ANDREA HOPKINS: Ignoring Peak Oil Theories Could Leave Nation Stuck In Neutral
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By From the Archives
Published: July 6, 2008
The message had an urgent tone – punctuated with exclamation points, some of it in bold type and in all capital letters.
It was the e-mail equivalent of a shout.
“Cut gas prices NOW!” it yelled. “Gas prices are now over $4 per gallon nationwide – and we now know that Congress is the cause.”
WELL, NOT all of Congress; just House Democrats. According to the folks at RightMarch.com, these evil Democrats actually are giddy with joy that gasoline prices continue to climb – wrecking household budgets and disproportionately harming the weakest members of society.
The solution that RightMarch, which bills itself as “the Rapid Response Force against the ongoing liberal onslaught,” is selling is the same one that House Republicans, including our very own Rep. David Davis, are touting. They want to drill like there’s no tomorrow, sucking every drop of oil from the ground with nary a thought about saving this precious resource for future generations. Conservationists and wildlife receive similar short shrift.
The centerpiece of the oh-so-cleverly-named “No More Excuses Act” is drilling in the Arctic National Wildlife Refuge (often shortened to ANWR) and off the U.S. coast.
Apparently, mere passage of the “No More Excuses Act” is supposed to magically cause the gas-price fever to break. Prices would then begin to recede. RightMarch offers no explanation for how this magical transformation would come about.
THEY DON’T offer one because it doesn’t exist. Most economists and honest politicians believe no single factor is to blame for the sickening spike in gas prices. Rather, it appears to be an unlucky confluence of factors that is to blame.
Demand for gasoline is soaring, particularly in India and China where many people have moved from poverty to something bordering on prosperity in recent years. They want the same modern conveniences that Americans have enjoyed for years.
Like an only child who suddenly becomes a big brother or sister, America is going to have to learn to share. This can be a painful transition.
At the same time that demand is climbing, oil production is plateauing or in some cases declining. Department of Energy reports indicate production has declined in major oilfields in Russia, Mexico and the North Sea. That isn’t good news for an increasingly energy-thirsty world.
WELCOME TO the world of peak oil. This was once the realm of fringe Doomsday theorists on the Internet, but it is now openly discussed on the Web site of The Wall Street Journal.
The Journal’s Keith Johnson writes, “The ugly truth? Peak oil isn’t fringe anymore – it’s going mainstream. That’s the reading from the latest oil market report from the International Energy Agency, the rich-country energy watchdog. ...
“The fact that there are no growing stockpiles of crude around the world, for example, suggests speculators aren’t behind crude’s dizzying rise this year (much to Paul Krugman’s satisfaction and Congress’ chagrin.) ...
“And while U.S. drivers fret and worry over how to pay for the Prius, the sad truth is that it doesn’t matter: By 2015, developing country oil demand will outstrip the rich world’s. They’re already in the driver’s seat: 90 percent of the demand growth over the next five years will come from Asia, the Middle East, and Latin America, the IEA said.”
Get ready for a long, bumpy ride that no amount of political posturing or finger-pointing can fix. How well the nation deals with the bumps and adapts to an expensive energy world will determine whether we come to a gentle, safe stop or crash.
THIS ISN’T meant to minimize the pain that high gas prices are inflicting on the nation’s psyche and economy. We just returned from a 2,500-mile road trip to visit my husband’s family in Northern Michigan. As we enjoyed the warm embrace of distant family, it was painful to think that such a trip might become cost prohibitive.
Is seeing one’s family a luxury or a necessity? For most of us, it’s the latter.
We live in a mobile society where many of us have moved far from home in search of employment or fulfillment. An expensive-energy world will make it much harder to fly or drive to visit family even once a year.
But while the middle class worries about going home for the holidays, the poor have it much worse. This newspaper carried an Associated Press report last week about Meals on Wheels programs that are struggling to cope with high fuel costs and still deliver needed nourishment to the elderly poor.
USA Today, meanwhile, reported that high gas prices are hitting rural areas in a disproportionate manner. In some parts of Tennessee and Kentucky, residents are spending more than 10 percent of their household budgets on fuel. Around Bristol, that figure is between 5 and 8 percent. Urban areas with mass transit systems are generally fairing better.
SO FAR, a solution to the problem remains elusive. But even the government’s own reports don’t indicate that opening ANWR and the Outer Continental Shelf to drilling will result in an immediate or substantial drop in the price of oil.
In fact, a Department of Energy report indicates that ANWR drilling won’t affect prices at all. And deep-water drilling involves considerable cost and risk; it isn’t a cheap way to get oil.
It might be time to adjust our standard of living to cope with permanently higher energy prices. Or we could join RightMarch and push a simple, politically motivated solution for a complex problem.
Some additional drilling might have merit, but don’t expect it to bring down prices. There are too many other factors involved – chief among them, the law of supply-and-demand.
Andrea Hopkins is opinion editor of the Bristol Herald Courier. She may be reached at or (276) 645-2534.
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Posted by ( beeman ) on July 13, 2008 at 2:16 pm
The concept of Peak Oil is real if oil is millions of years old and not being replenished as fast as we use it. Based on what we know, oil IS millions of years old. It was not really used by humans until the last century and will certainly start to run out, with discoveries becoming more rare and most likely smaller. So yes it is a serious problem for all mankind and the planet we live on. It is imperative that we change our ways. Alternatives must be developed for the future. I won’t be alive in a hundred years but this will be a horrible existence for humans if no alternative and practical energy solution is developed.
As to the crowd that just says we need to drill more, that is really a failure to understand the problem. While it might make more oil available for a few decades, it does nothing to solve the problem that oil is finite. And in the short term, all available drilling rigs are being used right now. 80% of federal land already leased to oil companies is not even being explored fully let alone being drilled. So talk about opening up the outer continental shelf, ANWR, etc. is just talk. It really would do nothing that cannot be done already. You simply cannot drill without the equipment, and last time I checked you cannot go to your nearest retailer and buy a drilling rig. The technology of oil production is costly and complicated. The way it works is that oil that is cheaper to pump is pumped first. Cost of production in Saudi is around 10 dollars per barrel. cost in ANWR would be many times that, as would oil from the OCS. No one is going to spend more money to extract oil from more expensive locations when they have other sources that are cheaper. This is truly simple economics.
One thing that people need to become familiar with is the Enron Loophole. Google that term and you will become angry. Also worthy of one’s time is to watch the movie Enron: The Smartest Guys in the Room. You will begin to see just how bad our politicians have acted for many years. It must change or our decline as a nation will accelerate. It simply cannot and will not go on like it is. And speculators are not the main problem. Deregulation of speculation, via the Enron Loophole (thank you Phill Gramm) is the problem.
It is also true that this “shortage” is not like the typical story of supply and demand. When is the last time you saw a station without product to sell? In a true shortage environment surely supply would be interrupted from time to time. But the supply chain for crude oil is fragile, and that is why prices spike any time there is talk of conflict in oil supplying regions like Nigeria and the Middle East. It does have the potential to cause major problems for all the countries that run on oil. And guess which country is at the top of that list?
And to top that off, go to Youtube and watch the 5 minute clip from President Carter’s address to the Nation on Energy from April 18, 1977. That man, so often criticized by the Right wing, was so far ahead of the nation it is scary. And it’s why he will be revered as a great President by future historians. He deserved better than what our nation gives him. A true patriot.
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Posted by ( dadw5boys ) on July 09, 2008 at 10:31 am
Peak oil is those PROVEN oil deposits that are presently being pumped or have been tested for the amount they hold. ASSUMING they do not find any larger amounts in the future then peak oil is here. Not long after the Peak oil report they found A HUGE DEPOSIT off shore of Brazil which has not even had a good test well in place yet.
Then the Saudia come up with the oil that was discover in 1930’s under solid rock deep in the desert that is suspose to hold 9 times as much as the Saudis have now. So peak oil like anoy other theory is just that a theory till history proves it right.
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Posted by ( CITIZEN X ) on July 07, 2008 at 12:32 pm
The price of oil has NOTHING to do anymore with supply and demand. Our current price of gas has nothing to do with short supply, it has everything to do with the value of the US dollar. Currently the US dollar is very low in value. The only way to secure the value of our money is to RAISE interest rates. The FED can boost the value by increasing the prime rates quite easily and increase the value of the dollar. Right now the FED won’t do this because they are not politically affilliated, and they cannot risk the appearance of being in favor of either candidate. Yes, inflation will result from raising the rates, but that is where careful and wise decisions about how much to raise the rates becomes important. The FED will remain on the current course until the Nov election is over. They will then raise the rates as they should and we will begin to see gas drop back where the market really believes it should be. Current estimates for a barrel of oils true market value is between $70 to $75 per barrel. About half of what it is now.
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Posted by ( Michelle In Ga ) on July 07, 2008 at 10:06 am
Great article. Folks takes this
seriously, time to get ready is
precious. Google Peak Oil now!
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Posted by ( pamela ) on July 07, 2008 at 3:08 am
Just wanted to say I am so happy to see someone locally finally pick up on the Peak Oil subject.
Your article is a great start for this area and I pray that people begin to study and inform themselves about what is going on.
Hopefully you will write more on the subject and encourage people to begin to do things to take care of themselves as we “power down”.
Good work, and thank you.
pamela
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Posted by ( Tali ) on July 06, 2008 at 10:46 am
Considerations to make, my brother drives a gas tanker twice a night to Knoxville, the end of the pipeline, and delivers gas and diesel to local stations here. All the million gallon storage tanks there are full. In fact, shipments have been diverted as there is no place to put it. His nightly deliveries used to be single drops at one station. Gas stations have so much gas for sale, he has to divide loads between several stations. All the way back to the source, the Saudis insist that the market is well supplied.
To study the reason a barrel of oil had doubled in a year , common sense should tell anyone that demand has not doubled as well. That is pure hogwash.
Over the past few years I watched the price of oil closely. Any excuse by speculators like “militants threw a hand grenade at an oil pipeline in Nigeria”, drove the price up 5 or 10 dollars immediately even though no oil was spilled.
Rhetoric by Iran is now the excuse as well as what Andrea writes about, peak oil, limited or dwindling world supply. Most certainly, China and India have not more than doubled their demand in one year??Impossible!!
Speculation by hedge and retirement funds have supported high oil prices and along with the weak dollar.
Speculation has became so obvious, anyone can watch the news and wait for one negative word regarding oil by any leader, “mis-leader” or “expert” in the world, oil prices jump accordingly.
Speculators invest in future oil which has not been pumped or delivered at a fraction of the price and they never have to take delivery. This is simply not right as huge profits (at our expense)continue to drive this trend.
World governments , especially ours, need to stand up and say “enough is enough” on the profit taking from the pockets of Americans.
Oil is way to important to our economy and security to be used as a tool for the rich to get richer.
Oil should be sold by the supplier to the refiner, period. Anyone buying oil should be able and ready to take delivery, period. All the speculation would be over and oil prices would return to levels of two or three years ago.
We as Americans should have been working toward energy independence many years ago. I blame Congress, present and past for their short sightedness, pandering to special interests and partisan bickering. None of them, Democrat or Republican are squeaky clean and blameless on this all important issue. Question is, what are WE going to do about it?
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Posted by ( cjwirth ) on July 06, 2008 at 9:36 am
Ms. Andrea Hopkins is right. Global oil production is now declining, from 85 million barrels per day to 60 million barrels per day by 2015. At the same time demand will increase 14%. This is like a 45% drop in 7 years. No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always be higher than production; thus the depletion rate will continue until all recoverable oil is extracted. We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from “outside,“ and without the power grid virtually nothing works, including home heating, pumping of gasoline and diesel, airports, communications, and automated systems. This is documented in a free 45 page report that can be downloaded, website posted, distributed, and emailed: http://www.peakoilassociates.com/POAnalysis.html
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