Hi, Brad, Abiotic oil is probably real: at least one huge field (Ukraine) has been discovered based on the abiotic concept. In Russia, where the concept originated, it is taken as solid. Americans have been slower to accept it because the concept came from Russia.
Cold Fusion (sometimes called the Pons-Fleischman (sp?) Effect) will I think turn out to be real. It is under active scientific and technical development and results as of a couple of months ago are quite promising. But it is a substantial amount of time away from commercial implementation. If it makes it that far, it could well change the energy picture dramatically. Cheers, Lawry -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Brad McCormick, Ed.D. Sent: Wednesday, May 11, 2005 5:53 PM To: [email protected]; [EMAIL PROTECTED] Subject: [Futurework] Abiotic oil -- let's hear whether this is right-winglunacy or something maybe real? If anyone wants to contact the author: If you wish to provide feedback on any article, please write to [EMAIL PROTECTED] <mailto:[EMAIL PROTECTED]>. -- If there is anything to this, it could be important??? Or is it maybe like the nuclear fusion that some scientists recently apparently really have produced on a desktop (whatever) -- i.e., something real but too "small scale" and/or "expensive" (needs more energy than it produces) to be useful. \brad mccormick * * *What We Now Know* *Week of 5/9/05* *IN THIS ISSUE* The Peak Oil Debate II: Economics Children in Handcuffs The Power of Cali Skeeter Season Alert ********************************************** *THE PEAK OIL DEBATE II: ECONOMICS* Last week, we took a look at the science behind the abiotic oil theory (i.e., that oil is not a fossil fuel at all, but is continually generated by natural processes deep within the earth, and is therefore a renewable resource). Today we'll consider the possibility of abiotic oil in the larger context of petroleum economics. Or, to put it another way, just what factors play into how much we fork over at the pump, anyway? As consumers increasingly feel the pinch--an average middle-income family has seen its household expenditures on petroleum products rise by 50% in the past four years--one thing is certain: The ten major oil companies (hereafter "Big Oil") are awash in dough. 2004 delivered profits on a scale that is truly mind-boggling, some $100 billion worth. Exxon's fourth-quarter profit alone was $8.42 billion, the largest for any American company, of any kind, ever. Such windfalls were made possible, of course, by the record-high prices for crude, which are a simple function of supply and demand. Or so Big Oil would have us believe. That's their standard mantra. But is it the truth? World demand is exploding, no question about that. The Department of Energy projects that it will rise 50%, from 80 million to 120 million barrels a day by 2025. At the same time, Big Oil asserts that it is suffering from drastic depletion. Royal Dutch/Shell has lowered its estimated reserves by 30% within a year; ConocoPhillips reported that 2004 additions to reserves represented only about a 65% replacement of oil pumped; and ChevronTexaco's CEO recently told analysts that he expects "our 2004 reserves-replacement rate to be low." Now, if Big Oil is faced with a dwindling supply of the product that generates its profits, then you might expect the bulk of that money to be reinvested in exploration and development, in order to try to ensure future abundance. As George Gaspar, an analyst with investment advisors Robert W. Baird & Co., told the /Washington Times/ back when a barrel of oil was still a bargain at $43: "Forty-dollar crude is a big gift to the exploration and production sector. They ought to be putting it into the ground." They aren't. Less than half of Big Oil's 2004 profits were spent on these two things, with new exploration projects commanding a mere 8%. Big Oil's usual rejoinder is that exploration has become increasingly uneconomic. Many "experts" even claim that there are no new fields of any significance to be discovered, anywhere in the world. So, the reasoning apparently goes, let's spend the money on something else; namely, us. And that's exactly what they've been doing. The incentive-laden executive compensation packages we know about. But other actions that serve to further line the pockets of shareholders, among which company executives always figure prominently, include mega-mergers, stock buybacks, and dividend increases. Exxon/Mobil recently raised its dividend by 9% and expects to pay out $6.5 billion in 2005; it also spent almost $10 billion in 2004 to buy back its own stock. The economics of this situation are more complicated than with other commodities, since oil is so central to our lives, but we can be certain that it is not just supply and demand that are controlling prices. We know, for instance, that energy companies have a history of creating artificial scarcities in order to bleed consumers. Enron will naturally come to mind, but Big Oil has been guilty, too. A 2001 FTC report, while absolving oil companies of antitrust violations (only because they didn't collude with one another), nevertheless noted that they "withheld or delayed shipping additional supply in the face of a price spike... In each instance, the firms chose strategies they thought would maximize their profits." Then there is the question of how oil prices are determined. It isn't, as many suppose, by OPEC. No, as the watchdog group Public Citizen puts it, "Today, prices are determined on international exchanges based on what traders are willing to pay. And who are these folks trading oil and setting the price? Increasingly, they are hedge funds, investment banks, and others out to make a quick buck speculating on the price of oil. And while they're making money, the rest of us are paying for it. "An increasing share of [oil] trading, however, has been moving off regulated exchanges such as the New York Mercantile Exchange (NYMEX) and into unregulated over-the-counter (OTC) exchanges. Traders operating on exchanges like NYMEX are required to disclose significant details of their trades to federal regulators. But traders on OTC exchanges are not required to disclose such information, allowing companies like Enron, Exxon/Mobil, and Goldman Sachs to escape federal oversight and more easily engage in manipulation strategies." And an official 2003 U.S. Senate report stated: "The lack of information on prices and large positions in OTC markets makes it difficult in many instances, if not impossible in practice, to determine whether traders have manipulated crude oil prices." But let's say fluctuations in the price of oil were simply a matter of supply and demand. It would make sense for Big Oil to attack the supply side, wouldn't it? Well, actually, no. High demand + short supply (real or not) = greater profit. Thus, there has been no movement at all on one response that could have a profoundly positive effect on gasoline supply: The construction of new refineries. Hembree Brandon, editorial director of /Delta Farm Press/, addressed this issue in a paper on the subject: "Not since 1976, almost 40 years ago, has a major new refining facility been built in the United States. That ain't all: As best anyone can tell, no new refineries are on the drawing board in this country. Nada. Zip. Zilch. In 1980, there were over 300 refineries in the United States; at the start of 2004, that number had dropped more than 50 percent to 149. In most cases, the companies said, the closed facilities weren't profitable. Which wasn't the case for 2004, when profits from refining and marketing operations were a significant part of the overall gains by the major companies." [We'll say: The domestic gasoline price spread--pump price minus the cost of crude and taxes--jumped by 31% between 2000 and 2004, to 51 cents a gallon. That's the cut refiners and marketers take.] Granted, the absence of new refinery construction also has a lot to do with environmental regulations and community resistance ("not in my backyard"), but still, Big Oil has been less than aggressive in pushing for it. All of which brings us back to the number one supply-side question: What about the potential of abiotic oil? It's not as if oil companies are ignorant of the theory. According to Harry Mason, a British geologist with 30 years of worldwide mineral exploration experience, "Many western geo-scientists are aware of the thesis--we were taught the basics at University College London in 1965... [but] the subject is not well funded in the West and thus poorly disseminated in our scientific literature--largely due to deeply instilled negative views in the western oil industry geo-scientific community." Okay, what about the idea of not searching for "new" fields, but instead returning to check on wells that previously were capped, for one reason or another? What if abiotic oil is seeping in? Dr. K. K. Bissada, a geochemist for Texaco, said in a 1995 /New York Times/ article: "It's impossible to put a number on the rate at which this goes on, but I could imagine that this kind of stacked reservoir system, with favorable geographic plumbing between the reservoirs, might refill the upper reservoirs in, say, 10 or 20 years. If we were to go back to some oil field that had been abandoned 50 years ago, we might drill a test well, and we might find fresh oil. The trouble is that that kind of experiment is too expensive in the present economic climate." Too expensive, or too threatening to profits? Big Oil constantly reminds us of how costly pure exploration is. Surely test-drilling a few former wells would be a whole lot cheaper. In sum, it would seem that oil is either a rapidly dwindling fossil fuel, or a renewable, inorganically created, essentially unlimited resource. We don't pretend to know which. But in the absence of an open national discussion, it may come to pass some day that the oil companies, after squeezing the last penny from our wallets, will come to us and say, "Oh, yeah, by the way, we've got this /other/ source..." _______________________________________________ Futurework mailing list [email protected] http://fes.uwaterloo.ca/mailman/listinfo/futurework _______________________________________________ Futurework mailing list [email protected] http://fes.uwaterloo.ca/mailman/listinfo/futurework
