| Scaring people about energy |
By Alan Caruba
There’s a new book, A Thousand Barrels A Second by Peter Tertazkian, that paints a very scary scenario about the oil industry and energy options in the future. When I read such books or the daily headlines in newspapers or in news magazines, I keep reminding myself that bad news sells.
Tertazkian’s book is actually quite interesting and appears to have been well researched from open sources. The author is the chief energy economist and director at ARC Financial Corporation, identified as “one of the world’s leading energy investment firms.” His book is devoted to the concept of “peak oil”, that indeterminate day when the world’s known reserves of oil begin to decrease and the view that there will be few others to replace them.
That is a fallacy. On at least five occasions in the past, the world has been informed that it was running out of oil. Tartazkian’s book asserts that, “We’re on the verge of a tipping point in oil…a break point.” However, the author does say, “”We’re not running out of oil, but the oil we need is getting harder to find.” This is true.
A case in point is a new field near Sakhalin, a remote island off Russia’s east coast. American, Japanese, Indian, and Russian oil companies funded the project which now taps a field that will yield some 250,000 barrels of oil a day by the end of this year along with some 60 million cubic feet of natural gas. Additional fields in the pipeline include Chayvo, Odoptu, and Akutun-Dagli. Overall, more than five billion oil-equivalent barrels of energy are anticipated.
Here’s what most people still don’t understand. It took some ten years to make this happen and involved “slant-drilling” for 20 miles to tap the Sakhalin field. This is an extraordinary technological achievement and a very expensive one. If we began today to drill in Alaska’s ANWR, it would take about the same time frame before Americans could benefit from their own oil. So far, the U.S. Congress has managed to stymie this effort for decades!
Civilization has gone through various stages of dependency on different forms of energy. Domesticating animals like oxen and horses was the first breakthrough. People burned wood for a very long time, then coal. The British Empire was built on the availability of coal. They were, for a relatively short time, “energy independent.” Then in 1859 came oil. Middle Eastern oil discoveries in the early part of the last century transformed whole economies and launched an effort by Western nations to secure control of it.
The President, in his State of the Union speech, said America was “addicted to oil” and urged that we undertake more research to achieve “energy independence.” What he didn’t mention is that America imports oil from sixty different nations, not just the Middle East. His solutions, too, left me less than thrilled. Can you imagine how many acres of land we’d have to plant to produce enough corn to make ethanol as a gasoline additive? This is a boon to farmers, but does little to address the need for oil.
It is true that Americans and the West send billions of dollars to the Middle East, enriching a few despotic governments who use that money to finance a global jihad. Getting control over a crazed and volatile Middle East might account for why U.S. troops are in Iraq. If you want to gas up your car, you might want to think about the benefits of having some influence over a nation with the second largest reserves of oil in the region.
The concept of “peak oil” has been around since the 1950s when it was first proposed by a Shell Oil geologist. New oil fields have been found since then and the effort to find others continues in order to meet the anticipated world demand of 120 million barrels per day in 2025.
As noted, bad news sells. Americans need to keep in mind that (1) all the oil that exists around the planet has not been found, (2) that new technologies will make its extraction possible, and (3) will greatly improve the use of what exists. Our national energy concern should be focused on oil in terms of the essential role it plays in transportation. Failure to keep our cars and trucks on the road would imperil our economy. Ultimately, all goods move on wheels.
The world is filled with some really unpleasant people; some of them are in charge of nations like Iran, Venezuela, and Nigeria, where the government controls production. However, the minute they stop exporting to us and other nations, they are in big trouble. They need us as much as we need them. And governments change.
The largest supplier of oil to the United States is none other than Canada. The discovery and development of oil-tar fields has enabled this. While the U.S. is home to vast shale-oil reserves, the cost of its development and extraction is still too high for the large oil companies to contemplate. That day, however, is coming and, when it does, trillions of barrels of oil trapped in that rock will continue to fuel our energy needs.
It doesn’t help when President George W. Bush, an oilman and son of an oilman, says during his State of the Union speech that America is “addicted to oil.” We are not addicted, but we are dependent. So is the rest of the world. And, remember, it’s an election year. The President’s advisors study the polls.
James K. Glassman, writing for Tech Central Daily on February 2 called the President’s statement “dangerous.” I agree. Telling Americans that solar or wind technologies can take up the slack in our need for energy is nonsense. These heavily subsidized technologies represent about one percent of all the energy we use. That’s because they are astonishingly ineffective.
Telling Americans we can “conserve” our way out of our dependency on oil is absurd. The President’s suggestion that hydrogen will magically become an energy source has no basis whatever in reality and is little more than a cruel hoax. Hydrogen is not an energy source; it is an energy carrier, and a very costly one at that. It may, at some point, however, become useful for hybrid car production on a larger scale, thus reducing the use of gasoline as their only fuel source.
The scary news purveyors are having a field day. In the March edition of The American Enterprise magazine, Robert Zubrin says that the only way to “liberate ourselves from the threat of foreign economic domination, undercut the financiers of terror, and give ourselves the free hand to deal with Middle Eastern extremists” is to devalue their oil resources. “We can do this by taking the world off the petroleum standard and putting it on an alcohol standard.” An essential step says Zubrin is to “simply pass a law stating that all new cars sold in the U.S.A. must be flexible-fuel vehicles capable of burning any combination of gasoline and alcohol” in the form of either ethanol or methanol.”
Ethanol is made from agricultural products. They have to be grown somewhere in the world and are subject to all kinds of problems such as drought, grasshoppers, weeds, and plant diseases. Methanol can also be made from biomass, as well as from natural gas or coal. This is the kind of beguiling notion that sounds great on paper but doesn’t work in the real world.
Whoever becomes the next President of the United States is going to have to make some major decisions to insure that this nation remains the superpower it is, economically and militarily. Insuring that America has enough energy for the foreseeable future, however, is going to be the single, most important decision of all.
Alan Caruba writes a weekly column, “Warning Signs”, posted on the Internet site of The National Anxiety Center. © 2006, Alan Caruba
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