On Oil
It is looking very much as if Hubberts Peak is nearing. Experts place it within the next decade, with oil production flattening out as of this winter. Maybe a few bumps in production will occur along the line if the Caspian Sea fields will move into production more or less simultaneously with the Iraqi fields, but other then that, oil production is heading down. At the same time, demand is rising faster than anticipated. Since there is no longer much spare capacity anywhere, this rising demand wont be offset by production increase. I'd say our present energy regime is at an end. Although oil prices can be considered high at the moment, I certainly do not expect oil prices to tend downwards for any serious length of time. And to make thing worse still, most oil producing regions are facing serious security issues. Lets explore some of the consequences.
Rising prices and rising demand (=volume) for oil means some people are currently getting very rich, who are they and what are they likely to do with the cash? The House of Saud will probably make roughly 15 billion Euros more then expected, Vladimir Putins Russia gains a bundle and the Mullahs of Iran are also bathing in cash. Others to gain are (in no particular order) Nigeria, Venezuela and Indonesia. Putin used the cash to outflank the communists and centralise power in the Kremlin. The Mullahs are using it to suppress the growing opposition in their country and reverse some of the meagre reforms that have been made. I am very much interested in how the money will be used in Saudi Arabia, whether it will fund democratic reforms or terrorists. Not only are these countries bathing in cash, the current situation provides them with phenomenal leverage in dealings with oil importing nations as the US, China, Japan and many European countries. This leads us to the next question; Who'll be the last to run out of oil? That's the billion dollar question. The US is trying to secure it's supply by moving it's military bases out of "Old" Europe and into the major oil producing regions. At the same time everyone is trying to influence the route of some new (and controversial) oil pipelines from the Caspian Sea and Iraq fields among others. Do we have alternatives to oil? Yes and no. We can't meet our present energy consumption by reasonable alternative means and I don’t think we will be for a while. We can generate substantial amount of energy by alternative means and considering the progress that is being made in this field recently I would argue more research into alternative energy sources is likely to be cost effective (and may land me a job). So if we are going to reduce our energy consumption, by plan or by raw economics, can we do so without giving up much of our modern way of life? I believe we can if we start thinking creatively about our energy use and distribution. A lot is to be gained by decentralising power production. By generating power locally, from waste, as "by product" of heating systems (like the central heating system in our homes), a lot of the loss by the transportation and transformation of our power could be avoided. Hydrogen fuel cells may provide us with a means of storing energy efficiently, thereby opening up a lot of "micro power" possibilities. But distributive power generation will erode the power of energy companies and they will probably move against it. But what does this mean for us in The Netherlands? Since we're living on a large bubble of gas, we could be worse off, we'll probably make some more money selling the stuff. We' won't be the first to run out of hydrocarbons, but we will run out eventually. We also have reasonable but decreasing expertise on alternatives. If we start paying attention and currency to researching and implementing alternative energy sources and efficiency measures, we could again be leading in this field and maybe make money out of all this. But we should move soon, because the world is waking up to this. China is investing heavily in alternative energy (a truly massive investment in absolute terms), as are many other countries. These were just a few of the questions that arise while we are slowly running out of oil. I invite you to pose others and to discus these questions further...
Keywords: Oil,Energy
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Hello,
Just read a remark of Rikkert about highest gasprices in Amsterdam.
Better tax the people who make air dirty?
Is that why hybrids are sold for nothing, thanks to the government?
And LPG also costs virtuallly nothing?
And incentives to buy very clean cars, set up by “paars II”, were killed by the “balkenende” party…because it was too succesful?
I lived in Holland for a long time and came to the conclusion that the environmentalists use the environment as a “pass” to push through different issues on the political agenda.
Allways known that treehuggers suffer from mental disorders.
Perhaps it is because of greenhouse gasses….
IAS () - 15 07 06
Hi IAS,
Your points on incentives for technologies that pollute the air to a lesser degree are all valid, I am very much aware of them. They do not however change my views on taxes on gasoline. It is simply a matter of “the polluter pays”. The externalities of burning the stuff are rather large. The taxes are a way to factor these into prices of gasoline, which is why I support them.
I’ll just ignore your remarks on environmentalists and “treehuggers”, the first is made without refering to any thing specific, the second is just plain ignorant…
Rikkert - 01 08 06
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