More Warnings on Long-Term Oil Problem

It's a given that in a tight and volatile oil market, prices are going to go up and, yes, they're sometimes going to go down. Of course, the current drop in oil prices, after being on the rise for most of the last two years, is curiously suspicious as the midterm elections approach. It's appropriate to ask what the price of oil will be a month after the midterms?

I've read articles suggesting that the price of oil is dropping because the threat of war with Iran has lessened (but not really) and because of the large oil find, reportedly 15 billion barrels, in the Gulf of Mexico. Now if you look closely at the stories on the Gulf of Mexico find, you find the announced statement of up to 15 billion barrels of oil. Up to. If you hunt around, you find more specific numbers and they have a considerable range: the Gulf of Mexico find may be between 3 to 15 billion barrels of oil, a more honest assessment (I've written about this in an earlier post and The Oil Drum also has a response).

I hope the Gulf of Mexico find yields 20 billion barrels of oil but that's not the issue. The public needs accurate information about the current oil crunch and the future we face in just a few short years. There are people in Houston, the oil capital of the United States who are honest about what we face; here's an editorial from the Houston Chronicle:

U.S. Energy Department study concludes crude production will peak, requiring other energy forms

Last September, a Chronicle editorial warned that global oil production would peak in this decade or the next, and then inexorably decline. Given that likelihood, the United States would have to embark on a crash program to develop alternative energy sources or endure crippling increases in the price of energy.

Last week, a study performed for the U.S. Department of Energy concurred with the editorial's conclusions.

The study, led by Robert Hirsch, warned that the world should be spending $1 trillion per year developing alternative energy sources — including tar sands, oil shale and gas liquefaction — to avoid having its economy crippled by oil shortages and the resulting chaos. The study recommends a 20-year lead time, so it might already be too late to prevent a crunch.

The report said the timing was uncertain. Hirsch predicted peak oil production could come in five years, almost certainly by 2020.

Actually, the world would not have to arrive at peak production in order to experience severe shortfalls in oil supplies. The aftermath of Hurricane Katrina showed what even a minor constriction in supply can do to drive prices skyward....

We've known for thirty years that we have a problem. And now we have five to twenty years to deal with it. Some argue peak oil is already here but, even if true, it probably only applies to conventional light sweet crude. The immediate problem in many ways is enormous worldwide demand. But clearly, the writing is on the wall. We need to act.

We have a president and vice president who claim they can walk and chew gum at the same time, but they have dawdled for five years and are still reluctant to deal honestly and completely with the need for alternative energy; they have been too happy to help friends in the oil business maintain their fat profits—even if those profits are on hold for two months before the midterm elections. Congress is the body of the people, it's always been the body of the people, and it's time for the people to be heard again in Washington.