Thursday, May 22, 2008

Moving Fast

Earlier today, I was in a meeting in which the subject of things moving "really fast" came up. For example, two years ago when we discussed the virtues and the benefits of plug in hybrid cars, one of those benefits considered was the fact that the car would not be limited by oil supply issues. We weren't talking about price, we were talking about supply. I would even use the word ration.

Back then, the notion seemed so remote, it received more than a few raised eyebrows. Gas Rationing? Impossible.

Today, it seems like prudent public policy management to think through these possibilities.

Especially now that the WSJ is finally willing to report the story:

Energy Watchdog Warns Of Oil-Production Crunch
IEA Official Says Supplies May Plateau Below Expected Demand
May 22, 2008; Page A1

The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.

The Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but the bottom line is already clear: Future crude supplies could be far tighter than previously thought.

A pessimistic supply outlook from the IEA could further rattle an oil market that already has seen crude prices rocket over $130 a barrel, double what they were a year ago. U.S. benchmark crude broke a record for the fourth day in a row, rising 3.3% Wednesday to close at $133.17 a barrel on the New York Mercantile Exchange.

For several years, the IEA has predicted that supplies of crude and other liquid fuels will arc gently upward to keep pace with rising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day currently. Now, the agency is worried that aging oil fields and diminished investment mean that companies could struggle to surpass 100 million barrels a day over the next two decades. (clip)

The IEA, employing a team of 25 analysts, is trying to shed light on some of the industry's best-kept secrets by assessing the health of major fields scattered from Venezuela and Mexico to Saudi Arabia, Kuwait and Iraq. The fields supply over two-thirds of daily world production.

The findings won't be definitive. Big producers including Venezuela, Iran and China aren't cooperating, and others like Saudi Arabia typically treat the detailed production data of individual fields as closely guarded state secrets, so it's not clear how specific their contributions will be.

To try to compensate, the IEA will use computer modeling to make estimates.

But the direction of the IEA's work echoes the gathering supply-side gloom articulated by some Big Oil executives in recent months. A growing number of people in the industry are endorsing a version of the "peak-oil" theory: that oil production will plateau in coming years, as suppliers fail to replace depleted fields with enough fresh ones to boost overall output.

All of that has prompted numerous upward revisions to long-term oil-price forecasts on Wall Street. Goldman Sachs grabbed headlines recently with a forecast saying that oil could top $140 a barrel this summer and could average $200 a barrel next year. (more)

Are you ready for $8.00 gasoline?

And for food to double ?

Things are moving fast.

And we need to be

prepared to move with them.

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San Jacinto courtesy of David Sanger



Anonymous Anonymous said...

May 23,2008 comment Moving Fast

For about 15 billion years the planet earth rocked along without man as a passenger. For about 99% of the last 3 million years man lived pretty much in sync with the rest of life on the planet. About 10,000 years ago a small group of our species became civilized and, based on their accomplishments, decided that they were the purpose of the universe and that man was the end product of creation, thus the entire creation was here solely for the will and pleasure of the human species. This idea, and the small group that harbored the idea, grew logrithmatically increasing from a fraction of the estimated total population of 5 million in the year 8000 BCE to being most of the worlds population of 750 million by the year 1700 AD. 300 years ago more than half the earth's land mass was still occupied by humans living more or less as they had always lived which was in harmony with nature.

From here on out the phrase "moving fast "doesn't touch what's happening. By the time I got out of high school the 750 million people that lived in Columbus's day had now reached 2.5 billion and the "civilized people" occupied about 90% of the earth's land mass. When my grandson graduates from high school there will be 6.5 billion of us civilized folks and no space left for the old ways. While I was writing this comment an additional 12,000 humans crowded another 25 species off the planet earth and into extinction. Going, going, gone forever. Now that's fast.


8:07 AM  

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