The Oil Crunch: A Case Study
Oil producers are continuing to have trouble meeting worldwide demand. No one is certain how long this will go on but almost no one is betting the oil crunch will end anytime soon. For one thing, India and China have a long way to go to be fully industrialized with all the implications that will mean for oil consumption. It's not even certain that India and China will reach full industrialization if new supplies of oil cannot be found quickly enough in the years ahead. Already some countries are learning to adapt to what is happening now. Stuart Staniford of The Oil Drum offers a case study on Thailand that's well worth reading. Here's a few excerpts:
First, two comments. I'm not sure that China was specifically interested in Unocal's Thailand operation, at least in the near term; even China has to pay attention to its foreign policy. The most worrisome point in the article, despite discussion of alternative energy, is the turn towards the growing use of coal which we will be seeing by many countries in the near future. It's shouldn't be forgotten that the world has largely been turning away from coal because of the heavy pollution associated with it, not to mention the more current issue of CO2 and global warming.
Countries around the world are going to be adapting in different ways to the oil crunch. It's going to be important to understand those adaptations and how they affect the world's economy which we're all now a part of; and it's going to be important to understand what is happening if various nations begin to feel they are being pushed out of the energy markets. It's also important to remember that the US is the most innovative nation in the world but we have in no way committed ourselves to dealing with the energy crunch as effectively as we should be doing. There is no energy Manhattan project. There is only lip service about alternative energy from the Bush Administration. And, well, the reader should have picture a by now of an incurious and unengaged president whose clumsy efforts to deal with terrorism and inability to disentangle the US from Iraq have left him unable to deal with a growing number of issues, including energy.
There are remarkable similarities between the history of Thailand energy and that of the United States. We get a fine overview of the past and future of Thai energy policies from Thailand's developing gas and petrochemical industry by Khun Prasert Bunsumpun, the president of PTT Public Company Limited. First let's look at some basic facts about the present. Formed in 1978, PTT is the state-owned Petroleum Authority of Thailand. Bunsumpun tells us that 74% of Thailand's natural gas needs are supplied by indigeneous [controlled by Thailand] sources in the Gulf of Thailand. The rest is imported by pipeline from Myanmar [used to be Burma]. Just like the US, Thailand responded to the oil shocks of the 1970's and 1980's by restructuring their energy usage.
(snip)
So, this restructuring led to the creation of Thailand's natural gas industry starting in the 1970's. The leading developer then as now is Unocal Thailand, a division of Unocal. It is hard to resist saying that you can bet the Thais were probably delighted that the Chinese takeover of Unocal failed.
(snip)
However, disturbingly, Thailand is turning to another energy source, coal. This Gulf Times article Coal gets Asia boost as LNG proves risky reports that "`Everyone thought the future was gas but the price has not come down and the flexibility on supplies has not been there. Government policy is emphasising coal`, said Bishal Thapa of ICF Consulting in New Delhi. Other Asian countries such as Pakistan and Thailand, hurt by the high cost of oil imports, are set to boost coal for power this decade". Thus we find reports like Egat plans coal-fired power plant for 2010 [Electricity Generating Authority of Thailand]. Aside from their use of NGV's I find all of this quite similar to what is going on in the US and elsewhere.
On the bright side, Thailand is making considerable investments in cleaner alternative energy sources. As we find in Thailand to develop own palm oil industry, the future is biofuels. [Sorry, you'll have to register to see this article]. Thailand wants to expand its production of biofuels to augment the sugar-cane, molasses and cassava sources they already use.
First, two comments. I'm not sure that China was specifically interested in Unocal's Thailand operation, at least in the near term; even China has to pay attention to its foreign policy. The most worrisome point in the article, despite discussion of alternative energy, is the turn towards the growing use of coal which we will be seeing by many countries in the near future. It's shouldn't be forgotten that the world has largely been turning away from coal because of the heavy pollution associated with it, not to mention the more current issue of CO2 and global warming.
Countries around the world are going to be adapting in different ways to the oil crunch. It's going to be important to understand those adaptations and how they affect the world's economy which we're all now a part of; and it's going to be important to understand what is happening if various nations begin to feel they are being pushed out of the energy markets. It's also important to remember that the US is the most innovative nation in the world but we have in no way committed ourselves to dealing with the energy crunch as effectively as we should be doing. There is no energy Manhattan project. There is only lip service about alternative energy from the Bush Administration. And, well, the reader should have picture a by now of an incurious and unengaged president whose clumsy efforts to deal with terrorism and inability to disentangle the US from Iraq have left him unable to deal with a growing number of issues, including energy.
posted by Craig at 5:20 PM
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