Inflation? - US military warns oil output may dip causing massive shortages

[landover]

Peak Oil date keep on shifting in the future, is it the date?

US military warns oil output may dip causing massive shortages by 2015

 

[Zathras]

A lot depends upon the world economy, specifically India, China and the USA. India and China's oil demand is growing rapidly.
As I recall, last year was the first year more new cars were sold in China than were sold in the USA.
While many new sources of oil are being found, and ways to get at more of the oil in old fields, the newly found oil is mostly much more expensive than the old oil.
The combination of these factors will lead to much higher prices, but the timing of when that is going to hit depends on lots of other factors.
One issue is investments in developing more expensive methods of extracting oil tends to lag the need for it, as those investments aren't made when oil is cheap. They only gear up when the price of oil can support the more expensive extraction techniques.
Either way, I am planning on driving an EV when the next oil crunch hits, and growing some of our own food or buying from local farmers to minimize the direct impacts on us.

 

[brewer12345]

Uhh, meanwhile Petrobras seems to be stumbling on enough new reserves to make Brazil the next Saudi and the US is apparently floating on nat gas nobody wants. Pull the other one: its got bells on.

 

[Zathras]

As I recall, most, if not all of the oil Petrobras is finding is expensive to get to.
I am NOT saying we are running out of oil, I AM saying the oil we are finding is getting more expensive to get to AND demand is set to increase by quite a bit as the economy improves.
I don't think the armed forces conclusion that we may well be running an oil deficit in a couple of years to be beyond belief. Sure, it could be wrong, but it could well be correct.
As for the presence of natural gas, sure, we have tons of it. What does that have to do with a shortage of oil?

 

[brewer12345]

Petrobras' finds are suggestive that there is new supply in the wings and that costs will very likely fall dramatically once production ramps up. After all, a few scant years ago people were talking about US nat gas shortages and shale fracking has advanced to the point that gas is dirt cheap.

If you have nat gas available inexpensively you can (to some extent) substitue it for oil. Examples include having plug-in hybrids that are juiced up with gas-fired electricity, running vehicle on CNG, etc. If you go look at the most recent investor presentation that Methanex has on its website, they detail energy-related uses for methanol (including a diesel substitute via DME). Methanol is just natural gas that is turned into methanol with a little water vapor and a relatively simple process.

 

[FUEGO]

As I recall, most, if not all of the oil Petrobras is finding is expensive to get to.

True, it may be more expensive (deep offshore drilling required). But expensive is all relative. For a long time, big oil companies were considering $30 per barrel as the long term price of oil, and setting their "reserves" by that. My guess is that the long term price of oil is creeping up from $30/bbl, hence making recoverable reserves increase as the price of oil rises. You can't pay $80/bbl to pump oil out of the ground and bring it to market when it costs $30. You can when it costs $81.

As for the presence of natural gas, sure, we have tons of it. What does that have to do with a shortage of oil?

Econ 101. Substitution of energy sources.

 

[ziggy29]

As for the presence of natural gas, sure, we have tons of it. What does that have to do with a shortage of oil?

Many of the things for which we currently use oil as an energy source can be adapted to use natural gas instead. So it gives us a plausible alternative if we really do start "running out of oil."

I see natural gas (and "clean" coal) as part of the bridge between "peak oil" and abundant greener, renewable energy sources.

 

[Nords]

I'm still trying to figure out how the military can claim to know anything about peak oil.

Maybe their next briefing papers will fix global warming or the trade deficit...

 

[ziggy29]

I'm still trying to figure out how the military can claim to know anything about peak oil.

I could be wrong, but given that the U.S. military might be the largest user of oil on the planet, they probably have a vested interest in having people around who are good at reading the tea leaves with respect to the global supply of oil. Seems to me if a potential supply crisis is coming, they would want to know and plan to adapt for it sooner rather than later.

 

[Leonidas]

I could be wrong, but given that the U.S. military might be the largest user of oil on the planet, they probably have a vested interest in having people around who are good at reading the tea leaves with respect to the global supply of oil. Seems to me if a potential supply crisis is coming, they would want to know and plan to adapt for it sooner rather than later.

That's a good argument, but motivation does not equal expertise. You can go to all the usual sources and see opposing views from "we're going to be in dire straits soon" to "lack of demand will drive prices back down soon".

I also have to wonder if the military isn't like every other bureaucracy - in that certain careerists will "discover" emergencies so they can "fix it" and earn accolades and promotions.

 

[travelover]

I'm still trying to figure out how the military can claim to know anything about peak oil.

Maybe their next briefing papers will fix global warming or the trade deficit...

I'm glad you said it, 'cause that was my thought exactly. I wonder what the Dept of Energy thinks?

 

[Zathras]

True, it may be more expensive (deep offshore drilling required). But expensive is all relative. For a long time, big oil companies were considering $30 per barrel as the long term price of oil, and setting their "reserves" by that. My guess is that the long term price of oil is creeping up from $30/bbl, hence making recoverable reserves increase as the price of oil rises. You can't pay $80/bbl to pump oil out of the ground and bring it to market when it costs $30. You can when it costs $81.



Econ 101. Substitution of energy sources.

Both very true. But again, the price has to increase BEFORE the more expensive oil is actually drilled in large quantities. Leading to a lag in the response of supply to demand.

Substitution of energy solutions is exactly what we need. HOWEVER, it won't happen magically. It needs to happen before the crunch in order to avoid the shortages.
Call me jaded, but I just don't see our government doing ANYTHING until the disaster has already hit.

 

[brewer12345]

Both very true. But again, the price has to increase BEFORE the more expensive oil is actually drilled in large quantities. Leading to a lag in the response of supply to demand.

Substitution of energy solutions is exactly what we need. HOWEVER, it won't happen magically. It needs to happen before the crunch in order to avoid the shortages.
Call me jaded, but I just don't see our government doing ANYTHING until the disaster has already hit.

Why does the gubmint need to do anything about it? Crises and shortages are important market-based signals to private producers. This is an instance where the free market does actually do its job (more or less).

And a gubmint is doing something about it: Petrobras is partially owned and very much controlled by the Brazilian gubmint. PBR has embarked on a major, multi-year expansion program involving tens of billions of dollars of cap ex, with the explicit intention of transforming Brazil into a major oil producer.

 

[ziggy29]

Why does the gubmint need to do anything about it? Crises and shortages are important market-based signals to private producers. This is an instance where the free market does actually do its job (more or less).

I think it should be left to private industry and the "market" as much as possible. Having said that, though, I think energy supply concerns are very much a national security and national sovereignty issue, so if the gummint has sound reason to believe that the national supply of energy will be hit hard and cause extreme pain and shortages *before* the marketplace can adjust and adapt to it, it would be within their role as providers of national security to take some preemptive actions.

 

[Nords]

Seems to me if a potential supply crisis is coming, they would want to know and plan to adapt for it sooner rather than later.

They're way ahead of you. The "planning" part is finished, and the "adapt" part is called called "civilian fuel rationing".

They might earn credibility points for actually linking the reference, let alone something from a service war college or a Pentagon think tank like RAND... but JFCOM?!? Leonidas has accurately assessed the "work environment" at a four-star HQ:

I also have to wonder if the military isn't like every other bureaucracy - in that certain careerists will "discover" emergencies so they can "fix it" and earn accolades and promotions.

"Thank goodness today is Sunday-- just one more paragraph on this [-]point paper[/-] PowerPoint brief and then I can go home for a few hours!"