Monday, April 16, 2007

World Oil Reserves Not Being Replaced

The biggest clue that we are facing a major energy problem is that worldwide we are using more oil than we are finding to replace it. This has been going on for some years though there have been ways in which the problem has been somewhat ignored, partly because of places like Saudi Arabia and Kuwait that are not only known for their large reserves but that are known for having inflated their reserve numbers in the last twenty years. Of course, American oil companies are particularly motivated to publicly minimize the problem.

Here's a story from Oil Online:
The world is currently producing more oil annually than it is replacing with new reserves. That sobering conclusion emerges from a new survey of global liquids reserves published by Energy Intelligence.

In contrast to the gradual rise in global oil reserves that has been reported annually in most surveys based on public sources, the new assessment shows that the trend in worldwide liquids reserves is actually one of stagnation and modest decline. The PIW Reserves Survey shows global oil reserves declining by almost 13 billion barrels, or 0.9%, over the last two years to 1.459 trillion bbl at the end of 2006 on a "proved plus probably" basis. Global oil reserves are liquid hydrocarbons, natural gas liquids, tar sands and crude oil, that are economically recoverable at current prices.

The PIW survey uses a somewhat broader definition of reserves than the other surveys based on public sources and it applies that definition consistently and systematically across all countries, fully accounting for production declines and new additions.

There's been some industry flimflam that things like oil sands are adding significantly to our reserves but that appears not to be happening at the rate touted in industry p.r. Bush's war in Iraq is a major historical fiasco but Bush's biggest fiasco in the judgment of years to come may be his refusal to deal rationally with a growing energy crisis faced not just by the United States but by the world. We have lost six years in that growing crisis and we are likely to lose another two years before Washington begins to come to grips with possibly the largest threat to our nation's economy and future.

I can't emphasize enough that cheap energy is no longer being found in anyone's backyard. Today, most new oil is coming from deep sea drilling or remote areas in the arctic or in the few last unexplored remote regions of the world. Cheap oil, especially light sweet crude, has reached the end of an era of growth. We may or may not have reached the era called peak oil but we are certainly in for a bumpy ride in the next five to ten years.

Bush and Cheney are oil industry appeasers. They have chosen to leave things to market forces but there is no sign whatsoever that Big Oil is ready to transition to new energy sources (the oil industry has had the numbers for years and essentially has known for thirty years that we have a problem). We need government action and major cooperation with a variety of industries to develop new sources of energy and greater efficiency with the energy we have. Like the Republican appeasers of the 1930s, the current Republican leadership has its head in the sand. Danger is approaching and it may be the biggest challenge our nation has faced. I might add that stealing other nation's oil does not solve the long-term problems. It's time we get our act together.

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