Energy Futures
Oil
by A.K. Gupta
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Just five countries in the Middle East sit on top of nearly two- thirds of the proven oil reserves in the world. Of these five, only Iran and Iraq remain outside of the U.S. sphere of influence, possibly the real reason why President Bush designated them, along with North Korea, as the “axis of evil.”
The U.S. is the world’s leading consumer, using over 26 percent of daily consumption despite having less than 5 percent of the world’s population. It is increasingly dependent on foreign oil, having imported 56 percent of domestic supplies in 2000 (though most of this comes from Canada, Mexico, and Venezuela).
The petro-cabinet assembled by Bush has hopscotched the world— from Central Asia and Equitorial Africa to the Andean region and Alaska—to secure more sources to feed the West. Yet, oil discoveries peaked in the 1960s. Today, newly discovered reserves amount to only one-quarter of annual global consumption.
Since the first oil well began pumping in Titusville, Pennsylvania on August 27, 1859, some 900 billion barrels of oil have been sucked out of the earth. Slightly over 1 trillion barrels in proven reserves exist around the world. Forecasting future discovery is tricky at best, but perhaps another half-trillion barrels of oil in undiscovered conventional reserves remains hidden.
It’s estimated that world production will peak between 2010 and 2020. Skeptics, led by disciples of M. King Hubbert, who accurately predicted in 1956 that oil production would peak in the lower 48 states around 1970, contend that prices will rise sharply after 2010 as production peaks and reaches a point of diminishing returns.
Others dispute this, noting that contrary to expectations, two new “supergiant” fields have been discovered in Kazakhstan and Iran in the last decade. As prices rise, it makes deep-ocean, marginal fields, and artic exploration more economical. Ironically, as fossil-fuel induced global warming melts the glaciers, oil companies are anticipating a gold rush in the largely unexplored and environmentally fragile polar regions.
Unconventional sources—tar sands in Western Canada, the heavy oil belt in Venezuela, and oil shale in the U.S., Brazil, Zaire, India, and many other countries—will likely become major producers of oil by the mid-21st century, as improved technology and rising costs render them feasible. While all conventional reserves—proven, unproven, and already pumped—amount at upper estimates to 2.5 trillion barrels, it’s thought that another 3 trillion barrels can be extracted from unconventional sources.
Also, Third World regions are at the beginning of the discovery curve, likely resulting in increasing output in future decades. This hasn’t escaped the notice of the Bush administration. The White House had Secretary of State Colin Powell stop in at the Johannesburg Summit on Sustainable Development in September to catch some flack over the profligate American lifestyle before embarking on his real business: Currying favor with oil-rich African nations like Gabon and Angola. Sub-Saharan Africa already provides the U.S. with 15 percent of its daily supply, which is expected to rise to 25 percent by 2015.
Walter Kansteiner, assistant secretary of state for Africa, is blunt about U.S. policy toward the forgotten continent. “African oil is of national strategic interest to us, and it will increase and become more important as we go forward.”
U.S. policy has kept oil cheap, stymying the development of cleaner fuels and transportation. Even if the White House dropped its hostility to alternative fuels, it would take decades to wean the economy from oil because of the need to create a massive new infrastructure for the production, transportation, and distribution of a new energy supply, such as hydrogen fuel cells. From today’s vantage point, it appears that oil dependence and oil wars will continue to dominate the landscape.
Oil
by A.K. Gupta
--------------------------------------------------------------------------------
Just five countries in the Middle East sit on top of nearly two- thirds of the proven oil reserves in the world. Of these five, only Iran and Iraq remain outside of the U.S. sphere of influence, possibly the real reason why President Bush designated them, along with North Korea, as the “axis of evil.”
The U.S. is the world’s leading consumer, using over 26 percent of daily consumption despite having less than 5 percent of the world’s population. It is increasingly dependent on foreign oil, having imported 56 percent of domestic supplies in 2000 (though most of this comes from Canada, Mexico, and Venezuela).
The petro-cabinet assembled by Bush has hopscotched the world— from Central Asia and Equitorial Africa to the Andean region and Alaska—to secure more sources to feed the West. Yet, oil discoveries peaked in the 1960s. Today, newly discovered reserves amount to only one-quarter of annual global consumption.
Since the first oil well began pumping in Titusville, Pennsylvania on August 27, 1859, some 900 billion barrels of oil have been sucked out of the earth. Slightly over 1 trillion barrels in proven reserves exist around the world. Forecasting future discovery is tricky at best, but perhaps another half-trillion barrels of oil in undiscovered conventional reserves remains hidden.
It’s estimated that world production will peak between 2010 and 2020. Skeptics, led by disciples of M. King Hubbert, who accurately predicted in 1956 that oil production would peak in the lower 48 states around 1970, contend that prices will rise sharply after 2010 as production peaks and reaches a point of diminishing returns.
Others dispute this, noting that contrary to expectations, two new “supergiant” fields have been discovered in Kazakhstan and Iran in the last decade. As prices rise, it makes deep-ocean, marginal fields, and artic exploration more economical. Ironically, as fossil-fuel induced global warming melts the glaciers, oil companies are anticipating a gold rush in the largely unexplored and environmentally fragile polar regions.
Unconventional sources—tar sands in Western Canada, the heavy oil belt in Venezuela, and oil shale in the U.S., Brazil, Zaire, India, and many other countries—will likely become major producers of oil by the mid-21st century, as improved technology and rising costs render them feasible. While all conventional reserves—proven, unproven, and already pumped—amount at upper estimates to 2.5 trillion barrels, it’s thought that another 3 trillion barrels can be extracted from unconventional sources.
Also, Third World regions are at the beginning of the discovery curve, likely resulting in increasing output in future decades. This hasn’t escaped the notice of the Bush administration. The White House had Secretary of State Colin Powell stop in at the Johannesburg Summit on Sustainable Development in September to catch some flack over the profligate American lifestyle before embarking on his real business: Currying favor with oil-rich African nations like Gabon and Angola. Sub-Saharan Africa already provides the U.S. with 15 percent of its daily supply, which is expected to rise to 25 percent by 2015.
Walter Kansteiner, assistant secretary of state for Africa, is blunt about U.S. policy toward the forgotten continent. “African oil is of national strategic interest to us, and it will increase and become more important as we go forward.”
U.S. policy has kept oil cheap, stymying the development of cleaner fuels and transportation. Even if the White House dropped its hostility to alternative fuels, it would take decades to wean the economy from oil because of the need to create a massive new infrastructure for the production, transportation, and distribution of a new energy supply, such as hydrogen fuel cells. From today’s vantage point, it appears that oil dependence and oil wars will continue to dominate the landscape.