservation. It seems a lot of oil consumption in the world could be reduced without a drastic decline in the economy or way of living. When oil becomes too expensive, people will finally conserve and other sources of energy (electric powered transportation, shale gas, coal, solar, wind, thermal etc) will become competitive.

It is interesting to think that at some point in the future (whether 100 years or 1000 years from now) all fossil fuels will become scarce commodities, and possibly fresh water as well.
posted by Golden Eternity at 10:36 AM on March 14, 2012


It is revealing that Japan was able to close 52/54 nuclear plants and a lot of this was done by conservation.

I'm afraid the article you link to is pretty dishonest. Japan has massively increased both natural gas and coal burning generation in response to taking its nuke plants offline. Yes, there have been conservation measures too, but the notion that post-Fukushima Japan proves that cutting back on energy expenditure is easy is just false.
posted by yoink at 10:40 AM on March 14, 2012


You're making a dangerous leap there Golden Eternity. Japan is small. Here in the US we require a lot of very long-haul transportation to keep the grocery store stocked every day, and we get our products generally from very far away. A conservation effort like Japan's (even notwithstanding yoink's comment) isn't politically viable here because it would require an enormous and expensive reorganization of our settlement and land use patterns. That adjustment is going to take place only at gunpoint and over a long time, and by that time the conventional energy inputs of our pet alternatives will also be harder to come by. That's the main reason why it's so disturbing to hear people like grajohnt talking about how the big crunch isn't so terribly imminent.
posted by maniabug at 10:49 AM on March 14, 2012 [2 favorites]


And, Jimmy Carter FTW. No near-term policy change will make up for our rejection of his advice that we needed to dramatically alter our energy-intensive ways of living 35 years ago.
posted by maniabug at 10:54 AM on March 14, 2012 [4 favorites]


And, Jimmy Carter FTW. No near-term policy change will make up for our rejection of his advice that we needed to dramatically alter our energy-intensive ways of living 35 years ago.

He's history's greatest monster!

posted by gompa at 10:58 AM on March 14, 2012 [1 favorite]


Norway, indeed, is a world leader in terms of Arctic and cold-water permitting right now. The reviews of the Barents projects were well done, though concerns continue on the actual capacity to respond to a major spill even there. The Barents is essentially ice-free year-round, making it a much safer area to work in than much of the rest of the Arctic.

Things are less settled on the North American side. There have not been any concrete plans made for activity in the American/Canadian Beaufort. In principle, the lease-holders have another two years to submit projects for review, but nothing has been proposed yet. That provision for same-season relief drilling is being vigorously challenged by several of the proponents as overly costly and perhaps even technically impossible.

Response capability is strongly determined by how far the incident is from a major port. At 40 nmi from New Orleans, only a few hours travel, response was still very challenging. In the Beaufort, with times on station in the weeks, it's going to be orders of magnitude more difficult to respond. The amounts of equipment that are contained on the exploration ships are another key issue---in most cases this is sufficient for the first 12 to 48 hours, no more.

The potential for damages and the persistence of oils is beginning to be understood, but there are still big data gaps for the Arctic, particularly with regard to ecosystem effects. There are estimates for how much (or little) a typical response to a typical spill can mitigate, though the presence of ice is a major wild card. Even given our better understanding of consequences and response, however, many of the risks on the rig and exploration side are still guesswork. The exploration gear is all new technology. No one really understands the engineering failure rates.

In addition, current risk-assessments, including Norway's, tend to emphasize the highest probability spills, which tend to be small and relatively low consequence. My opinion is that this encourages a sense that spills are manageable, leading to over-confidence in spill and risk management, particularly on the response organization and industry sides.

One of the lessons of MC-252 (and a couple of other recent spills) is importance of low-probability, high-consequence events. These may have low probabilities individually, but traffic in oil is always increasing, and even low probability disasters are likely when there's lots of chances. The latest traffic analysis I've seen puts a VLCC going past Hammerfest every single day, each a potential Prestige or Erica (quite a bit bigger, actually). Individually, these ships are very safe, but there are a very large number of them.

The poor understanding of large scale response and consequent lack of preparedness was a big issue in the MC-252 response, dominating how the first months played out. No one had seriously considered how much boom or dispersant would be necessary for example.

One of the reasons I'm so cautious about this is that the science of risk assessment has improved in the last couple of decades. The Aleutian and Cook Inlet risk assessments are examples of current approaches, more comprehensive than even what Norway currently requires under law.

Most companies have come to grips with the fact that big accidents are potential company-killers, which obviously, attracts just a wee bit of shareholder interest.

BP said they understood this too, before Macondo. They'd even gone so far as to put Hayward in as CEO, specifically because he'd started as a rig engineer, with one of his main mandates to improve operator safety.
posted by Anonymous 5$ Sockpuppet at 11:17 AM on March 14, 2012 [5 favorites]


Here in the US we require a lot of very long-haul transportation to keep the grocery store stocked every day

Require?

Do the people of Moorhead Minnesota REQUIRE vine fresh red ripe tomatoes or heads of lettuce in Jan/Feb?

Does that 'require' translate into the produce that is tossed? Stuff that is otherwise OK, just not asthetically pleasing?
posted by rough ashlar at 11:21 AM on March 14, 2012


Of course I meant require in the political sense, not the biological one. It's worth using the word that way precisely because people need to be lead to question their "requirements". I eat mostly local, and do as much of my own food production and processing as I can, but it's a big task. Takes a lot of time and money, scary for my family over the long haul even though we're about 50th percentile for income and no more than 25th percentile for debt. The boogeyman our culture needs to face is of no small proportion.
posted by maniabug at 11:53 AM on March 14, 2012 [1 favorite]


Most companies have come to grips with the fact that big accidents are potential company-killers, which obviously, attracts just a wee bit of shareholder interest.

BP said they understood this too, before Macondo. They'd even gone so far as to put Hayward in as CEO, specifically because he'd started as a rig engineer, with one of his main mandates to improve operator safety.


And even the worst case scenario turned out not to be a company killer, anyway, given that BP's still in business and even profitable enough to raise its dividends.
posted by saulgoodman at 11:59 AM on March 14, 2012


even the worst case scenario turned out not to be a company killer

Not sure it really counts as a "worst case scenario" though. In the end, clean up was a lot easier than anyone seemed to imagine. Most of the really apocalyptic projections about the consequences of the spill seem to have been way off base. I think one could imagine cold-water spills that really would bring about company-killing clean-up costs.
posted by yoink at 12:38 PM on March 14, 2012


grajohnt: The Norwegian discovery, while "massive" will amount to 500K bd during 11 years, and yet not even Norway will come back to its pre peak levels (Norway peaked in 2001 at 3.4 mbd), in fact, even when the Aldous Major South – Avaldsnes discovery comes onlie, Norwegian oil production will climb just for a few years and then it will start to decline again.

That is peak oil in a nutshell: new discoveries can't compensate the decline of the old fields. And in any case, unconventional oil (although this one is offshore is quite "conventional", quite shallow etc) is going to make the barrel more expensive.
posted by samelborp at 12:46 PM on March 14, 2012 [2 favorites]


grajohnt: A massive discovery in one of the world's most mature petroleum provinces occurred last year. This discovery is just about as 'easy to get' as oil gets, and threw a monkey wrench into the 'all the easy oil is gone' narrative.
I am failing, in my amateur, not-quite-an-armchair-expert way, to follow this line of reasoning. You are speaking of the Avaldsnes/Aldous/Johan Sverdrup discovery? The one which may yield 3 billion barrels of oil, enough to run the global economy for 40 days or so?

I can see how it would "throw a monkey wrench into the 'all the easy oil is gone' narrative" if such a discovery was made every 40 days. Heck, I could see your point if we found one every year. Be we aren't finding such things. The Sverdrup discovery is being hailed as "the largest discovery since the mid 1980s." Yet it's not even a blip by the standards of the 1960s.

It seems to me it's sort of a marker for how bad our situation has become. It's huge by the standards of modern discoveries, yet it's not enough to mean anything in particular on a global scale.
There is still a lot of 'easy to find' oil out there, but the costs and risks involved in trying new ideas are staggering.
If the costs and risks are staggering, then in what sense is it easy?
posted by Western Infidels at 1:26 PM on March 14, 2012 [2 favorites]


I'm not really following you, grajohnt at all. I gather you are saying that there are still substantial deposits of off-shore and unconventional oil available, and that higher prices will justify their production. This is true, of course, but then you imply peak oil is not a concern because the "end of easy oil story is off the rails".
I don't see deep off-shore or unconventional oil as easy to produce, compared to the first 50% of the world's oil (e.g. Texas and Arabia) which could be produced for under $2 per barrel.
And nobody is arguing peak oil means oil cannot be had, just that growth in the volume of oil produced cannot be delivered economically. Oil will, effectively, always be available for high value uses like plastics and pharmaceuticals, where $500 a barrel is still peanuts, but $150 or $200 a barrel oil will dramatically impinge on the transport industry, with substantial follow through across the economy.
Some people argue this is happening now, and is responsible for a substantial portion of the economic malaise and providing a strong headwind against growth.
I understand in coldly geological terms there are still substantial oil deposits, but to make a call to authority argument that a petroleum geologist says the easy oil is gone argument is off-the-rails, when that is clearly not the case in any substantial way, is dishonest.
If you believe there is substantial oil to be produced at anything approaching historical costs of production, please make that case. The argument you have put forward supports the case that future oil production costs will be very high in historical terms in both dollars, environmental costs and EROEI.
posted by bystander at 1:34 PM on March 14, 2012 [3 favorites]


One of the things I enjoy about Metafilter is the ability to have a reasoned argument - otherwise I make a point not to comment much on-line. Kudos to bystandad, samelborp, and A5$S for excellent points.

The point made by the Johan Sverdrup (Aldous/Avaldsnes) discovery is this: Despite the narrative *in the North Sea* being 'all the easy barrels have been found', in fact there were literally billions of 'easy barrels' to be found. It IS big by any standard (even by '80s standards - certainly in the top 10 of oil fields ever found on the NCS). It's in shallow water. It's light crude. It's not complex to produce at all. The ultra-silly thing about it is that it's in the first license block ever awarded on the NCS, there was a well that missed it by a mere 500m, and *it hadn't been discovered before*. The question that you should ask is 'why?', and 'what else have we missed?'. The answer is, naturally, a lot.

Johan Sverdrup is not the answer to the world's energy needs, but it is not unique, nor is the NCS. Brazil is case in point - the country was an 'meh' in terms of oil potential 10 years ago. Suddenly, it is red hot, in such a way that is transformative to it's economy and the future of the region. Mozambique/Tanzania are the same. Shale gas (and recently shale oil) are the same. Each of these cases represent someone rolling the dice on the fact that conventional wisdom was wrong (NCS is out of oil, Brazil was too deep, Mozambique was low potential, shale gas isn't economic). Challenging the status quo is hard and risky economic business, but the rewards are currently tempting enough to be making it happen on a regular basis. I have exactly zero doubt that there are many many of these cases left, including a very large volume of 'easy barrels'.

A relatively high and stable price of oil helps encourage the challenging of conventional wisdom, and also encourages conservation of resources. Both are capable of producing positive changes to our overall energy outlook, especially when combined. It also helps balance the (very real) risk picture that A5$S has pointed out, because you can still reduce the risks as much as humanly possible and still be able to make a business case to do it.

Should we be working towards alternatives? Yes, undoubtedly. But I think that we can, as humans, find a good path that balances the environmental, social, and economic risks that paves a smooth way towards that alternative. You could call me overly optimistic, but I have trouble seeing it any other way.
posted by grajohnt at 2:53 PM on March 14, 2012 [1 favorite]


OK, I'll bite. How does the discovery of a single large-ish "easy to produce" field in the North Sea change the equation for deep off-shore and unconventional? Are you suggesting we can reverse field decline by revisiting previously explored areas? High prices over the last 4 years seem to have largely disproven the idea that a workover will produce enough additional oil to make up for declines.
Nobody is arguing that unconventional sources can't produce oil, just that they are substantially costlier, and will consume an increasing portion of our income to deliver equivalent energy inputs. Again, you make the point that higher prices make it viable to exploit costlier sources. This is obviously true, but it does not negate the peak oil thesis, indeed it is a central plank of it.
posted by bystander at 3:34 PM on March 14, 2012 [1 favorite]


Sure. There's plenty of easy oil, natural gas and other fossil fuels left. And they're getting easier all the time.
posted by saulgoodman at 7:36 PM on March 14, 2012


Grajohnt -

A really interesting perspective from someone in the field. Thanks!
posted by Slap*Happy at 5:02 AM on March 15, 2012


Unfortunately, no one who can affect public policy is really listening. The real problem may be that we tend to consider the "present" as something that has always been, and always will be.
posted by clvrmnky at 8:06 AM on March 16, 2012 [1 favorite]


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