Friday, November 24, 2006

A Warning from an Energy Watchdog

One of the signs of 'progress' (if that word can still be used) in the last two hundred years has been a more stable agricultural economy throughout much of the world; irrigation and fertilizer have mitigated much of the agricultural problems that existed as recently as eighty years ago. There are still famines but they are largely the product of politics or geographic isolation (hunger is still an issue but that's less about agriculture than it is about econonmic policies that don't always serve nations well). In recent decades, agricultural production has somewhat smoothed out compared to what it was in the past.

For years, energy has had a somewhat smooth profile similar to agriculture but there are signs that energy may start taking on a feast and famine quality for a variety of reasons (with some nations having considerably more access to energy than others). For example, like agriculture, energy is now subject to the whims of weather as we saw last year as the result of Hurricane Katrina and the major shutdown of oil production in the gulf. Getting our oil from the ocean and the arctic is going to be subject to interruptions from time to time. Wars and politics are going to interrupt supplies. As oil fields decline, as they inevitably do, there is going to be more and more of a scramble to get energy. And the politics of Global Warming and pollution are becoming an increasing factor that has to be considered when developing oil as well as with the increasing return to mining coal; there are added expenses to developing oil and coal that have been put off for years but the bill is increasingly coming due.

Major organinzations that study the production of oil are increasingly concerned about what is happening: here's a story about a report from the International Energy Agency:
The world will lurch from one energy crisis to another unless governments switch from increased burning of fossil fuels to more nuclear, renewable and energy-saving sources, the Western world’s energy watchdog said.

In a landmark report published yesterday, the International Energy Agency (IEA) forecast skyrocketing fuel prices, blackouts and supply disruptions as it pointed to a 50 per cent surge in energy demand by 2030.

Chinese and Indian economic growth will propel global oil demand from 84 million barrels per day to 116 million bpd by 2030 with most of the increased supply coming from Saudi Arabia, Iraq and Iran. Non-Opec oil supplies will peak in the beginning of the next decade, reckons the IEA, raising the risk of supply disruptions which could push the crude price as high as $130 per barrel.

Actually, the above is simply one scenario predicted by the IEA and it seems to be the course the world is currently pursuing. Predicting supply and demand in a complex world is not easy. The one country that might have made a difference thirty years ago chose the politics of convenience; that would be our country, the United States. We can still turn things around but it needs to happen soon.

Predicting the future may be difficult, particularly if we choose to do nothing and decide to ride the winds of fate and let the winds take us where they will. Or we can start thinking about what we're doing. Here's more from the article on the IEA:
In its report, World Energy Outlook 2006, the IEA offered a choice of two scenarios. In its reference case, the agency paints a picture of soaring demand and increasing risk of supply disruptions as dependence rises on a diminishing number of gas and oil suppliers.

“This energy scenario is not only unsustainable but doomed to failure,” said Claude Mandil, head of the IEA.

The IEA describes an alternative scenario in which global energy demand is reduced by 10 per cent by 2030, oil demand reaches 103 million bpd and OECD carbon emissions peak around 2015.

Now here's the kicker. Both scenarios by the IEA are considered overly optimistic by some experts who are arguing that we need a major conservation program and a major commitment into alternative energy research because, as things now stand, it's not clear we can maintain our current level of energy use while cutting down on CO2 emissions and other forms of pollution. I don't know who has the answers to all this, but doing nothing doesn't seem a good choice anymore. I hope the new Congress has major hearings on where we stand on energy and on the powerfully related issue of Global Warming.


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