World Oil Supply Debate

M

Musburger

500+ Posts
Watch the Link (about an hour) if you are interested, and then comment if you like.

It's about an hour, but some interesting points get made. The participants are John Hofmeister, former President of Shell Oil and Dr. Tadeusz Patzek, Chair, Dept. of Petroleum & Geosystems Engineering, University of Texas at Austin.

Brief summary:

Hofmeister:
* Predicts $4 gas by May, $5 gas by end of year
* Believes US energy needs could be largely met internally if offshore, Alaska, arctic, shale, etc. were fully opened up.
* Says are economy is laid out in such away (distance, commuting, etc.) that it would be impractical to "scale back." We must forge ahead at full blast.
* The Saudis now require minimum of $100 oil in order to generate enough revenue to satisfy the populace
* Thinks technology may eventually make the combustion obsolete, but right now oil is the name of the game, and without a massive ramp up in exploration the economy will implode

Patzek:
* Says even if US scales back usage, growing third world expansion (India, China, etc.) will continue to drive up oil prices which will devastate our ecomomy.
* Agrees US should expand production, but becoming nearly self sufficient is a pipe dream
* Saudi exports will disappear in another 15-20 years as more of their production will go to domestic use.
* Only Norway has a sane energy policy
* Believes individuals will be forced to scale back dependency on oil in their own lives and should take steps to become more self-sufficient with respect to transportation, solar water heating where it makes sense, etc.

What I took out of it:
* US will likely eventually either do nothing and the economy will be ruined, or follow Hofmeister's path and drill baby drill over environmental concerns.
*I got the impression Hofmeister believes that most countries are incompetent with respect to managing their oil production and policies. That's basically where he left it, but I think the US agrees and that may be a big reason why we are making military moves all over the middle east, with long mid-range projections leading to going into Iran and perhaps even Saudi Arabia down the road.
* Hofmeister makes some very valid points, but I'm not sure if he believes all of them or if he is mainly talking as an oil advocate.
* Patzek appears more neutral and nonpartisan, and I tend to agree with him that added production will soften the economic blow, however we won't be able to sustain the status quo (commuter society) that much longer.
 
Telling, no comments on this thread and we have too many threads on the frickin pill on one page alone.

I really don't know what to say about this and honestly, no time to watch right now. From your synopsis, it sounds like we have two guys on the ends of the spectrum with the same end game.

Any middle ground debate on this topic?
 
Interesting points. Most people I know are only looking at the domestic supply/demand issue. The worldwide s/d is the reason for the price spike. I don't hear the President making any comments about this. If gas heads to $5 by the end of the year he's screwed at election time. What I don't understand is the lack of technology being put out there for natural gas vehicles. Good info.
 
There's gonna be a lot of cheap Suburbans in about three months.
There is no political will to plan for the future, every proposal gets shot down.
We have to get off the petroleum addiction as soon as feasably possible, but it looks like we choose to pay for foreign wars, ecological damage and spoiling natural areas over sensible planning for future needs. The market will eventually make the changes more economically viable, but what will be left by then?
 
The issue of limited supplies of oil is in my view- the most serious of anything posted here, and something that affects the daily lives of us all more than anything else- and not many people, or not enough anyways, seem to notice.

I don't care if someone comes here who works for Exxon and brags about a new discovery they heard about- as the real experts know, demand is more than consuming those "new discoveries."
 
There could be a lot more oil in the U.S., but much is off limits. We are holding a key to help our energy problems and our budget problems. We just need to make use of the key. The reasons we won't are mostly political.
 
I haven't seen anyone that has gone on record saying that we have hundreds of years left but there is certainly a wide disparity between the peak oil claimants and those that would have you believe the US has enough if we just get the damn regulations out of the way.

IMO the US can't be energy independent based on crude oil, no matter how free and easy we get with the regulation.

1. Oil is not a US commodity. it is a world commodity. what we produce in the US doesn't determine world prices. If you go with that logic, then it doesn't matter where the oil is produced, it only matters what the price per barrel is. Unless we somehow turn oil into a public utility and forbid US producers from selling to anyone else until US demand is met, and additionally limit their selling price to a cost plus basis, We will always be paying what the world price for oil is. Because, US oil companies aren't going to be good patriots and sell to only US customers if they can get a better price somewhere else.

2. If we assume a world market for oil then we have to determine not how much oil we can produce relative to our national demand, but how much we can produce relative to total world demand, because that is where the price will be set.

3. If you follow all of that, then you have to assume that the US can't make a dent in the world demand and therefore, we can't make a dent in the world price for oil.

4. If that is the case, then we are all bound for much higher prices.

5. The only way to bring down our average cost for power is to diversify into other sources that we have more control over long term pricing.

6. and to find more efficient devices for our lives.

On top of all of that, even with better technology, oil is getting harder and more expensive to get. Think of three cups...one full of water, one milk and the last a milk shake. You try to suck them dry (like drilling). The water comes out very easy. That was the first generation of drilling. The second gen (milk) is a little harder but still doable. The third gen is a milk shake. That's where we are at now. It takes a tremendous amount of effort, technology to get a lot of the oil out of the ground now. It will be more expensive and because of that, the oil producers will only tap it when the price per barrel is high enough to gaurantee a good return.
 
Like Dr. Patzek said, the issue is not really the total supply of energy available, but rather the increasing power (rate of energy consumption) requirements that portends trouble ahead.

So, aside from the fact that we're all DOOMED and should "depower" our lifestyles, what's the best course of action... buy energy stocks and ETFs?
 
I too do not have 1 hour so only read your synopsis. What I take from that is that we will be paying $4 to $5 for gas this summer. If this happens then the economy will slow down. Unfortunately Americans just do not have the elasticity in their budget to handle this kind of sudden change to their fixed budget costs.

In reply to:
Click to expand...
 
The domestic energy industry will not "solve the worldwide energy shortage". However, it could certainly improve our jobs market tremendously and help the country to dramatically reduce our deficits if anyone in Washington truly cared about these two issues.
 
I guess my point is that I want an electric car that can take me from Texas to California in a 2 day trip. I don't want to have to stop for hours to recharge after only 300 to 400 miles. Until there is a way to completely recharge on the fly, electric cars are not an alternative for me.
 
To date we have developed about a third of the world's known reserves. The problem is that the other two thirds are difficult and expensive to get. However, technology is improving all the time. There is even new technology that uses bacteria to help produce depleted fields.
 
Does a hybrid get better gas mileage than a diesel? It seems that hybrids have almost no advantage over newer diesels and last probably 100,000 miles less.
 
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