FYI: Double Digit Oil Price is History

The Economic Times has an article "Double-digit oil price is history: R S Sharma" that gives a perspective on where we stand on oil supply and consumption and some comments on what we need to do:

Oilonomics has gone haywire. The rise in oil prices has now started to hurt. Crude oil price increased five-fold in five years (from $22 per barrel in 2003); doubling in just fourteen months (from $54 per barrel in January 2007 to $110 per barrel in March 2008). . . .

During the last quarter century, primary energy consumption increased by about 64% (oil by 31%; gas by a spectacular 97%), primarily driven by growing demand from the developing world. CRISIL in a recent report has pointed out that non-OECD countries, particularly China and other Asian countries, have been the largest contributors to the 3.2 million bpd incremental world oil demand over the period 2004-07. Most forecasts for the next quarter century project more than a 60% increase in energy demand, mainly from emerging consumption centres. India’s demand for primary energy in 2030 is projected to be four times what we are consuming today (423 million tonnes of oil equivalent).

On the supply side, the emerging scenario is even more complex. Oil and gas resources are concentrated in a few countries. OPEC has around 73% of the world’s proven oil reserves. One-third of the world’s oil production comes from just three countries: Saudi Arabia, the Russian Federation and the US. Half of the world’s oil production comes from the 100 largest fields, almost all more than 25 years old. Discoveries of new giant fields are becoming rarer. Out of 85 million bpd oil production today, only 15 million bpd come from new finds and day-by-day incremental demand is outstripping incremental supply. . . .

Against these hard facts, ‘Peak Oil’ theory has kept every one guessing. Have we reached the peak or not quite yet? We may not have a definite answer as of now, but its effect is quite visible on the dynamics of the oil market. Now, many oil geologists believe that 90% of the globe’s oil fields have already been tapped and many are already exhausted. . . . Reserve replacement ratios (RRR) for most, if not all, is less than one. . . .

I believe we do not have any options other than recognising the long-term devastating effects of flared-up oil prices. We need to bite the bullet and go for energy demand management with a vengeance. Increasing efficiency of transportation, residential, commercial, and industrial uses is a must. Further, we need to ease the pressure on oil and gas by expansion and diversification of other energy resources.

Comments

[George Bruce]

Meanwhile, oil prices dropped below $100 today......

[George Bruce]

Meanwhile, oil prices dropped below $100 today......

[NiraliSherni]

Good post there, sobering and thought provoking. We all need to do out bit to contribute and manage our energy requirements more effectively. I think that electric vehicles are a real and viable option for transport which more and more people are looking to adopt recently. Harnessing wind and solar power are also ways in which we can help ourselves and the environment.

[Alex]

Go clean nuclear go!

[Carlos]

Suddenly, Mr James Howard Kunstler is sounding more main and less ex-treme. I've been reading his book, the Long Emergency (2004) and his predictions are coming true.

If you check my blog, you will see I have little trouble finding fault with the local press (Sydney Morning Herald) but so far I'm finding it hard to fault Kunstler. He understands energy (2nd law of thermo), he follows history and he has a pretty good understanding of the finance world. There are very few people who have all three - so even if Kunstler does sound shrill, he's worth giving credence to.

If he's wrong, and I hope he is, the problem is this:
One by one, he discounts each alternatives to oil, as THE solution. He is probably right. But all things pulling together, and the unforeseeable, like further innovation, might just do it.

[Benjamin Cole]

The price mechanism is a wonderful way to induce energy efficiency. We have pretty well-funded venture capital markets to explore new and better ways of generating energy, and liquid fuel.
Most likely, we see glut in 5 to 10 years.....

[http://thesmartcreature.blogspot.com/]

“Further, we need to ease the pressure on oil and gas by expansion and diversification of other energy resources.” This is what we have already begun to do, and with high oil selling prices those other energy become competitive. But it is a fallacy to believe this expansion and diversification is done in the frame of what we call “sustainable development” : the observation of real facts shows that they are done in the frame of perpetuating the growth needed by our present economic system. For more details about such thinking, look at the March 2008 Newsletter of the blog The smart creature .

[Mark]

The long term effects of high oil prices are that other energy sources will become feasible, deployable, available, and ultimately ubiquitous. Its the *short* term effects that may be devastating. We will never get off of oil until oil is too expensive to use. When energy as a whole is too expensive to use, we will conserve. People are economic animals - we always match our behavior to some point just beyond our budgets.

[Ron Chev]

Energyville, an energy simulator interactive experience: Choose energy sources to power your city thru the year 2030!

http://willyoujoinus.com/

[Adam Scott]

See this URL on the cause of the oil prices rising. Remember, oil is traded by speculators. We have plenty....

http://www.huntingtonnews.net/columns/080511-engdahl-columnsoilprice.html