I think Michael is absolutely right - "At some point, production must peak" since oil is a non-renewable resource. The only issue is when? I think the end-of-oil activists are probably correct that we are at, or just passed, the peak for conventional, sweet, light crude - the figures for the decline in the North Sea production, Mexico, US, Canada, etc. are pretty convincing. Simmond's forcast for Saudi Arabia plus the warning from Kuwait reinforces that point. What is being developed -- the tar sands, heavy oils, etc - are making up the difference between demand and the supply of conventional oil. At the same time, these heavy oils are much more expensive to extract and have a much lower EROEI. If I remember my figures correctly, the EROEI of conventional light crude is around 100:1 while that of the Canadian tar sands is between 3 and 10:1. Plus the fact that the cost of developing the heavy oils is rapidly rising and, in the tar sands case, is dependent on high usage of natural gas and water, both of which are also subject to constrained supply and rising prices. Since the price of 'crude' is set at the margin, we can only expect further rising prices even if the supply of crude/synthetic oil does increase.
The Canadian tar sands at the most optimistic forecasts, can produce perhaps 3 to 4 million barrels a day, which is just a fraction of US demand, never mind the increasing demand from China which has invested in the tar sands. (Current Canadian production is in the range of 1.5 million BPD) So far, the increased supply from the sands has just compensated for the decline in conventional production in Canada. I disagree totally with Carrol that peaking oil or just plain rising energy prices is not the basis of political action. As has been pointed out by many, industrial (corporate) agriculture is totally dependent on oil (e.g. the article in Harpers on "The oil we eat") The rising price of oil will mean the rising price of food. This is compounded by the global warming problem and the attempt to reduce emissions through replacement of petroleum with ethanol and biodiesel. Already there have been food riots in Mexico and (I think it was) the Phillipines or Indonesia over the rising cost of corn due to the demand for corn for ethanol production or the rising cost of food in the Asian countries as they convert agricultural land to palm oil plantations to produce biodiesel. Also in Brazil, the cutting of the rain forest to produce sugar for ethanol conversion is exacerbating global warming and killing off the aboriginal population inhabiting the rain forests. If we are facing the replacement of oil with biofuels because of peak oil and global warming, the problem of food supply will only intensify. In other words, the problem of peak oil which is, as Michael points out, inevitable, joins global warming as a problem that can only be solved by political action which involves major structural changes in our economy and our way of life which involves reduced globalization, more localism and small scale in food production, and more collective consumption (e.g. mass transit) and shorter working hours and more leisure time -- i.e. a redistribution of real income from the rich to the poor.. This may not be socialism, but it sure isn't contemporary North American capitalism. Paul P Michael Perelman wrote:
David's point about declining fish stock and peak oil was interesting. Obviously, unless oil is being "produced" at a rapid rate the stocks decline -- At some point, production must peak -- maybe not next year; maybe in decades. My suspicion is that it is not too far off. Peak fish [a plug should go here for H. Bruce Franklin's excellent book], peak birds, etc. is much easier to measure. As Gene noted people find peak oil is more frightening; rather than organize for a more rational society, they want to cocoon into individualistic strategies, expecting a Mad Max world or a Gaza. The problem seems to be that the nebulous force called the left has not been able articulate a strategy. As a result, the warm and fuzzy idea of salvation via carbon trading has an obvious attraction. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com
-- Paul Phillips Professor Emertus, Economics University of Manitoba Home and Office: 3806 - 36A st., Vernon BC, Canada. ViT 6E9 tel: 1 (250) 558-0830 email: [EMAIL PROTECTED]
